Ladies and gentlemen, if we can please make it start. We have 2 hours for presentations and Q&A. So I want to try and get this started on time so that we can maximize that. Okay. Ladies and gentlemen, I'm very pleased to welcome you to Statoil's Capital Markets Day live in London, and to those joining on the phone and on the Internet. My name is Peter Hutton, Head of Investor Relations. We have 3 formal presentations today of between 20 and 25 minutes, followed by 45 minutes of questions and answers both from here and on the telephone. To open our proceedings, we have Eldar Sætre, the CEO of Statoil, a position in which I'm delighted to say he was confirmed earlier this week. He will be followed by Torgrim Reitan, the CFO, and Margareth Øvrum, Head of Projects, Technology and Drilling. But first off, within Statoil, I have a safety moment, which I'd like to read out. If there's an emergency situation, if an emergency situation should occur while we are here, the evacuation significant signal is a voice system announcement. Please use the fire exits within the venue in an emergency situation and follow the signs and exit at ground level. That having been said, we have no plans for any fire drill today, so if there's a rush for the doors, perhaps it's people running out to buy the stock. First on that note, I'd like to welcome Eldar to start this on the first presentation this morning. Thank you very much. Eldar Sætre: Thank you, Peter, and good morning, ladies and gentlemen. It's really good to see you all, I have to say. Times of uncertainty require leaders that see opportunities and can make adjustments whenever that is the right thing to do. And…

Thank you, Eldar, and good afternoon, everyone. This morning, we announced our fourth quarter and 2014 results. And I'm sure that you have already looked at the numbers, so I will go briefly through the highlights and then I will spend time on our priorities. As Eldar said, the uncertainty is large. But we are well prepared, and we are well-positioned to capitalize on all price scenarios. Using our massive CapEx flexibility and improving oil projects, stepping up further on our efficiency and then maintaining robust financials. But first, let me take you through the results. In 2014, we delivered strong results. We maintained stable underlying cost. However, earnings were impacted by prices and by impairments. We produced more than 1.9 million barrels per day, and this is well above the guiding. Start-ups and ramp-ups contributed as did strong regularity. Our organic CapEx was $19.6 billion. That was in line with our guiding, and lower reserve replacement was solid, 95%, 96% organic. And our 3-year average is now 117%. Exploration added 550 -- 540 million barrels from the drill bits. And our projects are on cost, and they are on schedule like in Gudrun and the Valemon platform. And we announced divestments of $4.3 billion in proceeds in a higher price environment, and this has given gains of $2.6 billion. And finally, our dividend policy is firm, and we propose a dividend of NOK 1.80 per share in the fourth quarter. And this means NOK 7.20 for the full year. And this is our step-up from NOK 7 in 2013. In 2014, the adjusted earnings were NOK 136 billion. It is down from last year mainly due to lower prices. Adjusted earnings also fell in the quarter to NOK 26.9 billion due to operations resulting in high production, but lower…

Thank you, Margareth. While we're just moving these onto the stage, and first of all, Eldar, Torgrim, Margareth, thank you for 3 on-time delivery. That leaves us with a little bit more time for Q&A, in which I think is important. Ladies and gentlemen, we will now open for questions. We do have microphones. And can I ask that when you're given the opportunity to ask a question, you use that microphone and you introduce yourself so that people who are following us on line on the Internet can see what the, can hear what the question is and who is answering it. We have a lot of people in the audience today and a lot of people on the phone. So I'm afraid, I'm going to be fairly wicked in terms of polling for questions. And I'm going to ask just for 1 each and 1 which is not broken into 2, 3 or 4 subparts. I know the trick, I've been on the other side of the table. So if I could ask Eldar and Torgrim and Margareth to come on. And we'll start to take the questions, okay?

Okay, now I start in the front of the room. Jon? Jon Rigby.

