Shell plc (SHEL) Q4 2025 Earnings Report, Transcript and Summary

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

Welcome, everyone. Today, Sinead and I will present Shell's Fourth Quarter and Full Year 2025 results. 2025 was another year of consistent delivery and real progress. We continue to execute with discipline and delivered against our targets in service of becoming the world's leading integrated energy company. As always, safety is a top priority. In 2025, four colleagues tragically lost their lives in our operated businesses. We owe it to them, and everyone who works with us, to learn from these incidents and to prevent such tragedies from happening again. On process safety, we continue to make encouraging progress with 30% fewer incidents in 2025 compared to the previous year. Improving personal and process safety is a continuous journey and will remain our top priority. Turning to our strategy of delivering more value with less emissions. Last year, we beat our ambitious CMD23 targets and set out important new financial targets at CMD25. The first of these financial targets is to deliver structural cost reductions of $5 billion to $7 billion by the end of 2028. By the end of 2025, we had already achieved $5.1 billion of reductions with more to come. Nearly 60% of the structural cost reductions came from operational efficiencies, a leaner corporate center and faster value-based decision-making. Achieving this target 3 years early demonstrates the drive of our organization to deliver. The next target is disciplined capital allocation within a cash CapEx range of $20 billion to $22 billion, and we ended 2025 in the middle of that range. This is about greater discipline and better capital allocation to enhance returns and you see that reflected in tough choices like stopping the construction of the biofuels plant in Rotterdam. The third is annual growth and normalized free cash flow per share of over 10% through 2030. We are on track to deliver through a focus on performance and discipline by turning around underperforming capital, and we continue to focus on shareholder distributions through buybacks. This brings me to the fourth financial target. Shareholder distributions of 40% to 50% of CFFO through the cycle. This remains sacrosanct. And in 2025, we delivered at the top end of that range. In short, we are on track to achieve our financial targets, showing that we deliver on what we say we will do. Now turning to our portfolio. In 2025, we executed several deliberate value-driven decisions to strengthen our businesses. In Upstream, we completed the divestment of SPDC in Nigeria, the conclusion of a major multiyear effort. We also completed the Adura joint venture in December, which as of today is the U.K. North Sea's largest independent producer and unlocks additional value. And finally, in Chemicals & Products, we divested our loss-making asset in Singapore and are working to reposition our Chemicals portfolio to unlock further value. These decisive actions demonstrate our focus on value. At our CMD25, we also set an aim of growing our LNG sales through to 2030 by 4% to 5% per annum. And last year, those sales grew by 11%, supported by the highest number of cargoes delivered in a single year. This record was supported by last year's start-up of LNG Canada, where ramp-up to full capacity is continuing. Beyond our organic growth, we also completed the acquisition of Pavilion Energy last year. We also committed to bring new oil and gas projects online that at their peak, will add more than 1 million barrels of oil equivalent per day by 2030, and we're progressing well. By the end of last year, we had already started up more than 1/4 of that new production. We have also further strengthened our deepwater position by increasing our interests in the Gulf of America, in Brazil and in Nigeria. And we took final investment decisions for the Kaikias waterflood in the Gulf of America and for Gato do Mato, now renamed to Orca in Brazil. In addition, we have expanded our footprint for exploration by acquiring acreage in Angola, South Africa, and the Gulf of America. Moving now to marketing, where we continue to high-grade our portfolio. Last year in Mobility, we closed or divested some 800 lower-performing branded sites. And by focusing on performance, discipline and simplification, both Mobility and Lubricants achieved their best-ever results in 2025. And in Power and Low Carbon options, we've continued to high-grade the portfolio through the year, divesting projects like Atlantic Shores and ScotWind, while also diluting parts of the Savion portfolio. These steps are aligning our portfolio with our increased focus on flexible generation and trading. Turning now to the less emissions part of our strategy. At CMD23, we said we would invest between $10 billion to $15 billion in low-carbon energy solutions between 2023 and 2025, which we have delivered on. We have created options in Power and Low Carbon in areas such as CCS and bioenergy. We're now focused on delivering returns on those investments, helping our customers to decarbonize and leveraging our trading capabilities. Last year, we also made significant progress against a number of our ETS24 emissions target. Starting with our target to halve Scope 1 and 2 emissions under our operational control by 2030 on a net basis compared with 2016. We have already achieved some 70% of that target. Next, our target to lower the net carbon intensity of the products we sell by 15% to 20% by 2030. We are on track, delivering 9% in 2025 compared with 2016. Linked to that, we also set an ambition to reduce customer emissions from the use of the oil products we sell by 15% to 20% by 2030, and we met that ambition, achieving a reduction of 18% in 2025. 2025 was also the year we achieved our target of eliminating 100% of routine flaring from our Upstream operations, once again showing that we deliver on what we say. With that, I will hand over to Sinead, who will tell you more about our financial results and our financial framework.

