We are nine joints by Wales so On CEO of Shell so Wale, good morning. Thank you for joining us on the buyback then three point five billion RBC. Before these results, one of their allets came out and said you could raise that buyback it's a four billion. Are you being overly conservative on the return of cash to shareholders?
Thank you for the opportunity this morning. What I'd say is we have actually announced in June of last year that we wanted to go on what we called our first ten quarter sprint, which just drove the fundamentals of the company to become much stronger, lower cost. We have now announced one point seven billion dollars of cost takeout, more capital, discipline, improved operational performance, all allowing us to
continue to be able to indeed enhanced shareholder distributions. We've talked about thirty to forty percent of our cash flow from operations going to distributions, and you're right to say that we are with the three point five billion dollars. We've been approaching the higher end, if not slightly above the forty percent. And what we continue to focus on
is consistency of delivery. This is not about simply one quarter after the next, looking at what we can do from a distribution's perspective, but looking through this period and continuing to make sure that we are able to reward our shareholders consistently at the higher end while continuing to moderately deleverage and invest in our businesses. So overall, we like the balance of where we are at the moment.
Do you like the balance of the mix, though, in terms of the upstream during the heavy lift, the downstream looking a little vulnerable, refining margins still a little soft. Well, is the business vulnerable if oil moves low? You've benefited from eighty five dollars hour all over the quarter. That environment could change.
It's fair to say that we have seen in essence, normalization of prices and margins across the energy system back down to pre twenty twenty two levels, whether you're talking refining margins, whether you're talking LNG prices, even power prices. We are building a company that is actually resilient to the low side of the prices as well, and that's critical for us. We create value through the cycles, and what we have done is by taking at some of
our costs, by really focusing on the capital discipline. We believe that we have an organization, a company that is able to continue to buy back shares to as low as fifty dollars oil price that puts us in a good situation. Our balance sheet is the strongest that it has been in a very, very long time, and our fundamental business model continues to work. While indeed we enjoy
the upside during high commodity prices. It's important to recognize our marketing business particularly performs really well when you see commodity prices go down, and of course we have the world's leading trading business which also allows us to take
advantage of those volatility moments. So by and large, we like this model we have of a multi energy vector company that allows us to be able to win in today's energy system, but also importantly to continue to win in the lower carbon energy system of the future, of which we are committed to play our role.
Talk there, good morning to you. Talk there about the resilience of the business down to fifty dollars barrel. In terms of the oil price. Clearly there's a lot of focus on whether we see a higher oil price from here, partly perhaps driven by geopolitical tensions. We haven't necessarily seen prices come in as high as they could have done since the most recent bout of Middle East tension. What are you braced for? What do you think could happen on oil prices as a result of this?
Geopolitics very difficult to predict. It's fair to say that at the moment we see that the physical markets are well balanced, if anything slightly tight, in particular on crude. Going into the summer season, we saw stock draws all
across the world except for China. I think the biggest determinant of where prices might go is a combination of indeed, as you mentioned, geopolitics, but critically OPEC's decision in the coming weeks, around the pace at which it unwinds its cuts, and of course the Chinese demand, of which there are
mixed signals at the moment. And so what we try to do is to focus on what we can control, and what we can control is everything from our own cost structure, our capital discipline, our operational performance, and the portfolio choices we make. We want to make sure that we are allocating our capital in the most responsible way we can.
Okay, and so with that in mind, well you might not like this question, which maybe you think is something you can't control US politics. I wonder what's at stake there, though, because you do have to think about these things even when you can't control them. LNG markets in particular, do you see the USLNG landscape shifting considerably dependent on whether we have a Harris or a Trump administration.
We don't see major shifts in the short to medium term. These projects that are being talked about would only come which are being held at the moment, would only really sort of start up towards the end of this decade early the next decade, and so for the next five to six years, whatever is in the funnel and and already sort of under construction will be what comes into
the market. But indeed, as I've said in the past, the biggest issue is the LNG markets like any other energy market that looks at long term fundamentals, requires stability, requires consistency, requires predictability, and any major policies that start to rattle investors in those big infrastructure projects can potentially undermine confidence in that market, which which I think would be a real miss given the incredibly important role that
LNG in particular will need to play. In the energy transition, both from an energy security perspective but also from an energy transition perspective for call to gas switching.
Are you getting that? Are you getting that reassurance? Here? In the UK? The new Labor government raising the windfolds ax on energy players here. What is your response to that move.
Look, we've invested for a long long time in the UK and in successive recent government means what we have seen is changes to the overall framework for the energy system.
For the energy investments. The number one thing we look for when we look to invest, Given the nature of our investments, which typically are long term investments, multidecadal investments, both by the way, in the conventional energy space as well as in the new energy space, what we look for is physical and regulatory stability and anything that potentially
destabilizes that, of course, is not welcome. And so what we continue to do is to engage constructively with the government to be able to clearly express our views and then to respond to the signals that the government chooses to put into place.
Have you already been engaging with the government, Well, what are the early signals You're guessing we.
Have been engaging with the government for several weeks now, and we expect continued engagement in the coming weeks. I continue to hope for a balanced approach, recognizing some of the challenges that the incoming government is trying to deal with. But at the same time, what we can do from a SHELL perspective is to advise on what are the key ingredients of an investment climate that will be conducive to the sources of investment that are able to support
any government as it's thinking about its energy policy. We've said to many governments we are willing partners in their efforts to establish energy security and decarbonize their energy grid as long as it makes sense from a strategic perspective for us, and as long as we see the stability that is required.
Well, thank you very much, thanks for joining us. Well so on the CEO of Shell.