So I'll -- I guess, discipline has to be -- would have been a slip into the 2s and 3s but that would have gotten half an hour later, so can I just go -- it's evident, actually, one area that wasn't discussed very much, which is exploration other than to say that sort of reiteration of the fairly large budget. Can you talk a little bit about given, I guess, the way that accounting works, you take the cost but not the benefit, have you gotten any metrics or measures about how much value your exploration has contributed across the cycle so we can make some sort of judgment about that? Because clearly, the cost is scarring the historical cost accounts right now, but obviously, the value of some of the things you discovered over the last 3 or 4 years are not yet appearing on your sort of accounting valuation. Eldar Sætre: So I think it should be recognized that we have added quite substantial volume of barrels to our resources through exploration over the last few years, and I think you see an evidence of that in the list of projects that was on -- shown by Torgrim. And I guess, the most profound evidence is through the Johan Sverdrup project. So I think this is translating into concrete projects, and that's the time where you actually see the true value of the barrels being demonstrated in the exploration phase. This is about finding the hydrocarbons and then you start working on it and see how you can develop these into valuable resources. Internally, obviously, we have value estimates, but it's a difficult technology to discuss that externally. So this is really what have we translated into concrete projects, and I think they're demonstrated over this year that we have added value barrels, for instance, over Norwegian continental shelf next to the Ghana field, high value, which will be -- still a prospect for Edvard Grieg going forward, and it's highly valuable as such. We have added barrels on -- in Tanzania during this year as well. That's the project that we're working extensively on, and it's progressing. And we're working on the cost side on that project, which was illustrated and mentioned also by Margareth in her presentation.

Can I come back to you as we get one agent, and then we'll -- now Jon, go. One more.

Are you able to just give us an estimate on what you think your return on investment across the cycle is on the exploration budget? Eldar Sætre: Now the return is actually -- will turn out as we are developing this into project. So defining that, at the portfolio level is -- remains to be seen as we see the outcome of the exploration result. But as we indicated today, maybe the most significant project that we have discovered lately, the Johan Sverdrup project with a profitability below USD 40 per barrel. But at the portfolio level, we haven't any information on that to present to you today.

Anish?

It's Anish Kapadia with Tudor, Pickering. I had a question on the U.S. business and this current environment. If you're kind of thinking of a $50 to $60 a barrel world, can just run through the number of rigs you'd expect to run in U.S. this year and kind of production expectations for each play? And also, the potential for any monetization, say, infrastructure, your pipeline assets that you've got in the U.S. related to those assets? Eldar Sætre: I'll leave that to Torgrim, actually.

Okay. Thank you, Anish. We have taken on the activity significantly in the U.S. offshore over the last few years. We see good value in waiting with some of the drilling currently. So we currently -- at year-end, we ran with 6 rigs in Bakken, 5 in Eagle Ford and also 6 in Eagle Ford. And then we have reduced further this year, so it's finding the right balance and the right activity level. What we also see is that our costs related to drilling and completion are coming significantly down, and then it's extremely important to be able to take care of the hydrocarbons, and in particularly, environments like this when it comes to infrastructure and so on. So it works, but of course, it is impacted by the current price environment. For the year as a whole, the value chain in unconventional is generating a return.

Haythem, in the middle?

I'm Haythem Rashed with Morgan Stanley. My question is just regarding the comments around the dividend and some of the priorities you outlined earlier. Perhaps a question [indiscernible]. Essentially, you've talked about the dividend as staying flat for the -- or intending to keep flat for the next 3 quarters. You also talked about a net debt to capital target or a ceiling of 30%. Just wanted to get your sense on sort of as we look beyond and if we do stay in periods of weak oil prices, how do you prioritize the 2? I mean, is there a situation where you find yourselves maxing out on your flexibility and also meeting your sort of high gearing and then having to reconsider the policy around the dividend? Or perhaps, just a bit around, that'd will be great. Eldar Sætre: We are highly committed to our dividend policy. It's essential to us that we're able to deliver competitive return in line with that policy. We have demonstrated that today, and we have also shown you the financial framework, where we will be able to do that also going forward in a wide range of scenarios from USD 60 to, obviously, USD 100 per barrel. The CapEx flexibility -- we have enough portfolio. It's a part of this, ready to expecting various types of price scenarios. And what we should remember then is that in -- if these price scenarios actually pay out, it will be a situation where it makes a lot of sense to delay the projects because they're simply not profitable in the current environment to be sanctioned. So fundamentally, this is a very consistent approach what will happen in those kind of dynamics, and it gives us very strong confidence that we will be able to honor and present the competitive dividend through the cycle in whatever type of commodity environment that we will see all the way from USD 60 to USD 100.

