Shell Q4 2025 Earnings Call Transcript

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Provided by Quartr
February 5, 2026

Key Takeaways

  • Positive Sentiment: Shell hit the lower end of its CMD25 cost target early, delivering $5.1 billion of structural cost reductions by end‑2025 and plans to reach $5–$7 billion by 2028, signaling stronger operating leverage and margin upside.
  • Positive Sentiment: The company maintained disciplined capital allocation with a $20–$22 billion cash CapEx range, increased the dividend by 4% and launched a $3.5 billion buyback (to be completed by Q1 results), while delivering shareholder distributions at the top of the 40%–50% of CFFO target range.
  • Positive Sentiment: Progress on emissions goals continues: ~70% of the Scope 1&2 net reduction target to 2030 achieved, product carbon intensity down 9% year‑on‑2016, customer use emissions down 18%, and 100% elimination of routine flaring in upstream—supporting Shell’s ESG credentials and transition positioning.
  • Negative Sentiment: The Chemicals segment remained weak in 2025 due to low margins and operational underperformance; management is prioritizing restructuring, cost and CapEx cuts and has not ruled out unit shutdowns to reach free cash flow neutrality, indicating continued near‑term headwinds.
  • Neutral Sentiment: Reserve life and R/P declined (reserve life ~7.8 years, down ~15%), but management says targeted high‑margin deepwater bolt‑ons, divestments (e.g., SPDC, Adura JV) and selective M&A/exploration should close short‑term gaps while keeping a value‑accretive, patient approach to longer‑term resource replenishment.
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Earnings Conference Call
Shell Q4 2025
00:00 / 00:00

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Operator

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. If you would like to ask a question, please press star one. If you wish to be removed from the queue, please press star two. We will now begin the presentation.

Wael Sawan
Wael Sawan
CEO at Shell

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 continued 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.

Wael Sawan
Wael Sawan
CEO at Shell

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-$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 three 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-$22 billion, and we ended 2025 in the middle of that range.

Wael Sawan
Wael Sawan
CEO at Shell

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 in 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%-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.

Wael Sawan
Wael Sawan
CEO at Shell

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 multi-year 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 and 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 the aim of growing our LNG sales through to 2030 by 4%-5% per annum, and last year, those sales grew by 11%, supported by the highest number of cargoes delivered in a single year.

Wael Sawan
Wael Sawan
CEO at Shell

This record was supported by last year's startup of LNG Canada, where ramp-up to full capacity is continuing. Beyond 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 bbl 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 a quarter of that new production. We have also further strengthened our deepwater position by increasing our interests in the Gulf of Mexico, in Brazil, and in Nigeria, and we took final investment decisions for the Kaikias water flood in the Gulf of Mexico and for Gato do Mato, now renamed to Orca, in Brazil.

Wael Sawan
Wael Sawan
CEO at Shell

In addition, we have expanded our footprint for exploration by acquiring acreage in Angola, South Africa, and the Gulf of Mexico. 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 low emissions part of our strategy. At CMD23, we said we would invest between $10 billion-$15 billion in low-carbon energy solutions between 2023 and 2025, which we have delivered on.

Wael Sawan
Wael Sawan
CEO at Shell

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 targets, starting with our target to have 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%-20% by 2030. We're on track, delivering 9% in 2025, compared with 2016.

Wael Sawan
Wael Sawan
CEO at Shell

Linked to that, we also set an ambition to reduce customer emissions from the use of the oil products we sell by 15%-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.

Sinead Gorman
Sinead Gorman
CFO at Shell

Thank you, Wael. Our financial results in the fourth quarter of 2025 were lower, due to non-cash 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 non-cash 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.

Sinead Gorman
Sinead Gorman
CFO at Shell

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 Mexico and Brazil.

Sinead Gorman
Sinead Gorman
CFO at Shell

In Downstream and Renewables and Energy Solutions, mobility and lubricants delivered higher margins through increased sales of premium products, while also reducing operating costs. As a result, both businesses continued 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 and 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 and energy solutions business performed in line with expectations. Now, moving to our financial framework. Our cash CapEx range for 2026 remains at $20 billion-$22 billion.

Sinead Gorman
Sinead Gorman
CFO at Shell

We continue to maintain a strong balance sheet with gearing of 21% or 9%, excluding leases, and our distribution range of 40%-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.

Wael Sawan
Wael Sawan
CEO at Shell

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.

