Peter Hutton - Senior Vice President, Investor Relations Eldar Saetre - President and Chief Executive Officer Hans Jakob Hegge - Chief Financial Officer Margareth Øvrum - EVP, Technology, Projects & Drilling, (TPD) Torgrim Reitan - EVP, Development & Production USA (DPUSA) Tim Dodson - Executive Vice President Exploration John Knight - Executive Vice President Global Strategy & Business Development Lars Christian Bacher - Executive Vice President, Development & Production International (DPI)

Brendan Warn - BMO Capital Markets Theepan Jothilingam - Exane BNP Paribas Mehdi Ennebati - Societe Generale Lydia Rainforth - Barclays Marc Kofler - Jefferies Haythem Rashed - Morgan Stanley Hamish Clegg - Bank of America Merrill Lynch Anders Torgrim Holte - Danske Bank Teodor Sveen Nilsen - Swedbank Anne Gjøen - Handelsbanken Halvor Nygård - SEB John Olaisen - ABG Biraj Borkhataria - RBC Europe Ltd. (Broker) Anish Kapadia - Tudor, Pickering, Holt & Co. International LLP Rob West - Redburn (Europe) Ltd. Tom Robinson - Deutsche Bank

Good morning, ladies and gentlemen, and welcome to Statoil’s Capital Markets Update. And what I know is a very busy day for you all. I'm very pleased that we will be able to run you through a series of presentations to look thorough our outlook over the next four years, and also comment on the quarter results that you've seen presented this morning. We’ll be starting with presentations from Eldar Saetre, our CEO; Hans Jakob Hegge, our CFO; Margareth Øvrum, EVP for Technology, Projects & Development; and Torgrim Reitan, EVP for DPUSA. And I'm delighted that we have many members of the executive committee here who will also be able to answer questions both in the session itself and after the session more informally in the gathering area outside. Safety is central to everything that we do in Statoil. And with that in mind I'd like to just read a very short announcement about safety specifically for today. If an emergency situation should occur while we are here, the evacuation signal is a voice system announcement. Please note we only evacuate the building should the voice announcement say to do so. Then please use the signposted fire exits within the venue, follow the signs and messages from the guards, exiting is at ground level and the assembly point is situated on Bartholomew Close. So with that I'd like to move directly into the capital markets update itself, and I'd ask Eldar to join us on stage. Thank you very much.

Thank you, Peter, and good morning, everyone. It's great to see you all. This is the third time that I have the pleasure of welcoming you to our capital markets update here in London. But it is the first time I do so without looking back at the yet another year of falling oil prices. So let's make that a new tradition. 2016 was a challenging year for the industry, a fact or so reflected in the fourth quarter and full year results for Statoil, which Hans Jakob will get back to soon. But there is also saying that you should never waste a good crisis. And I am proud to say that Statoil is emerging from this downturn as a stronger and much more competitive company. We have reset our cost base. We have transformed our opportunities at and sharpen our strategy to be even more value driven in everything that we do. So in short, we are now well positioned to capitalize on the opportunities of a world class portfolio. Last year, we achieved a lot, but we also experienced the worst thinkable. We had one contractor fatality during construction work in South Korea. And on the 29th of April, we lost 13 of our colleagues when a helicopter crashed on its way to Bergen. For the year as a whole, our serious incident frequency came in at the 0.8 which is an increase from the two previous years. I'm not satisfied with this development. Over many years, we have improved our safety results, and now we have to get back on a positive trend. And we are fully committed to doing so. We have already taken several steps to reinforce safety measures throughout our company. And it starts with me and all our leaders being crystal clear…

Thank you, Eldar. And ladies and gentleman, good morning. It's good to see you all. 2016 has been a tough year for the industry and for Statoil. The low prices have impacted our results, but we have delivered solid operational performance taken down costs delivered U.S. $3.2 billion in annual efficiencies and radically transform our portfolio projects. At the same time we have maintain financial flexibility and our firm commitment to capital distribution. We are in a strong position to capitalize on our high value opportunity set. Let me start with our 2016 numbers. Impacted by the lower prices we delivered adjusted earnings of U.S. $4.1 billion down from U.S. $9.6 in 2015. Our net operating income was U.S. $80 million for the full year compared to U.S. $1.4 billion in 2015. Heavily impacted by net impairments of U.S. $2.3 billion dollars, this is mainly due to the changes in our long term price assumptions. Still we deliver a solid cash flow which I will come back to. We delivered strong operational performance, higher production efficiency and increased our well capacity. Our production was above guiding despite the high turnaround activity. We deliver annual efficiency effects well above our ambition. OpEx SG&A is reduced by 13% in 2016 and 30% from 2013. We have demonstrated strict financial discipline improve the breakeven or next generation portfolio and reduced organic CapEx for the year. In short, we are getting more for less as we have increased the production. Adjusted earnings for the group were at U.S. $1.7 billion down a U.S. $100 million compared to the same quarter in 2015. Achieved liquid prices increased by 14% gas prices were up in the U.S. and decreased by 14% in Europe. Our cash flow from operations was strong up U.S. $1 billion compared to…