Okay. Can you take one more from the Lydia from the floor here? Then I'm going to switch over to the phones for another couple or 2 or 3, and then we'll be coming back here. Lydia?

It's Lydia Rainforth from Barclays. On -- in terms of the flexibility that you provided in the presentation, and that was unusually helpful. It seems that Statoil was doing all of the work. How much help do you actually expect from external [indiscernible] to the external cost inflation as well? And I apologize for the [indiscernible], the second part of that question is what was the most difficult part you're finding within the efficiency program right now? Eldar Sætre: I'll give you to Margareth. Margareth Øvrum: [indiscernible] so now without the attack then the market side, I think the most important is working together with the suppliers on the improvement projects, and we are working very closely now with our main suppliers, and I think that is mainly 8% of it. But of course, in these circumstances, we are also discussing and renegotiate and retender. And of course, as I said also in my speech today that we see decreases in the prices. So you have to use the -- you have the utilize the different dimensions you have, the opportunities to do. And of course, improvement is the most sustainable. And in a negotiation, you just -- normally, you need to give something and you get something. And if you -- somebody I hear from our peers, they are giving an oil index price, and then you are back again. So I give views. We spend a lot of time to -- on the improvement side because that is lasting improvements going forward. And it's not that easy to give duration or more on the balance in these circumstances either. So I think I -- I think the best is really to work on the improvement side because there is a lot to take out on efficiency gain.

What I'd like to do now is to open up to a couple of questions from the phone. So operator, I know you polled the questions already, but if you could do that one and take the first question over the phone, please?

Our first question today comes from Teodor Nilsen from Swedbank.

One question. It's related to the CapEx guidance for 2015. Could you give us some more details on the reduction from the 2014 level or the $20 billion? What is price effect? Or what is activity effect and what is the effect from divestments you did in 2014? Eldar Sætre: All right. Okay. Thank you, Teodor. So CapEx is on to $2 billion. From 2014, we are actually stepping up on strengthening projects by 10%, and we will invest in Johan Sverdrup, so that will be an important explanation of that. Then we are reducing activity within U.S. onshore. A few years back, we invested around $4 billion a year in that business. Now it is significantly below the half of that. And then we are reducing our investments into modification and projects under execution, so those are the main elements of it. It's -- in the constant currency impact, there is a light effect of currency impact there as well.

Our next question will come from Anne Gjøen with Handelsbanken. Anne Gjøen: Is it possible to indicate the share of oil linked contract from Norway and it's usually a gradual impact of lower oil price in such contracts with a 6- to 9- month lag? And is there a downside for floor price on those oil linked contracts? Eldar Sætre: Okay. I guess this is for me. Referred to my previous occupation. So we have now been through the process where we have come a long way in performing these contracts, modernizing these contracts, to put it that way. It's a job we should not -- Western part of Europe have been 100% complete. That's come a long way in Southern Europe and less so, as we move East. But obviously, our main markets is in the North and North Western part of Europe and partly, in the Southern part of Europe. So this has come a long way. In terms of exact percentages, I will not be very precise, but by far, much more than 75% of our portfolio is actually now linked to gas market pricing. And we expect the trend towards oil market pricing to continue, but it will -- might take some time until we are finally there. But I think this is a very good development, and I'm also very pleased that the EU -- the internal market report is really enhancing this as we move forward. The structure of the oil indexation is basically depending on each individual contract and you have the delay that you indicated, but beyond that, I cannot comment on more specifics on the contract really that we really have to look at the each individual contract.

One more from the phone, and then we'll come back to the room.

Our next question from the phone lines comes from John Olaisen with ABG.

You have -- you said that you have an ambition or plan to be covering dividend with free cash flow from -- in 2018 at an oil price of $60. How would that -- if that happens, oil price is $60 in 2018 and you cut CapEx so much that you're able to cover dividend at $60 in '18. How would that impact your more long-term ambition? And your long-term ambition has been stated at every Capital Markets Day or capital update or whatever we call this day over last few years to have been about 2.5 million barrels. So if that $60 price, would that still be the ambition to do 2.5 million or -- and 2.5 million, is that still the right ambition at some point in time? Eldar Sætre: Okay. Thank you, John. So covering dividend in 2018 at $60, it's part of all the planning framework that we use. Even in that oil price scenario, there are actually quite a few very interesting investment opportunities. A lot of the IOR efforts are very solid, that we planned for, and we also planned for quite a few developments. But there is actually quite a long list of projects that will benefit strongly for simplifying and taking out cost and making them even more robust. So in such a scenario, quite a few projects that need to wait for a while. And you're right, lower investments over many years will impact the longer-term growth of the company. But we are very cautious to also take a long-term perspective into what we're doing. Exploration, Johan Sverdrup and then maturing the whole set of investment opportunities. I've been working with planning for many, many years, and I have actually never seen such a prudent plan of opportunities. What we have on the table is sufficient to grow for more than 10 years, so this is a question of how hard we push on the accelerator.