Thank you, Wael. Our financial results in the fourth quarter of 2025 were lower due to noncash tax impacts and lower oil prices, which were partly offset by another quarter of strong operational performance. Our adjusted earnings for the quarter were some $3.3 billion. Upstream delivered a strong quarter in the current price environment, and as expected, Integrated Gas results returned to more normal pre-COVID levels as we have outlined in previous quarters. Marketing results were seasonally lower and further impacted by noncash tax adjustments in joint ventures. Products delivered strong results, helped by higher refining margins, partly offset by lower trading, which is typical in the fourth quarter. And in Chemicals, we continue to face challenges due to both low chemical margins and lower operational performance. Fixing and repositioning this business is a key priority in 2026. Turning to cash. Q4 CFFO was robust as we generated $9.4 billion despite some of the typical year-end payments. Moving to the 2025 full year. From a macro perspective, Brent prices on average were over $10 a barrel lower than the year before. Despite this, we are proud that our stronger operational performance drove solid financial results in this lower price environment. Full year adjusted earnings were $18.5 billion, and we generated close to $43 billion in cash flow from operations. And we delivered just over $26 billion of free cash flow. Both Integrated Gas and Upstream had a very strong year operationally, with high controllable availability driving increased production. In particular, we saw increased contributions from higher-margin Upstream volumes, especially in the Gulf of America and Brazil. In Downstream and Renewables & Energy Solutions, Mobility and Lubricants delivered higher margins through increased sales of premium products, whilst also reducing operating costs. As a result, both businesses continue to improve their ROACE year-over-year in 2025, with Mobility increasing to over 15% and Lubricants to over 21%, and with both achieving their highest ever contributions to our results. Chemicals & Products had a mixed year with better refining performance being offset by continued low chemical margins and lower trading and supply contributions, while our Renewables & Energy Solutions business performed in line with expectations. Now moving to our financial framework. Our cash CapEx range for 2026 remains at $20 billion to $22 billion. We continue to maintain a strong balance sheet with gearing of 21% or 9% excluding leases. And our distribution range of 40% to 50% of CFFO remains sacrosanct. We continue to deliver compelling shareholder distributions. And today, we announced a 4% increase in our dividend, in line with our progressive dividend policy as well as a $3.5 billion share buyback program, which we expect to complete by our Q1 results announcement in May. This marks the 17th consecutive quarter in which we've announced $3 billion or more in buybacks. And with that, I will hand back to Wael.

Thank you, Sinead. Before closing out, I want to take a moment to thank our staff for their hard work, their commitment and their delivery across the year. We're living in a rapidly changing world, but our business model is well positioned for these conditions. That confidence is underpinned by our balance sheet strength, which we've improved in recent years through stronger operational performance and disciplined spending. This has led to enhanced cash generation. We'll continue to focus on what we can control and ensure we are positioned for countercyclical opportunities where they might arise and meet our high bar for investment decisions. Ultimately, we hope it's clear that you can be sure of Shell. You can trust us to stay value focused and disciplined. We have entered 2026 as a more resilient organization. We have raised the bar on operational performance. We are showing more discipline and making great progress to deliver more value with less emissions. And there is so much more to come. Lower costs, further performance improvements supported by the transformative potential of AI and a higher returning portfolio of world-leading franchise businesses. All of this gives us confidence for the road ahead. Thank you.

[Operator Instructions]

Thank you very much for joining us today. We hope that after watching this presentation, you've seen how we delivered a strong set of results in 2025 and how we are firmly on track to deliver the targets that we set ourselves at Capital Markets Day 2025. And now, Sinead and I will be answering your questions. So please, could we just have one or two questions each so that everyone has the opportunity. With that, could we have the first question please, Jake?

Our first caller is Alastair Syme from Citi.

I feel obliged to kick us off on reserves. You've listed a huge amount of portfolio refocus in the Upstream. But I guess, to Shell, we've had 3 years of sprint and cost takeout, but at the same time, reserve life has fallen 15%. And if I take you back a couple of years ago, you used to say there was no portfolio problem. And I think now the message is morphed into one that sort of acknowledges there is a bit of a problem to address, but there's no hurry. So I guess the question is what is the plan? How do we frame the time line around hurry? And how can you counter the market concerns that the business is simply shrinking?

Yes. Thank you very much, Alastair. I'll suggest I kick off and then maybe, Sinead, bring you in. Yes, first, thank you for the question. I think I'll start with what you and I have talked about in the past. Where we start and what I keep saying and I keep hearing back from my investors is that at the end of the day, it's intrinsic value creation that we are driving. And it's particularly value creation per share that we are driving towards. And so there are a few elements of how we are unlocking that. I think you touched on one of them, fundamentally driving the performance culture in the company, the takeout of the $5 billion of cost reduction, and we are now driving towards the higher end of the $5 billion to $7 billion range. There's more to be done on capital efficiency. There's more to be done on improving the returns on the actual capital employed. So there's significant value uplift on that side of it. We also showed, of course, in Capital Markets Day 2025, the trajectory to 2040 for both Integrated Gas and Marketing, where we see our cash flow growing from around $20 billion last year to close to $25-plus billion at a slightly lower capital diet. So all of that is showing the growth. But then let me come specifically to the heart of the question around resource. What we have tried to do is look at the resource as an important KPI in the overall mix, but most importantly, look at the cash flow that's coming from it. I mentioned in Capital Markets Day that we had a gap to 2030 that was close to 100,000 barrels per day to be able to, for example, keep our liquids flat. I'm pleased to say that with the $2 billion of deepwater bolt-ons that we did in 2025 and improved recovery from some of the reservoirs we have, we already have largely plugged that gap of the 100,000 barrels per day. So that actually gives us the runway to be able to derisk the 10% free cash flow per share that we talked about in Capital Markets Day. Your question, though, is a fair one when you look out to 2035. We still have a resource gap there that we plan to fill. But we want to make sure that the bar continues to be high there. And we have a few years to be able to fill that gap. So this is not ignoring the issue. But this is derisking what we can see in front of us, what we can control and making sure that we deliver on our commitment to our shareholders to do it in a highly accretive way. And that's what we want to be able to work on. We are liquidating the 1 million barrels per day of new capacity we're bringing in. Last year, we brought 1/4 of that. We have another 750,000 barrels per day to bring online. We have exciting new projects like Bonga South West, that is also coming in the post 2030 time frame. We need to be able to move those things through. But the core continues to be one of real focus on proper capital stewardship as we unlock that future cash flow. Sinead, maybe you want to add a few words?

Yes, just a little bit on that as well because I think you covered indeed how we're closing the gap. Let me just talk you through our thinking a bit. And I think as Wael positioned very well, of course, things like reserves or R/P are important metrics, but it's only one metric as we look at the depth of our portfolio. So let me go specifically on R/P. So roughly speaking, we were at about 7.8 years, as you know, now, which came down from 9. How did we -- what were the decision-making between coming down from 9? Two main elements of that. One was the SPDC sales, so the sale in Nigeria of assets and the other, of course, was the move with respect to oil sands, both of which we've talked over the last year or so with you. And of course, both were very conscious decisions. And of course, the reason they were conscious decisions, if we kept them, we would have stayed at about the same level given all of the additions that we had as well. But we consciously chose not to do that. And that $2 billion of CapEx instead that we move towards deepwater, what did that do? The fact that we put it into deepwater and that was Gulf of America, that was Brazil, that was Nigeria as well and a number of other aspects. Those ended up with very high-margin barrels, but of course, didn't have quite the same length in terms of the R/P or the impact on the R/P. We chose to go with high margin, therefore, creating value rather than just trying to manage to a metric. And of course, as you know, when we talk to the shareholders, it's very much about focus on not moving towards one metric, but actually generating value.