So thank you very much, Margareth, is a fantastic colleague I have now. So good afternoon everyone and it's good to see you and it's good to be here in London to give an update. Last year, we discussed your plan to transform the U.S. business. It is a portfolio of high quality assets and it provides a strong fit with the sharpened strategy. The U.S. portfolio is flexible it can respond to lower prices and it will capture value in an upturn. But like many others, we invested significantly in the U.S. in the high price environments. And as a consequence of the falling prices we have made impairments and we have negative earnings currently. With that said, we have a first class portfolio and organization, I have confidence that we have the ability to make this business work at low prices. And some of you may remember I will remember this plan has three pillars. First, we want to make money at lower prices. That is measured by net operating income or 90 to 50 ambitions. So in 2014 $90 per barrel to have positive earnings, in 2018 we'll make money at $50. Second, we are going to improve our operations by 20% to 25%. And lastly and maybe my favorite we are going to double the cash margin in $50 environment. So today I'll give you an update on all of this and show you that our plan is working. So let me first update you on my portfolio. Onshore we have an attractive portfolio in three core areas. Last year we increased our share in Eagle Ford and we took over operatorship from Repsol. We divested non-core Marcellus acreage and offshore we have had significant production growth of high value barrels. And in December we won…

Thanks, Torgrim. Thanks everybody. I am pleased to say that we are right on schedule. A little bit choreography now, I invite Eldar and Hans Jakob back on the stage to take your questions. We’re going to have roving mikes for everybody in the audience and also mikes on the tables where we’ve got the executives as well as, so who will be able to do those. So you want to come through there and stand on that one. We aimed to take questions for around 50 minutes. I know this is a long session. There’s a lot of important messages. We think are good ones that we want to get through and give an opportunity to discuss. I know I have something of a reputation for being fairly disciplined in terms of our approach to the questions. I’m going to reinforce that discipline. I’d like to keep it to one question preferably in one part and with a promise that if we get through those in the some spare we will go around again. But this is something where we want to give everybody an opportunity to ask those questions. So we’ll do this one 50 minutes max and they’ll also be plenty of opportunities afterwards when we say. The first time I saw was Brendan.

Thanks, Peter. So it’s Brendan Warn from BMO Capital Markets. Just coming back from the last set of results and probably just looking forward just this whole deferral production value and the cash flow. Can you give us sort of an idea of the amount or can you quantify that value for me? I’m now like to ask part B of that.

You can ask the part B if it’s related.

And I guess for Torgrim, I mean in the past we’ve heard about the onshore business was said the U.S. going to 500,000 barrels a day, a lot of additional promises, where the push backs going to be or where the I guess the more difficult parts your portfolio that you are dealing with and in terms of future divestments of your current portfolio?

So, in terms of deferrals, I assume you are referred to the gas flexibility that we have in our upstream portfolio and then we should confidential. So it is important for us to utilize that flexibility to create value not to run off the production volume targets or anything like that and give them that consistently over a long time. I think in net, the net position now that we have deferred some volumes I think it corresponds to around 20,000-25,000 barrels per day in volume. So not as significant deferral but this is something that goes up and down depending on how we look upon the market at any point in time highly valuable and we use that flexibility. .: Torgrim is preparing the business to stay where we feel comfortable owning the right to do that. He’s pretty much there now. We are we are ready to bolt on odd acreage to this business. It is a highly valuable component of our overall portfolio the flexibility of it, the cash resilience and so on. So in terms of how we would like to do that? Divesting, investing that is something that we will look at whatever opportunities is at hand and there were no more specific comments on that. But I think to the question Torgrim, you might add some comments. There is a microphone there I think.