So may I just add that the strategy is also leaving us with more robust projects for the future, so it's in fact, very consistent with what we always have said now that value is more important than volume, and it will really drive value into our portfolio.

I'm going to swing back into the room, and we'll come back here later on for some more questions on the phone. I move into the center, a question from Biraj.

Biraj Borkhataria, RBC. Just looking at your step-up program, and it looks like an additional $200 million on the CapEx side and $200 million in the OpEx side. How does that additional come out on the OpEx side compared to your total adjustable cost base? And are you seeing any industry inflation/deflation in that figure?

All right. On the improvement, the step-up in improvement, it is, first and foremost, related to modification, as Margareth said, our onshore business and also, field costs in Norway and drilling on wells. So in the current cost environment, the step loss will be further cost impact than what sort of we assumed.

Pass it along, and then we'll come forward.

It's Mark Bloomfield from Deutsche Bank. Question for Torgrim, please. In your presentation on, I think, Page 11, there was a chart you're showing, the range of operating cash flow numbers, a number of different oil price assumptions. If I read the chart correctly, it looks like you're receiving around a 20% to 25% improvement in cash generation at a broadly constant oil price between '15, '16 through to '17, '18. Guidance seems to suggest that volumes will be 7% higher -- 6% to 7% higher over that time. So perhaps, you can give us a sense of what the other moving parts are just to try and bridge that gap, get us to the 20% to 25%.

All right. It is actually mainly linked to projects over the execution that will come onstream. In 2015, we have 6 projects: Valemon. We have Julia, Edvard Grieg. We have fast track on Big Foot and Corrib and then furthermore, in the period afterwards. Quite a few of the projects comes out of the Gulf of Mexico, where they are not in a taxpaying position. So there will be more cash flow with the low taxes, so that is the main contributor to that growth.

Michael?

Michael from Citi. A question on exploration actually. I was a bit surprised you -- given the comments on flexibility that the exploration budget wasn't lower. Is that a function of the fact that you've got contracted rigs that you can't layoff? Or is it a function of what committed -- what commitments you have on your acreage? And perhaps, if you can give a bit of color as to where you're spending that money in to the -- on your exploration, that will be helpful. Eldar Sætre: So the level is partly reflecting certain commitments that we have in our exploration program, but it's also reflecting that fact that we would like to continue with exploration. At a high level, we want to be an exploration company also in the future, and we want to be as successful in the future as we've been in the past. So it is important for us for the longer-term value creation to keep up a decent exploration level, but at the same time, a tightening compared to what we have seen in last year. And in terms of where to spend the money, it is wide range of opportunities that we will include in the drilling program this year. We will drill further wells in Gulf of Mexico. The East Coast of Canada is a very important focus area for us this year. So we have a rig, which is -- we'll drill continuously for more than a year in the East Coast of Canada. And Brazil is also one of the activity areas. Norway, obviously, King Lear and other -- or opportunities that's surrounding King Lear and also other opportunities in Norway, so it's a wide range of opportunities all over across the globe.

In addition, last year, we had quite a bit of carrier in the exploration program from other partners, so the drop in activity is actually quite a bit higher than what you will read out of the numbers. Eldar Sætre: Just to also mention [indiscernible] actually Tanzania. We will have more wells to drill in Tanzania and U.K., where we access some quite interesting exploration acreage. We think there is more to be done on the U.K. mature sector, and we have added acreage, and that is also something that we'll -- hopefully, we'll be able to start doing exploration on during the course of this year.

Brandon?