And so let me close then, Alastair, and thank you for that, Sinead. What I will say is we are, of course, at an inflection point as a company as well. We have really been focused on the performance drive, the embedding the performance culture, and I think made great progress. What I can say and what I will be saying to our investors is both Sinead and I will bring that same focus and rigor now as we have really gotten the self-sustaining performance loop into the company. We will now look at portfolio reallocation, how we are going to be reallocating capital to the opportunities that allow us to unlock even further growth post 2030, and that's where our attention will continue to go in the coming years.

Our next caller is Josh Stone from UBS.

Just a question on the buybacks. I'm curious as when you set the buyback, how much of a close call that was this quarter? Because I understand you've got a strong balance sheet, prices seem to be holding up better than expected, but also for the first time in a while, we've got more people buying energy stocks and your shares are clearly rerated with that and they're more expensive. So was that considered at all in your decision to leave it flat? And how much -- how close was that call?

Thanks for the question, Josh. Sinead?

Yes. No, happy to take that. Thanks, Josh. Really good question. And what I like is you're asking us about how we think about it. And it is a conscious decision in terms of capital allocation each quarter, of course. I mean with respect to the buybacks and where do we go on the buyback, I mean, one of the first things I would say is what we've looked at is the fact that we've bought back roughly, what, 25% of our shares, I think, over the last 3 years. And of course, that's at some 20% below where our share price is today. So you can see the allocation around that. So that thoughtfulness is there. The frame that we use has been sort of quite clear. We've always said to you that sort of 40% to 50% in terms of CFFO distribution is sacrosanct. And of course, that varies a little bit quarter-to-quarter because it is through the cycle. So you see that in our thinking. And of course, this quarter was 52%, but you have volatility with price and everything else coming through. So we're very comfortable and very focused on staying within that. But indeed, we still see the buybacks as particularly at this sort of price as very much value led. And of course, we have such a strong balance sheet, as you know, when we're sitting at some 20% of gearing as well.

Our next caller is Irene Himona from Bernstein.

I had two, please. So first, can you please speak around the key financial impacts of the Adura joint venture in the U.K. in 2026 on key metrics like perhaps your cash dividend receipts or Upstream tax rates, et cetera? And then secondly, looking at group return on capital, obviously, it is below double digit. It's clearly not helped by widening Chemicals losses. The Chemicals down cycle appears to be a really prolonged one, which is clearly something that cannot be controlled. So I wanted to talk around what you are controlling in Chemicals and in particular, to ask about progress on the announcement you made at CMD25 of the restructuring intention for Chemicals? So how far has that progressed?

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

Certainly. Indeed, Adura really pleased, Irene, to see that actually up and running with our partner on the 1st of December. Teams are doing well there. It's really is a stand-alone venture, of course. You can see them out there looking at raising debt to be able to continue to grow that business and to be able to use capital very efficiently there as well. But you specifically asked about how would we see that play out in some of our metrics. What you see, of course, is because it is a stand-alone entity, you see a lot of the normal aspects pulling out. You see the production reduced coming through in our outlook or that production -- sorry, production being reduced in our Q1 outlook as well. So you see that in the Upstream numbers. And in contrast, what you will see, as you exactly rightly say, we'll see dividends coming in. Now we don't tend to give guidance. Of course, it's a stand-alone venture, as you know, but we expect to see considerable dividends coming through. And of course, I saw yesterday, of course, our partner, of course, made some comments in that respect as well. Venture is strong. It has the ability to grow. It's the largest stand-alone producer, independent in the North Sea now, and they're looking at many more opportunities and are driving hard to be able to return to the shareholders the dividends that they've rightly promised us.

Thanks, Sinead. Irene to your second question around group ROACE and then the Chems. So a couple of points maybe. Firstly, in my response to Alastair's question, I talked about our real focus on performance, right? We want this company to be the best performing, best returning company in our sector, positioned for longevity and positioned for sustained growth. And so we've been focusing very much on the performance. And actually, that's also starting to show through on the returns. You saw that this past year at 9.4% ROACE. By the way, that was up compared to 2024, despite a $10 drop in oil price. And that shows you we're making progress. Some of that progress is coming through, for example, in Mobility, where we had put a target of getting to 15% ROACE. We're up from 12% to 15% in 2025. Lubricants is up from 19% to 21%. Res, despite the fact that it is still nowhere close to where we need it to be, is up 4% points on ROACE as well between '24 and '25. So we're making progress. And Chemicals is not where it needs to be. And there's a couple of elements around Chemicals that you touched on. Let's talk about, firstly, the strategic element of Chemicals. Nothing's changed from what we talked about in Capital Markets Day. What I also said in Capital Markets Day is we are going to be patient because while we know where we want to go with it, we do not want to be selling at bottom-of-cycle conditions. We have promised our shareholders to be good stewards of their capital. And what we are looking at, at the moment is constructs that could potentially work. I won't update you at this stage on where things are because there's nothing specific to update on. But you can rest assured that we continue to look at opportunities around that. Where I would say I have less patience is in our own self-help. I already indicated a couple of quarters ago that we are looking at what more we can do. So the team did some great work around that. Q4 was a bit more difficult as well because we had a planned downturn in Monaca. But as we come out of that, we hopefully get a bit more tailwind there. But most importantly, we have identified a few hundred million dollars' worth of cost reductions, CapEx reductions to be able to just ensure that we get closer and closer towards free cash flow neutrality. So at least it covers its face in a difficult macro like we have at the moment. Hopefully, that also sets us up for a better performance when we see Chemical margins come through. But we are assuming that if there is a prolonged period of depressed Chemicals margins that we at least need to be able to avoid the bleeding in free cash flow from Chemicals. And that's very much our intent and what we're focused on.