I think this is working. So thank you, Brendan. First of all, 500,000 barrels per day in production target. Those type of targets are long on. We don’t use those types of targets. We are focusing on value and we see production as a vehicle to create value. So we have changed our targets from being a top line target production to be a bottom line target earnings and making money. So that’s sort of that we can just disregard a 500,000 barrels per day. Then on the difficult part of the portfolio, I would say it’s very encouraging to see that the underlying profitability of the portfolio is changing. Deepwater Gulf of Mexico has been seen as a very challenging part in the current price environment and I’m very glad to see that also those projects are improving significantly. We have over there improvements in sort of maybe not as impressive as, as Margareth talks about but still very impressive. And I would say for incidence development that shale is developing and we are joining is now looking at breakevens in them in the low 40’s. Onshore, the more difficult part in the onshore portfolio I would say Bakken, I mean the Montana part is sort of still there. It needs to be worked. We haven’t focused a lot on it and that’s why we’re joining Margareth in that area to see how much we can actually get that all in. But it will take research, it will take technology and it will take a bit of stamina in long term to make that work but I think ultimately we will get there. I can talk about the Eagle Ford and Marcellus as well. Marcellus I would say Ohio part of the northern Marcellus and Utica is coming across as a very promising. The well rate scare and always of quarter northern Marcellus and the gas fantastic breakeven but they exposed to local prices as you know. Those assets are actually free cash flow in the current price environment. So they are working.

Okay. Take next question from Theepan.

Thank you for taking the question. It’s Theepan from Exane BNP. I just want to talk between the balance between investment and levels of investment versus the balance sheet. My question is how should we think let’s take oil prices don’t necessarily go up as quickly to the sort of $75 outlook but in the next couple of years are around current prices so. How do you see what a sustainable level of investment is particularly given the good work that you’ve done improving breakevens against deleveraging the balance sheet and essentially initiating a buyback program? Thank you.

So investing in new capacity high quality asset is definitely a priority for us that is how we create values and also can distribute capital to our shareholders and so on. So we have a high quality portfolio and it is a priority while maintaining the commitment to capital distribution. We can do both. We have indicated through the presentation that you gave the current clearing level is sustainable in the mid-30s at oil price of U.S. $50 per barrel. And if the oil price should turn out to become 70 or 75 that we have assumed as a long term presence, this will significantly improve our debt ratio and our financial capacity. So it is - we have the capacity to invest in the current opportunity set but it will always be value driven. If we don’t have sufficiently attractive high value opportunities at hand that will have an impact on how we prioritize in this environment. In terms of priorities and capital distribution, we are very firm on the scrip program, we extend that in line with what we indicated last year, there is no changed in that plan. The board has the discretion to make adjustments but there is no plans to extend it or shorten it. So that’s basically what you should expect that we will move forward with that. In terms of buybacks that is an option that we keep as a mandate ask every year the AGM to give us that mandate and we will keep that. As long as we have a scrip program in place, I don’t think you should expect this through to introduce any share buybacks. And beyond that I think priority would still be to in terms of gearing a debt ratio, we’re very comfortable in the 30s, but we would still say that we have an ambition of a long term addition of getting into the range of 15% to 30%. So that will still be kind of a priority to get into that range. But overall all these priorities are something that will be looked upon not any point in time given the quality of our opportunities set and outlooks that you're looking at any point in time.

Okay. And then I'm going to swing over right at the back to Lydia and then I can give an opportunity to bring the microphone this side. So Mehdi next.

Hi. This Mehdi Ennebati from Societe Generale. I will ask a question regarding the non-sanctioned portfolio breakeven. So I just would like to compare April with April because last year you’ve highlighted during the CMU 2016 that’s the breakeven will be U.S. $41 per barrel for the non-sanctioned protect starting at by 2022 highlighted that now we are let's say close to U.S. $27 per barrel, but this takes into account a year once, so I just would like to compare April and April so excluding Johan Sverdrup how did you manage and to decline this U.S. $41 per barrel just in order for us to measure your thoughts. And just would like to come back to the slide number 23 and this is why in fact I am asking the question, you provide the breakeven of wage project and we can see a project which is at U.S. $10 per barrel breakeven, I want you to know if this is once at phase 1? Thank you.

So it's a very good point. We have tried to be very prudent defined in my presentation exactly what is the 2027 the next generation portfolio kind of a brand what is that. It is not the same portfolio that Margareth talked about last year for two years which were at U.S. $41 that was a portfolio not included - including Johan Sverdrup, it was basically a non-sanctioned project at the time of the previous CMU, but still in production by 2022 and Statoil operated project only. That portfolio, Margareth you have to correct me would have a breakeven price of around U.S. $30 per barrel, the same portfolio U.S. $41, U.S. $30. Margareth Øvrum: So it from U.S. $17 to U.S. $41 to U.S. $30.