Wael Sawan
Wael Sawan
CEO at Shell

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

We will now begin the question and answer session. People dialed in, if you have a question, please press star one. If you wish to be removed from the queue, please press star two.

Operator

...Phone callers are requested to mute the audio on their computer webcast and listen attentively to their telephone audio as we begin to progress through the telephone questions.

Wael Sawan
Wael Sawan
CEO at Shell

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?

Head of Investor Relations at Shell

Our first caller is Alastair Syme from Citi.

Alastair Syme
Alastair Syme
Managing Director at Citi

Thanks. Hi, Wael and Sinead. I feel obliged to kick us off on reserves. You’ve listed a huge amount of portfolio refocus in the upstream, and, but I, you know, I guess to show we’ve had three 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 has 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? You know, how do we frame the timeline around hurry, and, yeah, how can you counter the market concerns that the business is simply shrinking? Thank you.

Wael Sawan
Wael Sawan
CEO at Shell

Yeah. Thank you very much, Alastair. I'll suggest I kick off, and then maybe, Sinead, bring you in. Yeah, 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-$7 billion range.

Wael Sawan
Wael Sawan
CEO at Shell

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+ billion at a slightly lower capital diet. So all of that is showing the growth. But then let me come specifically to, 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.

Wael Sawan
Wael Sawan
CEO at Shell

I mentioned in Capital Markets Day that we had a gap to 2030 that was close to 100,000 bbl 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 bbl per day. So that actually gives us the runway to be able to de-risk 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.

Wael Sawan
Wael Sawan
CEO at Shell

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 de-risking 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 1 million bbl per day of new capacity we're bringing in. Last year, we brought a quarter of that. We have another 750,000 bbl per day to bring online.

Wael Sawan
Wael Sawan
CEO at Shell

We have exciting new projects like Bonga South West that is also coming in the post-2030 timeframe. We need to be able to move those things through, but the core continues to, to be one of real focus on proper capital stewardship as we unlock that, that future cash flow. Sinead, maybe you want to add a few words?

Sinead Gorman
Sinead Gorman
CFO at Shell

Yeah, 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 over 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 over P. So roughly speaking, we're at about 7.8 years, as you know, now, which it came down from nine. How did we and what were the decision-making between coming down from nine? Two main elements of that.

Sinead Gorman
Sinead Gorman
CFO at Shell

One was the SPDC sale, 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'd 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 moved towards deep water. What did that do?

Sinead Gorman
Sinead Gorman
CFO at Shell

The fact that we put it into deep water, and that was Gulf of Mexico, 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 over P or the impact on the R over P. We chose to go with high margin, therefore, creating value rather than just trying to manage to a metric. 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.

Wael Sawan
Wael Sawan
CEO at Shell

... And so let me close then, Alistair, 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.

Wael Sawan
Wael Sawan
CEO at Shell

Thank you for that question, Jake. Let's have the next question, please.

Head of Investor Relations at Shell

Our next caller is Josh Stone from UBS.

Josh Stone
Josh Stone
Head of European Energy and Equity Research at UBS

Yeah, thanks, and good afternoon. Just a question on the buybacks. I'm curious as when you set up the buyback, how much of a close call that was this quarter? 'Cause 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 have 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.

Wael Sawan
Wael Sawan
CEO at Shell

Thanks for the question, Josh. Sinead?

Sinead Gorman
Sinead Gorman
CFO at Shell

Yeah, no, happy to take that. Thanks, Josh. Really good question, and, and what I like is you're, 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, to the buybacks and where do we go in 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 three 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.

Sinead Gorman
Sinead Gorman
CFO at Shell

We've always said to you that sort of 40%-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 it was 52%, but, you know, 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.

Wael Sawan
Wael Sawan
CEO at Shell

Thank you for that, Josh. Next question, please, Jake.

Head of Investor Relations at Shell

Our next caller is Irene Himona from Bernstein.

Irene Himona
Irene Himona
Managing Director of Oil and Gas at Bernstein

Thank you very much. Good afternoon. I had two, please. 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, etc. And then secondly, looking at group return on capital, obviously, it is below double digits. It's clearly not helped by widening chemicals losses. The chemicals downcycle appears to be a really prolonged one, which is clearly something that cannot be controlled. 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.

Wael Sawan
Wael Sawan
CEO at Shell

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

Sinead Gorman
Sinead Gorman
CFO at Shell

Certainly. Indeed, Adura, really pleased, Irene, to see that actually up and running with our partner on the first of December. Teams are doing well there. It's, it's really is a standalone 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 standalone 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.