Our next caller is Biraj Borkhataria from RBC.

My first one is just on operating costs. You've clearly made that a priority in recent years and there's progress being made. When I look at your divisional breakdown, the one thing that surprises me is that when I look at the Renewables business, the OpEx still looks outsized relative to the size of that business and the contribution and I guess, the outlook. So my question on that front is, why aren't you moving faster to reduce costs specifically there? Or is that building options for the future or is there something else? And then just a second question, a follow-up to the resource one. In the past, and even today, you've mentioned you want to be countercyclical. So I guess, there's a balance between knowing where you are in the cycle, but also understanding the competitive landscape. As I'm listening to your peers talk about the same issue over recent months, a number of them have started to talk up M&A. So you could argue there's increased competition on the buyer side. So just some perspectives on your patience and the competitive landscape would be helpful there.

Biraj, thank you for those questions. Let me take the second one and maybe give you the first one, Sinead. Look, I think you heard me, Biraj, in the third quarter results, open up the space much more for M&A as we start to get much more comfortable that we now have the internal performance to be able to unlock value better than others can. And that to me was an important element of what we needed to do because I didn't want to simply add resource for the sake of it. Of course, we had started with a capital budget of $25 billion to $27 billion. We took it down to $22 million to $25 million in CMD23. We took it down to $20 million to $22 million in CMD25, and we haven't used the full capacity. Not because we can't buy barrels, but because we have said to ourselves that we're only going to go after accretive barrels. That's what's core for us. Now as we look at the landscape, I'd start off by saying the biggest thing we had to do was to continue to create the space for us to have the strategic patience. And to Alastair's question, we now have that line of sight to 2030, which means we built ourselves a few years to be able to really be selective about what we go for. But we are hungry for growth. Don't get me wrong. But we want to do it on the right terms. And so where do we see opportunities to play, where we can synergize, not simply buying the barrels, but where we think we can bring particular technologies where we have synergies with existing assets. You've seen us do deals in Brazil, in Nigeria, and the GOA. Those are the sorts of areas where we can play in, but there are other areas where we are looking for that. We will continue. I can tell you, I have a lot of opportunities coming on -- coming to my desk on a regular basis. And I would say I see more of them starting to screen now than we would have a year ago. But we are looking at making sure that we do not fall into the pitfalls of the past, where we start to sort of do deals for the sake of resource buildup rather than do deals that create value through the life cycle and allow our shareholders to be able to really get the most out of the decisions we're taking. Sinead?

Indeed. Thanks, Biraj. You're absolutely right in terms of cost being a focus over the last period, but it's been cost really in service of performance. So what have we done? As you know, we've taken some $5.1 billion out of structural costs over the period. So actually heading into the bandwidth, which we have talked to the band that we talked about as a target for Capital Markets Day '25. So we've done it a couple of years early. So you can really see the business motoring in terms of just as a company, how can we ensure that every dollar is allocated in the right way. And there's a lot more to come. That's clear. And there's a lot of pressure from the boss on making sure we do actually deliver on that as well. But specifically, it's very thoughtful about where we take it out. And as you say, in terms of our Renewables segment, there is more to come. But we've actually taken $1 billion out of OpEx over the last few years there. And we're changing the portfolio mix, remember. So as we change that away from some of the generation assets that we would have had before, we're moving it more towards some of the flex and assets that we can trade around. So of course, what you're seeing is as we make some of the divestments, as we change that portfolio mix, that comes down on that side, but actually goes up in terms of the actual flex side. And actually, we had quite a bit of OpEx that came from our CCGT acquisition in Rhode Island as well. So that's coming through. And remember, that Res portfolio with that Renewables portfolio is continuing to change. And actually, we've done more than 15 deals over the last 2 years in that space, more than half of them actually within the last year as well. So more to come.

Our next caller is Paul Cheng from Scotiabank.

Wael, can you talk about the new opportunity set. It seems like with the open up of Iraq, Libya and Venezuela and how attractive are those to you guys? And whether you are concerned, the opening up of these countries will compound the oil market oversupply? And if that is the case, how will it shape your capital allocation outlook, if any?

Thanks for the question, Paul. Look, I'd start maybe first from a longer-term perspective. So we continue to see growth in energy demand for -- well, through to 2050 at the moment. So some 25% uptick between 2025 and 2050 in terms of overall energy demand. We see oil demand continue to grow roughly by that 1 million barrel per day tick, at least for the coming few years. And remember, we're losing around 5% of overall supply due to depletion. So every single year, you're having to refill 6 million barrels per day. So longer term, the fundamentals continue to be very constructive, I would say, on oil. In the shorter term, you're right to sort of hint to the fundamentals being maybe slightly long in terms of supply, but that's being balanced by a lot of geopolitical risk at the moment, whether it is Venezuela, whether it is Iran or others. You're seeing more ships at sea. And that's creating, I think, a bit more balanced and helping the oil price achieve what it has achieved. Now turning to the specific markets that you've talked about. There is, of course, potential to unlock more production, but the world will need that production. So it doesn't concern me. It actually encourages me that we will be able to find the supply to be able to meet that demand. Most importantly, I think we are very well positioned to be able to play in some of these theaters. I was in Kuwait just a couple of days ago where the KPC announced the opening of some opportunities there, which we will be looking with interest in. We are in discussions, of course, with the Libyans. We have an MOU for some fields there. In Venezuela, we are well positioned, in particular, in the gas side, given some of the work that we had been doing even before recent events, and so on and so forth. Iraq, again, we have a strong position there. So we see ourselves as particularly well placed to be able to enter some of these theaters. But again, it's going to depend on the entire sort of risk-adjusted return profile and our ability to be able to say to ourselves, "Is this where we want to deploy our capital?" It doesn't change our appetite in terms of the longer-term fundamentals around oil. We continue to be bullish and constructive on that.

Our next caller is Michele Della Vigna from Goldman Sachs.