So what I would like to show you now is what I call the next generation portfolio the whole portfolio opportunity set with the next generation mindset, which includes Johan Sverdrup it also includes partner operated projects which actually has a higher breakeven than our portfolio, but still we include that that gives you a feeling for our whole portfolio which financially will have an impact for the company. So the difference is basically the partner operated components which is in there and Johan Sverdrup mainly, which is in the portfolio that's the precise difference between those two portfolios. Then on - you have the figure in your presentation, so is U.S. $10 the breakeven for Johan Sverdrup is not. And we won't tell you which project is this, but there are a great project which is at very low probability - high probability and low breakevens.

Lydia, any additions.

Thanks. It’s Lydia Rainforth from Barclays. If I could ask a question about the cost savings numbers and obviously you’ve increased the target today billion dollars and beyond in 2018, is not now a stretch targets in terms about cost saving number that you have and possibly from Margareth you have made those cost savings look relatively easy and I know they haven’t been what else do you think is up biggest challenge going forward with those?

Okay, so if you take the first questions stretched or not. And then Margareth prepare for the next one right.

Well, I think it's been very encouraging to see that how over delivered by $700 million and you're absolutely right Lydia it's not been easy, it's been hard work and across the entire organization. So it's many contributions to that. And that's why we've had confidence talk about the culture of continuous improvement. Is it a stretch target, it is a tough target and it's for this year and we expect to see within facilities related to sanctioning project, but also further market effects that we have talked about in the past.

So the market effects at the one billion is the around to hundred-ish of the total billion.

Yeah and just for the record, I mean we’ve talked last year about U.S. $300 million to U.S. $400 million in market effects it's actually turned out to be a bit higher so more around U.S. $450 for the last year.

Including in the U.S. $3.2 and the additional one is around U.S $200. Margareth? Margareth Øvrum: What are the most challenging, first of all I would say we have to deliver on it, so it's depend on where execution cover built it which I was approved today that has been a very good. But of course if the price is getting up again, we have already said that 10% to 20% of the savings are related to market and market capital safety, if the price is getting up again, you just have to fight that. But I would like to say once again that we have tried really to reduce the cost side by sustainable reduction by simplification and standardization and what we can do if the price is going up again if first of all we can ensure we have sufficient competition and there is various forms of completion if you can have different suppliers or you can have the different concept for instance a platform towards a subsea solution. So this is one way we can act, at the same time I think it's also very important that we collaborate with our suppliers to if you could elaborate where you are here we can probably the best solution. So maybe that was the long answer but yeah.

Thanks Margareth. We're going to do three questions from this side of the table and then we're going to take some questions that we've had on the phone. So picking up with Marc.

Great. It’s Marc Kofler from Jefferies. I just wanted to ask a question which I guess is reasonably similar to the previous question, but on the capital spending and the going to this year particularly in the context of the evolution in the going some capital spending that we saw in 2016. How much wiggle room flexibility is there in the 2017 program and should we you know should we expect is it even possible to get the same kind of gradual decrease in capital spending coming through this year that we saw last year. And then following on from that I just wanted to clarify if how significant the knock currency assumption in the capital spending program for this year is, I think it was off on one the slides? Thanks.

So I think I’ll leave Hans Jakob to address this.

Yeah, so thank you for asking that question Mark. As you aware of we’ve started off with the level of doubling coming from a level of U.S. $20 billion down to last year’s U.S. $10.1. So the efficiency gains has been tremendous and what’s the further potential, what's the sustainable level. So we guide of around U.S. $11 billion for 2017 and we say it will be somewhat higher going forward in the guiding period and we have maintained the flexibility of U.S. $4 billion to U.S. $6 billion that we talked about last year. So we don't have to sanction the projects according to the plan, but we plan to do so because we think we have our strong value proposition, very attractive returns at this level on a breakeven of U.S. $27. And in terms of the exchange rate you are correct.

Thanks Jakob. Could I just say in relation to the breakeven cash flow that we talked about last year that was what we could do, when we talk about U.S. $50 this year that is what we will do, all our projects is included in that roadmap for 2017 and going forward.