It's Brandon Warn from BMO Capital Markets. Just in the past, you've given us some performance sort of range of indicators for the MPRE business, and I wondered if you can make some comments in a $60-oil price environment. And just what sort of contribution to free cash flow do you see from this business in 2016, please? Eldar Sætre: So basically, this is the margin business, and the margin is something to see whether it's USD 60 or USD 100. It's very much about volatility and the structures of the curves. That sort of sets the basis for making money, so I don't see any reason why USD 60 should be worse place to be in terms of making money. Obviously, refining margins have their own dynamics but it's not a big part of our portfolio, so we have guided on a range around $3 billion in -- going forward. This has been a good quarter, but we also had quarters below that. And I think, still, we maintained that as a guiding, but I'm very happy to see that we actually have been able to deliver an average this year, which is above that level.

And we take one more from the floor and then we'll go back to the phones. Gordon?

Gordon Gray at HSBC. Just to follow-up to the question on cash flow growth -- on the outlook for cash flow growth and that big uplift you're pointing to like-for-like oil prices versus last year. I appreciate the issue about the new projects coming onstream in margin accretion. Can you just outline -- I think earlier, you mentioned that the P&L tax rate would stay flat at around 70% in the next few years. Is that the case through the plan period? And in particular, if it is, can we expect to see the cash tax rate coming down from that appreciably at all because of uplift allowances or tax shield, et cetera? Eldar Sætre: Okay. Thank you. It's also the rule of taxes, so you should expect around 70% corporate tax at the normal. And then it's important for me to say that in a low price environment, you typically see a slightly higher tax rate. The way that taxes react to oil prices is very different from place to place. And the Norwegian tax system is a system that we think works well in the high price environment and the low price environment. It is a net income or net cash OpEx, so the reduction in oil price is sort of -- the tax system is part of dealing with that, so that is part of the explanation of the cash flows going forward here. So what -- in addition, we'll see is that we pay Norwegian taxes with the 6 months delay. So as oil prices drops, there will be sort of a lag of 6 months before the cash taxes follows on.

We'll take 2 more questions from the phone. While I'm doing that, I'm very conscious that it's easy to fall into trap of having a very narrow vision and taking questions from over here. So while we got a couple of phones -- a couple of questions from the phone, people on this side of the room, if you can let me know and I can stop and direct my attention when we come back over here. So first question from the phones, please?

Our first question again from the phone line comes from Christian Yggeseth with Arctic Securities.

Just a question, I guess, to Torgrim. Could you please specify the level of CapEx you used for calculating the $60 free cash flow to cover dividends for 2018?

Okay. I can't give you the exact CapEx number, but it lends itself that we will use significant part of our flexibility in such an environment.

And our next question now from the phone comes from Jason Kenney with Santander.

I was just wondering in the fourth quarter period whether your gas business had any unusual support because of the Ukraine situation and if that was assuming it might unwind in time? Eldar Sætre: I don't see the Ukraine situation having any major impact on the -- during the quarter. The gas prices in Europe is impacted by several factors. One of them is the temperature, and that has been pretty mild so far. And obviously, LNG. They're coming into the market. And in Asia, we have seen an impact from oil indexation and lower prices, which has also have some impact on the trading market for LNG, and that has led to more LNG coming into the European sector. So that basically what has created there or defined the fourth quarter prices that we have faced, and I see no doubt it impact from, at least, not that I can identify, impact from the Ukrainian situation as such.

Come back into the room and at the back there. There we go. Thank you.

Aneek Haq from Exane BNP. Similar-ish to the question that was asked earlier on the balance sheet, but I wondered if we can bring it back to the single A credit rating and maybe talk about some of the metrics that the agencies will care about and how they look at your $60 to $80, $100 a barrel range, please. And how important, obviously, the single A rating is in that context? Eldar Sætre: Okay, so thank you. So currently, we have a AA- with Standard & Poor's and we have a notch higher with Moody's asset credit rating. There are different KPIs or metrics that are used. It depends from operations from net debt is a key one that we follow very closely, so the important for us is to remain with a strong credit rating and also to run with significant liquidity through carriers like this. So it is something, of course, we also follow very closely.

Just in front of me.