Sinead Gorman
Sinead Gorman
CFO at Shell

In contrast, what you will see, as you exactly rightly say, we'll see dividends coming in. We don't tend to give guidance, of course, it's a standalone venture, as you know, but we expect to see considerable dividends coming through. 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, you know, standalone producer, independent in the North Sea now, and they're looking at many more opportunities, and they're driving hard to be able to return to the shareholders, the dividends that they've rightly promised us.

Wael Sawan
Wael Sawan
CEO at Shell

Thanks, Sinead. Irene, to your second question around group ROACE and then the chems. So a couple points, maybe. I think 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.

Wael Sawan
Wael Sawan
CEO at Shell

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 percentage points on ROACE as well between 2024 and 2025. 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.

Wael Sawan
Wael Sawan
CEO at Shell

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.

Wael Sawan
Wael Sawan
CEO at Shell

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.

Wael Sawan
Wael Sawan
CEO at Shell

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. Thank you for the question, Irene. And Jake, if we can take the next question, please.

Head of Investor Relations at Shell

Our next caller is Biraj Borkhataria from RBC.

Biraj Borkhataria
Biraj Borkhataria
Global Head of Energy Transition Research at RBC

Hi, Wael and Sinead. Thanks for taking my questions. 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, you know, the size of that business and the contribution and I guess the outlooks. So my question on that front is, you know, why aren't you moving faster to reduce costs specifically there, or is that building options for the future, or there's something else? And then just the second question, a follow-up to the resource one. In the past, and even today, you've mentioned you want to be countercyclical.

Biraj Borkhataria
Biraj Borkhataria
Global Head of Energy Transition Research at RBC

So I guess there's a balance between, you know, 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, they... 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, and the competitive landscape would be helpful there. Thank you.

Wael Sawan
Wael Sawan
CEO at Shell

Biraj, thank you for those questions. Let me take the second one and maybe give you the, the first one, Sinead. Look, you know, I think, you heard me, Biraj, in the third quarter results, open up this 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, 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, we had started with a capital budget of $25 billion-$27 billion. We took it down to $22 billion-$25 billion in CMD23.

Wael Sawan
Wael Sawan
CEO at Shell

We took it down to 20-22 in CMD 25, 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?

Wael Sawan
Wael Sawan
CEO at Shell

Where we can synergize, not simply buying the barrels, but where we think we can bring particular technologies, where we have synergies with existing, existing assets. You've seen us do deals in Brazil, in Nigeria, in the Gulf of Mexico. 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.

Wael Sawan
Wael Sawan
CEO at Shell

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?

Sinead Gorman
Sinead Gorman
CFO at Shell

Indeed, and thanks, Biraj. You're absolutely right in terms of cost being a focus over the last period, but it's been cost in, 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 had talked, or the band that we talked about as a target for Capital Markets Day 2025, 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.

Sinead Gorman
Sinead Gorman
CFO at Shell

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 it 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.

Sinead Gorman
Sinead Gorman
CFO at Shell

And remember, that RES portfolio or that renewables portfolio is continuing to change, and actually we've done more than 15 deals over the last two years in that space, more than, more than half of them, actually within the last year as well. So more to come.

Wael Sawan
Wael Sawan
CEO at Shell

Thanks, Sinead, and thank you for the question, Biraj. Jake, can we take the next question, please?

Head of Investor Relations at Shell

Our next caller is Paul Cheng from Scotiabank.

Paul Cheng
Paul Cheng
Managing Director at Scotiabank

Hi, good morning or good afternoon. Where can you talk about the new opportunity set? 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 open up of these countries will compound the oil market over supply, and if that is the case, how will you shape your capital allocation outlook, if any? Thank you.

Wael Sawan
Wael Sawan
CEO at Shell

Thanks for the question, Paul. Look, let's start maybe first from a longer-term perspective. So we continue to see growth in energy demand, well, through to 2020, 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 bbl 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 bbl per day. So longer term, the fundamentals continue to be very constructive, I would say, on oil.

Wael Sawan
Wael Sawan
CEO at Shell

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 balance 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.

Wael Sawan
Wael Sawan
CEO at Shell

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

Wael Sawan
Wael Sawan
CEO at Shell

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. Thank you, Paul. Jake, let's have the next question, please.

Head of Investor Relations at Shell

Our next caller is Michele Della Vigna from Goldman Sachs.