I wanted to ask you about LNG. It looks like we're going into a period of oversupply where we may need the shutdown of some U.S. LNG plants at least for a few weeks in the summer. I was just wondering how should we think about that potential outcome into the Shell portfolio with the positive being probably on the trading side, some of the negative in terms of some of the spot gas exposure? And also, in a cheap LNG environment, we should see rising LNG demand. But one of the big areas of growth, which has been China, feels like it may be slowing down and potentially with the geopolitical risk rising, they may not want to depend so much on a commodity, which -- where the U.S. is the largest producer in the world. So just wanted to have, if possible, some of your thoughts on that.

Thank you, Michele. And let me maybe touch on that. So what do we see in the LNG markets at the moment? Again, if I take the long-term perspective, if anything, we are seeing even more constructive demand on for LNG. We see it more and more playing the role of the stabilizing force in most energy systems. I mean, take Europe, for example, we do not have, of course, the coal assets of past. Nuclear will take a long, long time to be able to bring in as Europe shifts its energy system towards more intermittent renewable energy, you will need more and more of that stabilizing force, which, of course, LNG plays. And that's demonstrated just this year by the fact that we have had record imports of LNG into Europe. You consider now where we are also in the current cycle, even if you think prompt and midterm, just at the moment, we're looking at storage levels in Europe at the low 40% compared to the 5-year average that is closer to 65%. So Europe will continue to play a big role. We see both China and India, actually, also still constructive on LNG, but at a certain price point, which is closer to the $8 to $10 rather than above 10%. So I don't think the Chinese or the Indians are averse to taking more LNG, but they want it at the right price point compared to the alternatives they have, which typically is domestic coal. So where does that leave us as a portfolio? I think we are incredibly privileged to have such a diverse set of supply opportunities, one of the best, of course, being LNG Canada with AECO indexation that allows us to supply our markets in particular in the East. We, of course, also have access -- significant access to U.S. LNG. I don't know whether there will be shutdowns or not in the summer, depending on demand levels and the wave of supply and how quickly it comes. But I would say we are very well positioned given that balance of diversified supply, diversified demand. We have multiple different indexations to whether it's Brent, TTF, we can sell on Henry Hub or AECO and so on and so forth. So the cross-commodity exposure gives us opportunities to be able to create value out of the volatility that comes with that LNG market. So do I expect a length in the LNG market? Who knows? There might be some, but we look through these cycles and create value over the long term for our shareholders.

Our next caller is Kim Fustier from HSBC.

I wanted to go back to Chemicals. Last quarter, you talked about cutting several hundred millions of dollars from Chemicals. I think you referenced that again today. But I mean, this could be a very extended down cycle of up to another 4 to 5 years. So a few hundred million of cost reductions may not be enough. And presumably somebody has to shut capacity. So what exactly would be stopping you from outright shutting capacity? Is it the benefit of integration with your refining plants? Is it the environmental cleanup costs or labor issues in Europe? And then I wanted to go back also to the Upstream longevity point. You've talked about that and yet we're seeing Shell continuing to put assets up for sale in the market such as Vaca Muerta in Argentina. I would have thought Vaca Muerta has a lot of running room, and you do have plenty of unconventional experience. So if you could help us understand the logic of that particular asset being put up for sale, that would be great.

I will let, maybe, Sinead start with that second question and correct that fake news article that came out, and then I can address the Chemicals one.

I think you just said it perfectly. Kim, I've seen the same article. I don't believe we've said anything about that specific asset at this moment in time. So indeed, lots of things I read in the paper or many other assets apparently that we're selling as well that I wasn't aware of.

Thank you, Sinead. And Kim to your Chemicals point. Shame on me, I should have also mentioned that, of course, we are also looking at unit by unit shutdowns where required. At the end of the day, we're looking at cash cost of each of these units and making the choices depending on where we are in the cycle. But nothing is off the table. Let me put it that way. We are looking at all the opportunities to be able to really get to free cash flow neutrality at some of these more severe realities around margin, and we are leaving no stone unturned.

Our next caller is Martijn Rats from Morgan Stanley.

I've got two questions, if I may. I wanted to ask about trading. Sort of full year results is always sort of a good one. I know throughout the year, it can be a bit volatile. But looking back 2025, group return on capital was 9.4%. But often, you're willing to provide a comment about the uplift of the trading created to the group ROACE 200 basis points, 400 basis points, usually they live in that sort of ranges. In 2025, broadly speaking, were we at the upper end of that range, lower end of the range? What was roughly the contribution of trading? And then the other one I wanted to ask, maybe a small point, but it relates to Kazakhstan. There seem to be some punchy compensation claims coming from the government of Kazakhstan now. It's not that -- we've seen this before, but I was hoping you could share some perspective on that situation.

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

Yes, happy to. Martijn, thank you for that. Indeed, as you know, our trading organization continues to be a core part of Shell's proposition. We have great individuals in there. We have a great set of assets that they get to trade around and some judgments that have to come with that as well. So indeed, we've talked before about the uplift that they provide in terms of being able to optimize across the organization or across the portfolio for us. They've continued to over 2025, as you say, had a very good year as well. Of course, Q4 is typically softer for us in terms of trading, particularly in terms of our crude and products desks. So just about there. And we've talked about that a number of times. And you see that play out in C&P as well, and that continues to be the case this year. They have done more towards the lower end of that range in terms of -- you said 2% to 4% in terms of ROACE. But really pleased with what they deliver, and they're continuing to deliver this quarter as well. So thank you.

Thanks, Sinead. Martijn, on Kazakhstan, it would be inappropriate, of course, of me to sort of get into details around that given there is some legal proceedings happening at the moment. I think suffice it to say that we are disappointed that we can't see alignment between the joint venture partners and the government on some of these topics. It is -- it does impact our appetite to invest further in Kazakhstan. So we watch the situation with care. We think that there's still a lot of potential investment opportunities in Kazakhstan, but we will hold until we have better line of sight to where things end up. And I leave it to the individual joint venture sort of projects to be able to make sure that they represent the position of the joint venture partners in a unified way. But let me leave it there -- at that point for now.