Marc Kofler from Jefferies. I just had a question going back to the free cash flow framework that you outlined in the key moving parts, particularly given, as you've referred to the volatility, the oil price environment that we see at the moment. I was wondering, does that present any opportunities in terms of the portfolio structure from an inorganic perspective, particularly in the context of your existing footprint in the U.S. and the markets over there? Eldar Sætre: We have been pretty clear all the way since 2011 that inorganic ways of developing our portfolio, sharpening it or expanding is a key part of our toolbox, and I hope I have -- didn't give any indication today that, that is not still the case. So we see that we need to use that actively, and we have demonstrated that extensively, not the least during 2014. We just also contributed significantly to our balance sheet. So in this current environment, it's an obligation we have as part of what is going on to look for both opportunities that could even be opportunities to divest. And that is something we'd like to do, but also, to look at opportunities to acquire assets or whatever, so that's something we are doing. It's a very natural normal part of our business development, and it will continue to be so. This will be sort of mistake if I didn't sort of follow that market also closely even in this -- also in this environment.

Just next to you.

It's Hamish Clegg from Bank of America Merill Lynch. Just 2 questions to go. This one's to Torgrim. Talking about liquidity, something you mentioned. Are my numbers -- and you may correct me. It looks like debt maturities this year are kind of matching undrawn credit facilities and cash when you factor in the cash burn, and I was wondering if there was a deliberate reason you guided us to 3 quarters of flat dividends as opposed to 4. Is that keeping open a degree of flexibility for you on the balance sheet?

Okay. All right. Okay. The liquidity [indiscernible]. So I mean, we will run with a significant liquidity position. It is important to us. On the dividend, the reason why we talked about 3 quarters -- and maybe this is a confusing for one. It is the mechanics because what we have done earlier is that we have amongst a new dividend level at the fourth quarter and we have kept it on the same level for 3 quarters and then we have taken a step-up in the fourth quarter again. So it is just mechanics that we know, say, NOK 1.80 per quarter, and the intention is to keep that flat as we have done earlier during the year. So there is no signal beyond the 3 quarters, although than that the dividend policy remains firm.

Okay, forward.

It's Rob West from Redburn. Margareth, just going through the operational improvement details you've taken us through. I think now faced with the mountainous task of going through all different metrics in trying to add them up and getting to your $5 billion. To help with that, I find kind of useful to consider doing that and just that overall uptime operator platforms across your portfolio, which is quite useful to kind of compare with, with other people. And was that in '13 well within '14? And where are you trying to take it to? And how much of that $5 billion total does that get you to? Margareth Øvrum: Normally, we don't reveal these figures on the total uptime. But with the unplanned losses last year, it's 5% lower than -- percentage points lower than the year before and 7% less than in 2013. Eldar Sætre: Okay, just add to that because the overall regularity is impacted by other factors and losses, so that has to do with maintenance cycles and so on. We don't do that every year, so and so, and value can impact and so and so. What is really measuring our performance and indicating our performance is on the unplanned losses, which is the biggest chunk of defining our regular.

Yes, that's why I said -- I was wondering kind of how much lower can you take it than 4%...

Well, then that's probably less -- approximately 5% left, right? Margareth Øvrum: But this is really improvement the last year. It's -- and we are working on a very broad basis so both to make the facilities more robust, but it's also the operational people driving efficiency from a day-to-day basis. So I think very helpful targets, solving all bottom mix, et cetera, so it's a very combined effort. Eldar Sætre: Can I just add? So even when the production platform co-producing, so there are no unplanned losses. It is also a thing that you can be -- and actually optimizing the wells and making sure that we get the maximum out of the production when the facility is actually produced. Margareth Øvrum: And for instance -- I can -- can I add? For instance, on the Oseberg field pilot, this is really to increase production as well as increasing the regularity. So right now, we are -- we will broadly implement that pilot for the whole company also.

Neill?

It's Neill Morton at Investec. Your question on the international upstream business, results have proven quite volatile, particularly, in the quarter-to-quarter basis. Just for modeling purposes, can you maybe give us some guidance on unit OpEx and unit depreciation for 2015, the latter obviously, in light of the big impairments in 2014?

All right. Okay. Thank you. First one, on DD&A [indiscernible] but we're seeing a growth in DD&A. It is actually significantly impacted by currency. So the increase in DD&A is -- 2/3 of it is related to currency impact, and actually increased production. Internationally, we see a DD&A per barrel in dollar term to be flat over the year, so that's an observation. When it comes to operational costs, we have a similar effect there. There is a 9% growth in operational costs year-on-year, half of it is related to currency. And then there is increased activity into that number, but that is actually contracted by lower SG&A costs and other costs elements. So over time, you should expect DD&A to -- per barrel to grow somewhat. It is natural that new developments are more capital-intensive than the old ones that are ongoing of Statoil.