Michele Della Vigna
Michele Della Vigna
Managing Director at Goldman Sachs

Thank you very much for taking my question. 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.

Michele Della Vigna
Michele Della Vigna
Managing Director at Goldman Sachs

Just wanted to have, if possible, some of your thoughts on that. Thank you very much.

Wael Sawan
Wael Sawan
CEO at Shell

Thank you, Michele, and let me, 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, into Europe.

Wael Sawan
Wael Sawan
CEO at Shell

You consider now where we are also in the current cycle, even if you think short-term and mid-term, just at the moment, we're looking at storage levels in Europe at the low 40%, compared to the five-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-$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?

Wael Sawan
Wael Sawan
CEO at Shell

I think we are incredibly privileged to have such a diverse set of 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 in indexations to whether it's Brent, TTF, we can sell on Henry Hub or AECO, and so on and so forth.

Wael Sawan
Wael Sawan
CEO at Shell

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. Thank you for that, Michele. Jake, let's go to the next question, please.

Head of Investor Relations at Shell

Our next caller is Kim Fustier from HSBC.

Kim Fustier
Kim Fustier
Senior Global Oil and Gas Analyst at HSBC

Hi. Good afternoon. Thanks for taking my question. I wanted to go back to chemicals. Last quarter, you talked about cutting several hundred million 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 four to five 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.

Kim Fustier
Kim Fustier
Senior Global Oil and Gas Analyst at HSBC

You've talked about that, and yet we're seeing Shell continuing to put assets up for sale on 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. Thank you.

Wael Sawan
Wael Sawan
CEO at Shell

Thank you. 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.

Sinead Gorman
Sinead Gorman
CFO at Shell

I think you just did 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.

Wael Sawan
Wael Sawan
CEO at Shell

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 costs 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. Thank you for those questions, Kim. Jake, let's go to the next question, please.

Head of Investor Relations at Shell

Our next caller is Martijn Rats from Morgan Stanley.

Martijn Rats
Martijn Rats
Chief Commodity Strategist and Head of European Oil and Gas Equity Research at Morgan Stanley

Hi. Hello. I've got two questions, if I may. I wanted to ask about trading. Sort of full year results, so was sort of a good one. I know throughout the year 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 base points, 400 base points. Usually, they live in sort of that sort of ranges. In 2025, broadly speaking, were we at the upper end of that range, lower end of the range? What was really the contribution of trading? And then the other one I wanted to ask, maybe a small point, but it relates to Kazakhstan.

Martijn Rats
Martijn Rats
Chief Commodity Strategist and Head of European Oil and Gas Equity Research at Morgan Stanley

There seem to be some punchy compensation claims coming from the government of Kazakhstan. Now, it's not that we've seen these, you know, we've seen these before, but I was hoping you could share some perspective on that situation.

Wael Sawan
Wael Sawan
CEO at Shell

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

Sinead Gorman
Sinead Gorman
CFO at Shell

Yeah, 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.

Sinead Gorman
Sinead Gorman
CFO at Shell

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%-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.

Wael Sawan
Wael Sawan
CEO at Shell

Thanks, Sinead. Martijn, on Kazakhstan, it would be inappropriate, of course, of me to sort of get into details around that, given there are 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 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.

Wael Sawan
Wael Sawan
CEO at Shell

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 at that, at that point for now. Thank you for the question. Jake, let's go to the next question, please.

Head of Investor Relations at Shell

Our next caller is Lydia Rainforth from Barclays.

Lydia Rainforth
Lydia Rainforth
Managing Director of Energy and Energy Transition Equity Research Analyst at Barclays

Thanks, and good afternoon to you both. 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 link to that, so obviously, you already achieved $5 billion in structural cost savings. Target is $5 billion-$7 billion by 2028, so why not lift that? And then secondly, I mean, just, you took the idea that there's more to come. The free cash flow growth to share target or ambition of more than 10% out to 2025 or out to 2030. 2025 with sub 5%. So was that a disappointing number to you, or was it just as you expected?

Lydia Rainforth
Lydia Rainforth
Managing Director of Energy and Energy Transition Equity Research Analyst at Barclays

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 2026, or is it more 2028 to 2030? Thanks.

Wael Sawan
Wael Sawan
CEO at Shell

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.

Sinead Gorman
Sinead Gorman
CFO at Shell

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, 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 were 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.

Sinead Gorman
Sinead Gorman
CFO at Shell

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

Wael Sawan
Wael Sawan
CEO at Shell

Yeah. 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-$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. Agentic 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 our trading and supply.