Thank you. Haythem Rashed from Morgan Stanley. Eldar just a question for you on the DPI business the international upstream business if you take a step back sort of broader than just the U.S. you've sort of said in the past you've not been so happy with performance there in room there's room for improvement, I just wonder if you can give us an update from where you see that business going in 2017 it sounds like some of the headwinds around DD&A mean that maybe you know results from that business will still sort of to have a bit of a transition phase in 2017 is a fair assessment or do you think that will start to see some of that improvement already this year? Thank you.

I think I will offer an opportunity for Lars Christian to comment on his part of the business you have addressed the U.S. business, but in general from my perspective. The international business in the balance sheet looks slightly different from the Norwegian Continental shelf. It is a younger portfolio obviously then also a higher cost portfolio. It has been accessed in slightly different ways as well at least part of the portfolio which actually make us reflect market values in the balance sheet are not historical you know development cost. So that gives us depreciation DD&A per barrel, which is I think in this quarter two and a half times what you see on the Norwegian Continental shelf. Nothing I could do about that is this is history of this is where we are, my focus is on value and value to me is about cash and how on improvements. So my focus is on improvement and on cash generation. On cash generation we are on par it was mentioned by Hans Jakob that U.S. $17 per barrel of cash from our operations internationally including both Lars Christian and Torgrim’s portfolios onshore and offshore. That's the average. That is exactly the same as we have on cash generation from the Norwegian portfolio, excluding expiration. So it is really a cash generating portfolio internationally, I think really you're demonstrating that we have a good starting point to develop this portfolio it will be part of our strategy going forward. SG&A OpEx is down around 30% in the international portfolio which is on par with what we are seeing in the rest of our business. So really I think there has been a really good progress Torgrim as addressed his progress and Lars Christian if you would like an opportunity to comment on your achievements. Thank you.

Thank you, Eldar. In addition to SG&A down 30% our operating expenses is down 30% since 2013. Cap Ex spending down 50% in 2013 we expected mining increase in range 20% to 22% toward 2016. It's actually down 20% compared to 2013. So this is across the whole board. If I look at my portfolio of assets I have some of the best assets in the company internationally, and I have some not so good assets which is a case across the whole board actually for the company. Last year I said the net operating income before exploration would be positive at U.S. $46 a barrel, I delivered that result at U.S. $45 a barrel and then the realized oil price for last year was just south of U.S. $45 dollars a barrel. And so it is to just focus on oil price last quarter, which was kind of higher definitely, but the first quarter for 2016 they realize oil price for the international part of the business was you know well below U.S. $30 actually so that is what I kind of have been the baggage for the whole year of 2016. As Eldar saying the DD&A is two and a half times the Norwegian Continental shelf for fourth quarter of 2016 for the full year it's twice as high. And the cash flow after tax per barrel basis is at par with NCS. So it is a strong portfolio, but it has its challenges on [indiscernible]. We have worked extensively to improve it and we are not fully where we would like to be and you see also our students from portfolio adjustments. We have exited one asset and we have acquired a couple that will definitely also improve the composition for the international part of the portfolio. One comment on regarding the new projects going forward for an international part of the business, we see the exact same improvements as we do for the NCS projects breakeven is down by U.S. $40 so far under still working many of these projects to bring them forward in due time. Thank you.

Thanks Lars Christian. One more from the floor then I'm going to take some from the phones and then I got closure of questions in the middle here. So Hamish?

Thanks Peter. It's Hamish Clegg from Bank of America Merrill Lynch. I think we can all agree you’ve done an excellent job on the cost cutting program the efficiencies have gone extremely well and appear to have brilliant momentum going forwards as well. As we feel we’re exiting the trough in the cycle for the sector with oil prices starting to look slightly better, and a good outlook, the focus for some of us shifts onto the discipline side we see the momentum in your cost cutting program, but would like to maybe if you could allude a bit more to the options in your portfolio for your resource base, you gave us a U.S. $20 billion 2P resource number today which is just great nearly 30 years. Could you expand a little bit on a couple of things for me, first is how much of that is coming from London and in your hands. And second beyond that with that exploration program where will the focus be can we see more opportunities in Brazil and you didn't mention the prospective it in the northern parents as well? Thank you.

Okay. So I'm glad to have Tim Dodson here who is heading up our exploration business, I address the exploration briefly in my presentation that was - that's an aggregate level I will give Tim the opportunity to answer that question on the resources reserves the nature of that he could add some color to that.

Yeah, so thank you for the question I have a slide on the organic tubular of 90% in the year with limited contribution from exploration. We had very strong operating momentum adding volumes from existing fields and on Lundin it’s 1.65.