Okay. I see the rigid discipline of one question per person has yielded some benefits. We still got a few minutes left. Is there anybody -- I'll try to get right in the way around the room and I'm just asking anybody that I've missed out? Or has a supplementary question at the front here.

Andrey Aleev, Crédit Suisse. I had a question on your M&A policies. So you choose to keep your exploration budget at a fairly high-level whereas we've seen that the value of this potentially just had a balance that's quite low. How do you think you're making these choices whether exploration is the best use of your capital versus potentially acquisitions in the various market? Eldar Sætre: Well, I don't accept your starting point that there's no value from our exploration. Look at what has happened to the Norwegian continental shelf over the last few years. It's a tremendous source of energy that have put into Norwegian continental shelf from new exploration and new barrels and field development, and we see the evidence of that. So this is -- obviously, I wouldn't do this unless we haven't seen value in what we're doing on exploration, so we are convinced that this is still at the core of what oil and gas industry is about, and it's something that we need to do. I've been through this experience before, and we cut exploration massively some years ago in the downturn. And we were hurt by that for years, so I think it is extremely poor that we tried to maintain a decent exploration level. In particular, as long as we have this strong feeling that we're a pretty good as well. So that, as to say, that this is not -- have to be supplemented, and we have seen that as well through inorganic measures. So again, we have demonstrated that, and it's a very important part of our toolbox. And obviously, gradually, we see that we fail yet still global exploration volume is coming down. So increasingly, difficult to stand out in this area, so it's important for us to have M&A also as a tool, part of the toolbox, into the future, and we are doing so.

Okay. Up here at the front? And then to Nitin.

Mehdi Ennebati, Société Générale. I will ask one question regarding the 2017, 2018 cash from operation on CapEx. So you show on Slide 11 that at $60 per barrel, you might have the flexibility on CapEx to be free cash flow at all plus dividend. But we're seeing that in 2017, 2018 by cutting, again, your CapEx, you might put a lot of pressure to your bargain mix with average percent ratio, which is already low compared to [indiscernible]. And do you want to take that risk? And maybe just one follow-up question on your cash from operations, 2017 to 2018, which natural gas price, particularly in Europe, do you take into account? Eldar Sætre: So obviously -- and we have discussed this a little bit on the previous question. If we don't sanction a project, you will see a bond forfeiture abound. But if we see USD 60 or USD 80 in 3 or 4 years from now, it would be a very different environment. Cost picture will look differently and a lot of the projects that -- is ahead of us. And remember, we don't have to make any additional decisions or anything significant beyond the Johan Sverdrup, so we have the flexibility throughout this year. But if we see that picture emerging, it will be a totally different situation and the fourth joint ventures or pay-offs in this will really have to address the cost picture vigorously. And I think the whole industry will come together and see that we have to improve our projects, and that's basically also what we're saying. We will do that to capture what we can gain into the project both from the supplier environment and also from the improvements that we are embarking on to put that into the project and reducing the breakeven prices, and through that, also, add value, so not only barrels to the equation. But obviously, over time, at one point, if we don't sort of invest in more projects, you will see an impact on the volumes and on the reserve replacement rate. Margareth Øvrum: And at the same time, I'm just wanting to add. We are working heavily on the very early phase project to improve them, getting better with the breakeven lower, and I think we are -- I tried to show you some of examples on my slide, how we have been working on project to get the cost down.

And if I may -- I mean, [indiscernible] yes, but the resources are still there for us, so it's a matter of timing of sanctioning and so on. And again, value is more important than being it is on as soon as we can.

Nitin?

Nitin Sharma from JPMorgan. And Torgrim, if you look at that $60 oil price scenario 2015, '18, how does your rookie stock up under that scenario? and how did it compare to your cost of capital, please?

Okay, so thank you. I think there's no secret that in the current price environment, return on capital employed will drop compared to previous years. It will -- with what we see in $60 plan or scenario is that gradually increases over the years, so when you get to 2018, '19, it is back on current levels but in a $60 environment.