Our next caller is Lydia Rainforth from Barclays.

A slightly different topic. Agentic AI, I think you signed up with SLB to deploy agentic AI across the Upstream. So I'm just wondering, what does that look like in practice? And what are you trying to get out of that? And possibly linked to that, obviously, you're already at the -- you already achieved $5 billion in structural cost savings. Target is $5 billion to $7 billion by 2028. So why not lift that? And then secondly, I mean just the idea that there's more to come, the free cash flow growth per share target or ambition of more than 10% out to 2025 -- out to 2030. 2025 was sub-5%. So was that a disappointing number to you? Or was it just as you expected? And basically, it does imply that there needs to be an acceleration of free cash flow growth. So when do you actually see that? Is that '26? Or is it more '28 to '30?

Thank you for that, Lydia. Did you want to take that second question? I can touch on agentic AI and how we're deploying it?

Certainly, indeed. So as you say, we had -- so in terms of the free cash flow per share, it is a target, as you say, out to 2030. We also knew that it was going to be variable across the different years as well, Lydia. So you see that year-to-year as it comes through. And of course, in this upfront period, of course, the share buybacks are a key part of that as well as we go through. So in terms of where we disappointed in terms of where it was for 2025? No. We knew where it was expected to come. And we've, of course, got a wave of different projects that are coming through. We've still got LNG Canada, of course, that is still to ramp up to its full capacity, and we talked about it as well, the number of different projects that seem to go. It is not linear. We know that, that portfolio will change over time. And of course, as Wael has already alluded to, there's a lot more to come in terms of performance. So that drive on performance is certainly not over, and you'll see that play out as we continue throughout the rest of the decade as well.

Yes. And to your question then, Lydia, on -- to the broader bucket around the cost reduction. So I think as you rightly said, we signposted the $5 billion to $7 billion, really pleased with the momentum the team continues to drive getting us to the lower end of that already. My expectation of the team is we do hit the higher end of that come 2028. So we will be driving towards it. And AI is one of those key elements. Agenetic AI is one of those elements. Now where are we on that journey? I'd start off by saying that the investment we have been making in data cleanup over the past few years, the investment we are making to be able to harmonize ERP systems. For example, in trading and supply, we are looking to modernize our ERTMs to standardize them and to make sure that they bring the data-centric architecture that allows us to scale up AI's benefit across the organization. So this is playing out not just in upstream. It's playing out all across. In Upstream, specifically, it's playing very much into the subsurface space and how we high-grade our interpretation of subsurface, both for existing reservoirs, but also as we look into exploration. And it's playing up in areas like proactive technical monitoring and the maintenance that we do. I would say agentic AI is also playing up very much in our functional journey. So as we look to continue to not just apply automation into the way we work, we are challenging the way our workflows are constructed because agenetic AI means that we can fundamentally approach those work outputs in a different way. So I find it an exciting journey for us. We are not yet banking all sorts of cost reductions coming out of agentic AI because, to be honest, we're still learning. There is a lot of hype around it at the moment, and we're trying to focus on where can we actually deliver real cash gains rather than talk about it. And so I will withhold judgment as to how much it will impact the bottom line until I can give you an honest reflection on the impact it can have.

Our next call is Lucas Herrmann from BNP Paribas.

A couple, if I might. Just going back to Alastair's opening question. When you think about resource and you think about resolving the resource issues for want of a better word, are we -- do you think -- we're really thinking about resolving for a deepwater issue in that, that's your greatest strength, should we say one of your greatest strengths certainly in terms of the Upstream. And obviously, the margins there and the return on capital there has the potential to be very attractive. So question one is really just back on Alastair's, what are we trying to resolved for? And question two, far easier. When I think about this year and LNG, it's really about volumes and about growth and opportunity. I mean, it looks as though you've got incremental volume coming from Calcasieu from -- I don't know how free things are around Pavilion, voluming in from Plaquemines, volume coming in from Canada, obviously. So it feels as though we're at a point now where LNG in volume terms at least should really start to drive improvement. And perhaps you can add to that by just commenting on where Nigeria Train 7 is and what your thoughts on timing are there.

Thank you, Lucas. I'll ask Sinead to take the second question in a moment. Let me just address the first one. When we think about the resource base that we want to sort of add to the funnel, I'll tell you we're agnostic, Lucas. I mean, we start from a position of we have a differentiated strength in deepwater. And of course, we can play into that strength. But we also have some real strengths in a bunch of basins with a bunch of technologies in our conventional oil and gas portfolio. And we have continued to hone our strengths in areas like Shales. I mean, look at what we're doing in Groundbirch, look at what we're doing in the Vaca Muerta, look at what we're doing with QGC, the upstream part of our Queensland assets. And so we are looking at how we can actually complement some of these strengths and create value out of it rather than trying to be too narrow. At the end of the day, this is back to what I talked about earlier, creating value per share and finding ways to be able to actually deploy our capital in something that's going to be accretive. And so that is our -- let's call it our North Star rather than necessarily what particular resource and in what country. Sinead?

Thanks, Lucas. Indeed. You're asking about what is our expectation in terms of some of the LNG volumes coming through? I think two ways to take it. Of course, you're right, we have volumes that are coming up, whether that's indeed LNG Canada actually delivering in terms of up and -- ramped up and getting to its full potential. We've got a number of third-party volumes, as you mentioned, coming through. And then, of course, we'll have different items such as Qatar in the years to come. But it's more about what we do with those. At the moment, we have quite a balanced portfolio. We don't have a lot of additional length, and we talked about that before. We're a little bit tighter. And therefore, we haven't had as many opportunities to be able to deploy some of that trading capability that we have had in the past in different positions around the world. Some of those volumes will continue to come in the time period. But also if you look at it, we talked about actually having a growth in terms of our LNG sales of 4% to 5% coming through over the next period per annum, actually, through to 2030. Actually, what we saw in this last year was our sales grew by 11%. So you can see that sales side of things absolutely there and continuing to grow, and we need the volumes to be able to match that. So of course, yes, some of those volumes will start coming through as well.