Could I also just say before you get the word to Tim that referred to Lars Christian. Lot of resources is outside of Norway. We have some assets I pointed towards the beyond 2022 portfolio, which is in many ways predominantly portfolio outside of Norway that are also Norwegian assets, but most of the big Norwegian assets will be done that we know today, we depend on exploration, the big assets are outside of Norway. We are improving that portfolio as Lars Christian making this quite significantly. You're not prepared to give sort of details you would find them in the graph on the page Hans Jakob illustrated they are improving, but you're really haven’t address them as forcefully as you have been doing on projects like you Johan Castberg and other. So we expect significant continued improvement on that portfolio, and that is really and also what is part of the resource base. Tim.

Thank you very much. When it comes to exploration our focus going forward will be more or less the same it has been for the last few years. Our results have not been as good as they were in the period 2011 through 2013 when we proved up close to five billion barrels of current resource the 20 million. We have been focusing the last two years in reloading basically replenishing our portfolio. That should come as no surprise as we drilled out what turned out to be a very good portfolio in 2011, 2012 and 2013. And that's really what exploration is about sort of always say that every prospect you drill and test it moves out of my portfolio whether it's a dry well or a commercial discovery, which I had on to my developing production colleagues, so these about replenishment. Our focus going forward will be as it has been before a balanced and attractive mix of exploration activity and prolific basins, we have a very attractive program in Norway, in fact in sort of I include UK into that this year. We have good follow-up opportunities in both Canada and Brazil again prolific basins, and then we have select higher risk frontier opportunities that can represent breakthrough opportunities in terms of big discoveries with the potential for standalone developments. So that will be our focus going forward, good opportunity set this year, and I think the perspectives for next year are also fairly good given the fact that we've loaded up with so much and such good quality acreage over the last the last two years.

Thanks Tim. We're going to take four or five questions from the phone to now please. Thank you. And then we're coming back into the center and I'll kick off with that.

We will now take our first question from Anders Holte from Danske Bank. Your line is open. Please go ahead.

Good afternoon, guys. Actually my questions have been answered already, so I’m good.

We will now take our next question Teodor Nilsen from Swedbank. Your line is open, please go ahead.

Hi, good afternoon and thanks for taking my question. One question on CapEx, you said that’s the normalized CapEx level going for will be $12 billion to $14 billion. I just wonder what kind of supplier price that’s just that you assume, do you assume an increase from today’s level? And then just a follow-up on exploration question. Could you mention some specific prospects in the brown field that you like? Thank you.

Okay. So in terms of the supplier cost basically what we have assumed into the numbers are contracts that I mentioned 30 billion of contracts that has been awarded and options that is add - added to these contracts these the way we are struck to them, gives us optionality in terms of using the same contracts into new projects. So we have I would say a pretty good overview of prices and the cost of supplies in the conventional portfolio that has included, so we haven’t taken any bets on something beyond that. When it comes to onshore in the U.S. we see already I mean in the in the conventional part, we see still a lot of capacity in some of the segments into rigs for instance. There’s a lot of rigs, spare rigs that is that hasn’t got a lot to do. Marine activity ships, a lot of capacity in many segments which will in many ways impact for quite some time the cost of supplies. When it comes to the U.S. situation, it’s more dynamic, more responsive. And I think Torgrim already sees that there are some pressures on cost of surprised that is already included in his assumptions and also in fact included in the improvements that Torgrim was showing in his presentation. So then Tim expected that’s on the Barents Sea. So please say some comments.

Yeah. Okay. Thank you. Thanks for the question. As Eldar already mentioned in his presentation, we will be testing a number of high impact opportunities this year just to the quick count, I think it’s six which I have communicated where all three of those in the Barents Sea, Cogen and Germany North. The three others in case you’re wondering is [indiscernible] in the U.K. and it’s a prospect in Suriname and the prospect in Indonesia. The first four the moderate risk. The second the last two or typical high risk, high reward Frontier prospects.

Thanks, Tim. I realize comes more questions on the phone.

We will now take our next question from Anne Gjøen from Handelsbanken. Your line is open, please go ahead. Anne Gjøen: Yes. Good afternoon. Thank you for taking my questions. I have a question related to tax. In fourth quarter tax in Norway I see this as surprisingly high, am I understanding or this that it has to do with reduced uplift with such low investment level going forward that’s very slow. What kind of impact will that have on your tax? I understand that for the company as such it is difficult to give tax guidance, but is it possible to say something about a tax rate in Norway but this for example oil price of $50, $60, $70? Thank you.