Wael Sawan
Wael Sawan
CEO at Shell

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.

Wael Sawan
Wael Sawan
CEO at Shell

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 agentic 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. Thank you for that, Lydia.

Wael Sawan
Wael Sawan
CEO at Shell

Let's go to Jake.

Head of Investor Relations at Shell

Our next caller is Lucas Herrmann from BNP Paribas.

Lucas Herrmann
Lucas Herrmann
Managing Director at BNP Paribas

Yeah, thanks very much for the opportunity, and, Wael, Sinead, good afternoon. A couple, if I might, just going back to Alastair's opening question. When you think about resource and you think about resolving, you know, the resource issues, for want of a better word, are we sort of... Do you think, are we really thinking about resolving for a deep water issue in that, you know, that's your greatest strength, shall we say, or 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, you know, very attractive. So question one is really just back on Alastair's, what are we trying to resolve for? And question two, far easier.

Lucas Herrmann
Lucas Herrmann
Managing Director at BNP Paribas

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, you know, incremental LNG volume coming from Calcasieu, from, I don't know how free tons are around Pavilion. You know, volume coming in from Plaquemines, volume coming in from Canada, obviously. So it feels as though, you know, we're at a point now where LNG, in volume terms at least, should really start to drive improvement. Perhaps you can add to that by just commenting on where Nigeria Train 7 is and what your thoughts on timing are there. Thanks very much.

Wael Sawan
Wael Sawan
CEO at Shell

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.

Wael Sawan
Wael Sawan
CEO at Shell

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

Sinead Gorman
Sinead Gorman
CFO at Shell

... 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 it in terms of now up and ramped, ramped up and getting to its full potential. We've got some 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 do we do with those? At the moment, we've quite a balanced portfolio. We don't have a lot of additional length, and we talked about that before.

Sinead Gorman
Sinead Gorman
CFO at Shell

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%-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.

Wael Sawan
Wael Sawan
CEO at Shell

Thanks, Sinead, and thank you, Lucas. Jake, can we take the next question, please?

Head of Investor Relations at Shell

Our next caller is Doug Leggate from Wolfe Research.

Doug Leggate
Doug Leggate
Managing Director and Senior Research Analyst at Wolfe Research

Hi, good morning, everybody. Thank you, or good afternoon. Thanks for taking my questions. Wael, I know this reserve number, you've kind of inherited that. It's been flogged to death today, but I wanna 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? Thanks.

Wael Sawan
Wael Sawan
CEO at Shell

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, 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 flatline 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 our of our reservoirs, really focus on making sure that we are going after every drop, that is really unlocking value.

Wael Sawan
Wael Sawan
CEO at Shell

I mean, remember, these reservoirs, we're barely scratching the surface of 25%-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 in 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.

Wael Sawan
Wael Sawan
CEO at Shell

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 them, 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, 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.

Wael Sawan
Wael Sawan
CEO at Shell

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?

Sinead Gorman
Sinead Gorman
CFO at Shell

Indeed. Doug, good to hear from you. You ask 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's talked to that. It'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, you know, if I take you through it, in terms of return on capital, we are clearly entering into a phase of capital reallocation.

Sinead Gorman
Sinead Gorman
CFO at Shell

You see it in what we're doing. You see on where we are moving our capital to in terms of allocating it more and more towards the upstream and integrated gas areas versus where it would've 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%-50% in terms of distributions, 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, you know, some 20% in terms of gearing.

Sinead Gorman
Sinead Gorman
CFO at Shell

Now remember, we've had a range of 10%-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%, um, is very healthy, and 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, our... You know, one of the things that you ask is: How is that going to be in terms of net debt?

Sinead Gorman
Sinead Gorman
CFO at Shell

If you look at the three-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, three-quarters 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, that had an impact in terms of equity as well.

Sinead Gorman
Sinead Gorman
CFO at Shell

I'm very comfortable with where we are in terms of a balance sheet perspective and where we are from a net debt. 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. We're comfortable with the position of where we're at.

Wael Sawan
Wael Sawan
CEO at Shell

Thank you, Sinead. Thank you for the question. Jake, let's take the next question, please.

Head of Investor Relations at Shell

Thank you. As a reminder, please, can we keep questions to one per analyst? Thank you. Our next caller is Henry Tarr from Berenberg.