Our next caller is Doug Leggate from Wolfe Research.

Wael, I know this reserve number, you've kind of inherited that. It's been flogged to death today. But I want to ask you a direct question. As you inherited the portfolio several years ago now, do you believe legacy Shell has underinvested? And if so, how do you fix it in short order, whether through M&A or without a step-up in CapEx? That's my first question. And my second one is probably for Sinead. And it's just going back to the recommitment to the buyback. Going back to your strategy day, you had assumed a flat real oil price. Can you maintain that 10% free cash flow growth per share without the help of a flat real oil price or without leverage?

Good. Let me take the first one then, Doug. Look, I mean, I don't often look back. And if I were to look back, I would say, I wish we hadn't walked away from Guyana when we did. That's the honest truth. How do we resolve the issue going forward? Look, at the end of the day, I think we play to our strengths. I mean, today, we can underwrite a production flat line on liquids, and we have said we're growing our gas by 2% between now and 2030. And what we are finding is, as we really focus on understanding of our reservoirs, really focus on making sure that we are going after every drop, that is really unlocking value. I mean, remember, these reservoirs were barely scratching the surface of 25% to 30% recovery. You add 1% or 2% recovery from these reservoirs and you can sustain without massive capital outlays. Now having said all that, that doesn't mean we don't play with seriousness and other opportunities. And so how are we going to look at that? One, we need to keep doing what we're doing inside the fence and do the best that we can to unlock those resources. Number two, we will leverage the strength of this company to be able to be out there to partner with the likes of Venezuela, with the likes of Libya, with the likes of Iraq, with the likes of Kuwait and others as they look to be able to open up with partners that they trust and partners that have worked with them for a long, long time. We continue, by the way, to focus on our own exploration capabilities. which we have recently had a full reset of the exploration team, changed out the leadership of that team. And we're starting to see the early stages of success in terms of really securing some exciting acreage in a place like Angola. We secured acreage in -- more acreage in South Africa, acreage in the Gulf. And so that's the other, call it, value accretive way of doing it. And then selectively, we will continue to look at the right M&A opportunities with that high bar that I have referenced, but it needs to be able to justify itself to be a value accretive deal. Otherwise, we don't do it, and we have the time to be able to play that out into the coming years. Hopefully, that helps, Doug. Sinead?

Indeed. Doug, good to hear from you here. You asked a question that can be taken from two different angles, one of which is just the confidence in terms of where we're going to for 2030. So indeed, that confidence comes from two aspects. It's from performance and it's, of course, from returns. On the performance part, I think Wael has talked to that, that's about driving the company hard, ensuring that every asset delivers on what it can and actually going even further than that. So you heard about the wave of projects that are coming. So you hear on that aspect of it as well. The other is about effectively return of capital and return on capital. So in terms of that, if I take you through it in terms of return on capital, we are clearly entering into a phase of capital reallocation. You see it in what we're doing. You see on where we are moving our capital to in terms of allocating it more towards the Upstream and Integrated Gas areas versus where it would have been in the past as well. So that's about return on capital. In terms of return of capital, so let's take you through. We've talked about it before. So what's our thinking in that? How do we go about it? We've got 40% to 50% in terms of distribution, which is sacrosanct. You've heard us talk about it more and more. So I don't need to go into that in great depth. But what also we have is we have a very healthy balance sheet. Our balance sheet is sitting at some 20% in terms of gearing. Now remember, we've had a range of 10% to 30%. You always say to me, let's look back over time. So over the 10 years, we've gone between 10% and 30%. So sitting at some 20% is very healthy. I'm very comfortable with that. And of course, I'm even more comfortable with that because during that time, we've managed to buy back 25% of the shares of this company and done so at a price that averages out at some 20% lower than today's share price as well. So you can see the creation of value there. But of course, one of the things that you ask is how is that going to be in terms of net debt. If you look at the 3-year period, actually, our net debt is roughly the same level as it was before. But what has happened, of course, is that our -- what you see is the gearing has changed, and that gearing has gone up roughly 2%. Where does that 2% come from? Well, actually, interestingly, 3/4 of that 2% is down to those distributions that we just talked about that our shareholders tell us time and time again that they love and they appreciate the way forward we're doing on that. And actually, the last bit of it, so the remainder comes from interestingly, the Netherlands pension reform, if you remember, back a few quarters ago, which is a bit specific to us, but that had an impact in terms of equity as well. So I'm very comfortable with where we are in terms of a balance sheet perspective and where we are from a net debt. And actually, when I look at net debt relative to the cash flow, the CFFO of this company, it is incredibly healthy, not only from our perspective, but also relative to our peers as well. So we're comfortable with the position of where we're at.

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

The question probably is a follow-on from that. And I guess then, you've talked about securing acreage. Are you happy with sort of recent exploration performance? And I guess then, as you think about resource beyond 2035, is more capital going to be allocated towards exploration? And do you have a plan to sort of improving some of the returns there?

Henry, thank you for the question. As part of the reset, what we have done is not just put new leadership in, new targets in, but also make sure that we are really restraining the capital that we're putting into exploration to something that we feel is fit for purpose. So this is not an open bucket, let's go back to the swashbuckling days of exploration everywhere. We need to be able to prove to ourselves that we can create value out of that. And so you asked me for my report card on exploration. I'd say it's mixed. Really pleased over the last year where we had a good step-up in commercial discoveries in basins which are familiar and known to us, smaller volumes, but highly valuable barrels that allow us to tie back into existing hubs. Less pleased with the fact that we haven't found the bigger plays that allow us to potentially create big new hubs. And so that's the space we need to continue to work on to improve. That first bucket is motoring on well, and I think we have filled the funnel with good opportunities. I think we've really started to fill the funnel for the second bucket with some exciting ones. I mentioned the likes of Angola, which I'm really keen to sort of see where we can get to with that. And that's one that we need to be able to go. But I would characterize our pursuit of resources as being not one that is dogmatic around exploration or M&A or NBD, new business development. We will look at where best to deploy that capital depending on track record, on that risk-adjusted return, where we think we can create value, and we will pivot depending on where that value can be created. Otherwise, we will start to have tunnel vision down one pathway rather than keeping options open and creating value through whatever is in the money at that point in time.