So, he is the tax set for not I used to be.

Yes. So thank you Anne for asking that question. In the quarter, we had a tax rate in Norway was 72% that’s in line with our guiding. But you’re absolutely right when the results go up and the CapEx goes down, the tax rate will increase. But we haven’t changed our guidance.

We will now take our next question from Halvor Nygård from SEB. Please go ahead. Halvor Nygård: Thank you. Two short questions. Firstly, in your production guidance it looks like if you plan to produce around 520,000 barrels a day in DPN, flex gas on U.S. onshore in 2020. Could you say something about the split between the two that is how much is puts gas and how much is onshore? And then secondly, you mentioned that you’re looking to add one to two new core areas both offshore and onshore. Can you give some more color in terms of geography type of hydrocarbons timeline and if it will be organic or inorganic? Thank you.

So I wanted to. Yeah, I expecting that question. I think it’s too early to tell. We are looking at we’ve heard today about are a very interesting exploration portfolio that could take us to certain places not all the places that they miss exploring, but we know hopefully work we will get some exploration success that as much reality portfolio and that could be related to places where we already have legacy assets or it could be totally new places. So in the offshore, it is - obviously there are some good opportunities with the East Coast Canada and Canada as one of them. You didn’t mention drilling in Canada but you will drill wells also East Coast Canada this year. The Gulf of Mexico, Mexico, wider Gulf of Mexico including Mexico is definitely one option. You have accessed acreage in a Frontier acreage in Gulf of Mexico two licenses again which is not being drilled this year but it which is ahead of us. In terms of Mexico or Gulf of Mexico, we are in the process of reviewing and taking another look at sort of how to understand geology and prospectively in that region. So that - these are examples of what could be but could also be other opportunities to build those kind of core position. That doesn’t mean that the core or contracts will be the only places where we are but that you see the potential to develop a saleable and material position in one to two additional offshore countries. Onshore, it’s again it’s too early. We are exploring many opportunities both from an exploration perspective and from a business development perspective, John. Russia as one of the countries where we have we are pursuing several opportunities both offshore and onshore. So that could be one of the onshore opportunities but it’s too early to conclude. So let’s say one to two and it’s just the guiding to telling us that we are doing more than just hanging on to Brazil and they use onshore. We are really looking to build a more robust portfolio of core countries also outside of Norway. Then? That’s it.

No. Yeah. That’s it. One more from the phone and then we’ll go through to cluster questions through here.

We will now take our next question from John Olaisen from ABG. Your line is open, please go ahead.

Hey, good afternoon, gentlemen. A question to slides from Johan Castberg. Jakob, you say that the noticed a start-up from 15 or 22 will have a return on capital employed, average return on capital employed of above 10% in oil prices 70 in 2020. First of all, it sounds a little bit low, this is - if you could common for a little bit of that for incidence what kind of gas price assumptions do you have behind that? And maybe just as importantly, do you think this portfolio of projects will pull up or pull down the average return on capital employed for 2020?

Yeah, yeah. I think it give feedback. Okay. So the last question it goes up. About the returns, I think we’re coming from a lower level on returns that’s been quite moderate the last year, it’s fair to say. But going forward return of both 10% on an internal rate of return well into the 20s, I think that’s a clear direction and a very valuable and attractive value position.

In terms of gas price we have now disclosing the price assumption, so basically in ‘20 we’re talking about a U.S. $6 per million Btu European gas price and U.S. $4 at real price.

Yeah. Not 6.

We come back into on to the floor now and then got a close to here. I’m going to kick-off with what really are going to go first with as nearly there. You log in your question, sir.

Thank you. Yeah, I really wanted to follow-up one of those previous questions Eldar but yeah new growth options in the international upstream business and obviously looking at a rising oil prices scenario 75 to 80 obviously forgives a few sins in terms of M&A, you’ve spoken about a lot of impairments through history. So maybe talk about business development and what criteria you specifically look at today going forward. What’s changed their to ensure that you’re really acquiring or accessing high return projects what regardless of the oil price please? And then secondly, if I can just follow-up on the Margareth’s one of our charts talking about the reserve recoverable resource stepping up 12% or so over the last three years. Is that the normal level of resource creep that you’ve seen over your experiences, is that higher than normal, if so will it’s really doing that and what - is that something we should expect to continue on that new portfolio? Thank you.