Henry Tarr
Henry Tarr
Director and Co-Head of Energy and Environment Research at Berenberg

Hi, and thanks for taking my question. 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 gonna be allocated towards exploration, and do you have a plan for sort of improving some of the returns there? Thank you.

Wael Sawan
Wael Sawan
CEO at Shell

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 made sure that we are really restraining the, the capital that we're putting into exploration to something that we feel is fit for purpose. So this is not a, an open bucket, let's go back to the swashbuckling days of, 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, 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.

Wael Sawan
Wael Sawan
CEO at Shell

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.

Wael Sawan
Wael Sawan
CEO at Shell

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. Thank you for the question, Henry. Jake, let's go to the next question, please.

Head of Investor Relations at Shell

Our next caller is Christopher Kuplent from Bank of America.

Christopher Kuplent
Christopher Kuplent
European Energy Analyst at Bank of America

Yeah, thank you. Well, 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's 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?

Christopher Kuplent
Christopher Kuplent
European Energy Analyst at Bank of America

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 Two or whether it's a farm down there. Thank you.

Wael Sawan
Wael Sawan
CEO at Shell

You wanna start with that one?

Sinead Gorman
Sinead Gorman
CFO at Shell

Yeah, no, absolutely. Thanks, Christopher. And indeed, you know what I will always say on anything 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 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.

Sinead Gorman
Sinead Gorman
CFO at Shell

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 there 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. You know, 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, you know, over 9x EBITDA as well.

Sinead Gorman
Sinead Gorman
CFO at Shell

It's those sorts of things that we will continue to look to do.

Wael Sawan
Wael Sawan
CEO at Shell

...And to Sinead's point, there, Chris, the 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.

Wael Sawan
Wael Sawan
CEO at Shell

It used to be at the higher end of the 60-70 range, and now we're closer to the lower end of that 60-70 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.

Wael Sawan
Wael Sawan
CEO at Shell

Now, as we look at some of the other opportunities, I'm sure things will continue to evolve, and, 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, 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, in our books. And, 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. Thank you for that question, Chris, and let's go, Jake, to the next question, please.

Head of Investor Relations at Shell

Our final caller is Ryan Todd from Piper Sandler.

Ryan Todd
Ryan Todd
Managing Director and Senior Research Analyst of Integrated Oils, E&P, Refining and Biofuels at Piper Sandler

Great, thanks. 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 a 2027 FID there in Nigeria. Can you talk about what hurdles you need to clear over the next 12-18 months to reach FID? And then maybe more broadly, could you talk about the broader resource opportunity in Nigeria and other, you know, 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?

Wael Sawan
Wael Sawan
CEO at Shell

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?

Wael Sawan
Wael Sawan
CEO at Shell

A key condition precedent was a set of fiscal supports 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 a 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 Nwa-Doro.

Wael Sawan
Wael Sawan
CEO at Shell

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. So we are actively going after those and developing them. Of course, where we continue to have a lot of momentum is in Brazil and in the Gulf of Mexico, 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...

Wael Sawan
Wael Sawan
CEO at Shell

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.

Wael Sawan
Wael Sawan
CEO at Shell

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 us.

Executives
    • Sinead Gorman
      Sinead Gorman
      CFO
    • Wael Sawan
      Wael Sawan
      CEO
    • Head of Investor Relations
Analysts
    • Alastair Syme
      Managing Director at Citi
    • Biraj Borkhataria
      Global Head of Energy Transition Research at RBC
    • Christopher Kuplent
      European Energy Analyst at Bank of America
    • Doug Leggate
      Managing Director and Senior Research Analyst at Wolfe Research
    • Henry Tarr
      Director and Co-Head of Energy and Environment Research at Berenberg
    • Irene Himona
      Managing Director of Oil and Gas at Bernstein
    • Josh Stone
      Head of European Energy and Equity Research at UBS
    • Kim Fustier
      Senior Global Oil and Gas Analyst at HSBC
    • Lucas Herrmann
      Managing Director at BNP Paribas
    • Lydia Rainforth
      Managing Director of Energy and Energy Transition Equity Research Analyst at Barclays
    • Martijn Rats
      Chief Commodity Strategist and Head of European Oil and Gas Equity Research at Morgan Stanley
    • Michele Della Vigna
      Managing Director at Goldman Sachs
    • Paul Cheng
      Managing Director at Scotiabank
    • Ryan Todd
      Managing Director and Senior Research Analyst of Integrated Oils, E&P, Refining and Biofuels at Piper Sandler
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