I'm going to get one last question and after this, I'm going to get one last sweep for the -- and to anybody who asked an early question, frustrated with only getting one question. The first man who puts his hand the fastest gets the follow-up, so one more question after this.

Matt Lofting at Nomura. Question on impairments, if I could. Can you just clarify what pricing scenario and long-term oil price you used in the impairment testing process with full year results? And what the carrying value is for the U.S. onshore business? Eldar Sætre: Maybe I should take the CFO title -- you seem to be -- I would love to answer that. Not basically, the main part of the impairments here is related to oil price. Approximately 90% of the impairment is -- has to do with oil price, and I will not comment on the long-term perspective but what is -- what will really drive this is the short term. And from an accounting practice perspective, what we are doing is to use basically the forward curve as we look for the next few years. That is defining a set of assumptions that goes into our impairment calculations. And then you might like to add something?

I mean, the prices that we used is prices at the balance sheet date, end of year. So I just want to draw your attention to one of the notes, where we have made a sensitivity to what the lower price and all that, what sort of impact that will have on the accounts.

Okay. Great. One more from the phones and then and bid for the last remaining question on the floor. So from the phones, one last time.

And our final question from the phone lines comes from John Olaisen with ABG.

And Margareth, it's to you. You mentioned the cost reductions on Johan Castberg. Is it possible to say -- and it gives me an indication of the NPV breakeven oil price only on Castberg. And after the cost improvements, please? Margareth Øvrum: No, I don't think we will reveal the breakeven price on the Castberg. Of course, you know we are working on 2 different concepts, and we have decided to delay the concept selection and we are working and truly committed to reduce the cost even further. Eldar Sætre: This is a project that really deserves to become as good as it can get, so again, profitability is more important than timing.

One thing I'll say is that management will be around for some questions after we finish. I'm going to take the last question now. There you go.

One last question. This is Hamish Clegg from Bank of America again. Wondering, guys, on your flexibility chart on CapEx. Is that 12, 20, 40 that's on the projects on that list that you could potentially strip out if the microenvironment is in there. I read this morning on one industry journals that the Norwegian government was putting pressure on you to actually go ahead and sign that project, which has a 12% IRR relative to your 24% IRR hurdle. How should we think about these sorts of news article that are coming out? Eldar Sætre: Okay. Again, [indiscernible] in order to avoid but you're talking about it then I'll talk. So that's the project that we've been working on for some time. It's very important project. It has to do with the resources in the government and it has to do with timing, so timing is setting some constraints of that project. But in the end, it has to have to have the profitability and robustness that it needed, so that's what we really are working on. So we have put up very good people into this, really to make the best effort to take down the cost and come up with a solution that actually can make this project fly. So it's a high-priority project that have to do with resources, and from that perspective, I can obviously see why authorities would like this to move forward. But still, I'm running the business, so it has to have the value creation and the -- meet the hurdles that we have for decision-making, and I will not comment on percentages in that respect. Margareth Øvrum: But it has to be improved quite significantly both on the drilling side as well as on the facility side, and this is what we are working on.

Ladies and gentlemen, thanks very much for the questions. I'd just like to ask Eldar to round this off for the end of the presentation. Eldar Sætre: Well, I'll be very brief. You have been on quite some time now so I'm sure you would like to head back and I would, too. And it's been a busy week, I have to say. A fantastic week, and it was a true pleasure for me to sign in on Wednesday, but it has also been a true pleasure to be here today. I've really been looking forward to this day, and it actually gives me as much energy as I was hoping for. So I'm now eager as Margareth said to get back to your people, and I'll do that but I'll spend 1 day to relax tomorrow and then it's back in business. And on Tuesday, actually, 2 days, I'm gathering with top 150 leaders in São, so I really look forward to that, to set the theme, communicate what we have told you and really bring along the whole team and our leadership on this -- on the journey. And I'm sure, they will buy in with full force. So I thank you, all, for coming. I really appreciate that, the engagement and the good questions that you have put forward to us. I hope we have sort of accommodated this in a good way and I presented you with some good answers. At least, we feel we have a strong story and have what it takes to tackle the challenging environment that we are looking at for the moment. So have a nice weekend. Thank you, and see you again.

Thank you.

Ladies and gentlemen, that will now conclude today's conference call. We thank you for your participation, and you may now disconnect.