Our next caller is Christopher Kuplent from Bank of America.

Wael, I wanted to ask you about the state of the M&A market. Not what you're about to buy, I get you. You're agnostic on lots of levels. But I guess it'd be interesting to hear from you, you've been in a number of data rooms, what deals that are currently being signed, what they are telling you whether this is a buyer or a seller's market, particularly when we speak about the assets that you're looking for, i.e., resources that are yet to be developed, whether it's the Namibian farm down that we've seen from Galp or others. Where do you think the bid-ask is currently sitting? And if I may squeeze in another opportunity for Sinead to deny fake news. Tell us what's happening with LNG Canada, whether it's FID of Phase 2 or whether it's a farm down there?

Do you want to start with that one?

Yes. No, absolutely. Thanks, Christopher. And indeed, you know what I will always say on anything is similar to Argentina. Of course, you see a lot of news coming through. We will look at every opportunity to deploy our capital sensibly and to maximize value. So we have no -- what is it, sacred cows, holy cows. We've used both expressions or I've used both expressions throughout. But in terms of LNG Canada, what I would say is we're not divesting from assets that we have high conviction in. So very much in LNG Canada, we're looking at making sure that, that performance is delivered. I think what you're seeing is a commentary in the press about reallocation of capital and speculation as to whether we would look to get out of anything, which is , say, parts or elements of it. The way I think about it is just pure and simple, where are the returns on every part of our asset base, and therefore, is this somewhere where I should have my money tied up, and that's what Wael and I spend our time looking at or is there somewhere else it could go. And that's actually true across the whole of the portfolio. We will look to maximize the value of every dollar we have sitting there. So if it's low-returning assets or if there's a better place to put it, we will do that. And you saw it, for instance, with the Colonial pipeline. We were able to realize value from our stake in the Colonial pipeline. It wasn't a strategic control point for us. We were able to actually exit at some over 9x EBITDA as well. So it's those sorts of things that we will continue to look to do.

And to Sinead's point there, Christy, that focus on capital reallocation, I would say, is an important now area of my and Sinead's focus in this part of the journey that we're on as a company because we believe there is over 15% of the capital employed that we have, the $225 billion, that we could actually redeploy into higher return opportunities, which we want to actively be looking at. To the heart of your question, and that, of course, plays into it as we redeploy some of that into, for example, M&A opportunities in Upstream and beyond, I would say the market is somewhere in the middle at the moment. It used to be at the higher end of the 60% to 70% range, and now we're closer to the lower end of that 60% to 70% range. And it's sort of in that space. So it is not out of what we have seen, call it, mid-cycle conditions in the past. I think there's different things at play. I mean, there's one interpretation of the subsurface by different players. There's desperation by some to be able to create investment cases for themselves. And what you have seen us do is to look at all of these. And where we have been able to win is where we have had a real differentiated advantage like the bolt-ons that we did in 2025. Now as we look at some of the other opportunities, I'm sure things will continue to evolve. And we'll see how we will compete for those. But the most important thing for me is to keep that broader frame of strategic patience, accretion when we do these deals, and making sure that we can add value to the barrels that we're bringing in, not simply adding resource for the sake of being able to satisfy a KPI in our books. And that's the approach that we will continue to use. It is fair to say that this will take more of our time, of course, as we get that performance muscle much more embedded into the organization.

Our final caller is Ryan Todd from Piper Sandler.

Maybe if I could ask one on an asset that you mentioned earlier and has also been in the news, Bonga South West. I think reports have suggested that you're targeting the 2027 FID there in Nigeria. Can you talk about what hurdles you need to clear over the next 12 to 18 months to reach FID? And then maybe more broadly, could you talk about the broader resource opportunity in Nigeria and other kind of existing basins within your portfolio like that and what may or may not have changed to make things more attractive in some of those areas?

Ryan, thank you for that question. Let's start with Nigeria. I was there, I guess, a couple of weeks ago now to meet the President and was very encouraged by the real drive to be able to support investment in the resource base of Nigeria. Of course, you know what we've done on the onshore, having exited that. That's opened up our opportunities now much more in the offshore. Bonga South West is a material resource. And what were the conditions precedent? A key condition precedent was a set of fiscal support to be able to make this an investable project, which I was very pleased that the President was committed to providing in the coming days as part of a gazetting process that needs to happen, which means we already have now kicked off FEED. And indeed, as you say, looking to develop that into hopefully what is an investable project. So now it really is just follow through on all sides to be able to make this -- the project we need it to be. It's important to recognize that there is a lot behind those funnels in deepwater Nigeria for us. We have a project called Bosi. We have projects like Adura. These are all projects that now are starting to make their way through the funnel as the investment climate opens up in Nigeria. And we are talking about hundreds of thousands of barrels there. And so we are actively going after those and developing them. Of course, where we continue to have a lot of music is in Brazil and in the Gulf of America, where we have existing resources. Some of the discoveries that I've mentioned are in the Gulf that tie back into our existing asset bases as well. We're excited by areas like Oman, where we have significant access to gas resources in the blocks that we operate. We're building out in Malaysia at the moment and so on and so forth. So this is a portfolio that has -- that continues to create opportunities for us. And we are making sure that what is within our reach, we are maximizing the value from, while at the same time looking at those exploration and M&A opportunities that I referenced earlier. Let me, therefore, close off, and thank you for your questions and for joining the call on behalf of both Sinead and myself. In conclusion, we delivered a solid set of results in 2025. And looking ahead to 2026, we believe we are well positioned with an investment case that remains robust through the cycle as a result of the actions that we have taken and continue to take. Lastly, I'd like to highlight a number of upcoming publications, including our annual report release on the 12th of March. And on the 16th of March, we will publish our annual LNG outlook, the LNG strategic spotlight as well as the response to the 2025 AGM shareholder resolution. Wishing you all a pleasant end of the week. Thank you very much for joining.