So first on business development, Tim you might not. John you might want to add to my comments here but I said in the strategy that this very conscious strategic direction of being counter cyclical is important. We have been that and we will definitely try to be even more counter-cyclical. That doesn’t mean that we - we could sell and buy at any point in time given the portfolio and the assets are and the buyer and seller is the correct one. But generally, we would like to do this in an efficient way, counter-cyclical way. I think the mindset that we do that. Tim do an exploration, John does on business development exactly the same as Margaret has on her our assets. It’s not about the long term assumption, it’s really about building resilience, cash flow at all times and the principles that we establish. So we need to see project even if we have to put a price on the table to access project that really has the potential to fit into the kind of resilience in terms of breakevens that we see and would like to see to sustain and be a robust against whatever kind of uncertainties that we might have. I don’t know where thought process is going to be 75, just an assumption we want to build resilience into that portfolio. On top of that, John is working on optimizing and looking at projects and that we can support cost efficiency, synergies for instance and then we should confidential, unlock even small stuff that we did last year and with guidance on. So it is really a value driven, M&A strategy has been highly successful so far but it’s even more important that in the future that we hang on to the strategic principles that we have established. I don’t know John if you want to add to this.

Sure. So business development is a mixture of buying and selling. You saw that we took advantage of the selling side for 2012 to 2014 at about $12 billion. If you get back over to 2010, it was about $25 billion of proceeds and about $12 billion of profit, no last info. And then on the acquisition side, if you look at what we’ve done this year, we’ve been doubling down in places that we know. And some of those acquisitions around Lynn Dean that’s about $540 million up on the mark-to-market basis at the moment. Now it’s simple. And with regard to Carcara taking advantage of the down turn and we’ve had a lot of interest from many companies including big name IOCs informing into that acreage and we’re looking forward to building on that when the next license round is announced in Northern Carcara. There are many - what we’ve done is Carcara is the beginning of a very significant opportunity. I think there’s still opportunity for value creation to do in that area.

Thanks, John. I’m going to go for Biraj and then Anish and then Rob, that’s all.

Hi, thanks for taking my question. It’s is for Torgrim. Just follow-up on questions on service costs. Could you just clarify what you’re seeing right now in terms of any kind of service cost inflation? What’s baked into the plan and do you see that as a risk to getting from 90 to 50 breakeven?

Okay, Torgrim. You take that.

Thank you very much. We feel that we have reached sort of the bottom of the cost curve within onshore. We see increasing activity particular out of the Permian Basin and we also noticed that all suppliers are starting to want to discuss supply cost again. We have assumed a 20% increase in supply costs over the next couple of years into the numbers and that is to me a pretty robust assumptions. So that it’s consistent to, so we should be able to deliver on the 90 to 50 with a significant growth in supply cost. The main driver for 90 to 50 is efficiency, not market effects so that efficiency is sustainable deliveries and that we continue to deliver on through this period.

Thanks. Anish?

Thanks. It’s Anish Kapadia from Tudor, Pickering, Holt. I had a question on your reserves, Statoil compares fairly poorly versus peers on reserve life and I think it’s a push back from some investors in terms of looking at Statoil relatives to pairs. When I look at your resource space, it seems like you’ve got about 3 billion barrels of resource that has been sanctioned and a further 3 billion barrels of resource that’s works some $50 that hasn’t been sanctioned this year. So I really wanted to get a sense of how does your reserve replacement, how do you expect to trend over the next five years or so as you bring some of those projects online and you also sanction some further projects?

So, obviously the resource base campaigns both the resource that is booked today and also resource that we expect to be booked as we drill wells and create more certainty according to the criteria that is established for that certainty going forward. Some of the project is still not at the breakeven level that we would like to see in particular in the international portfolio, significant improvements but still room for further significant improvements. And we are confident that these projects will translate into resources but it will take time to develop these resources and into resource and I think we have a track record now of showing what we are capable of doing. And all I have to do is put Margareth there Margareth on the task and she will deliver the kind of now returns that we see both from our current assets and we will also make sure that we pursue the same strict criteria in terms of the assets that we acquire that we explore for that these are assets that has the potential to feed into the future resource base. In terms of expectations, I said briefly that we expect our reserve replacement ratio to be on average above 100% over the next few years. I can’t guarantee you on a specific year but looking at what we have at hand and how we’re working to mature these assets, drilling more wells, I’m sure we will get more reserve also on Julia, Torgrim. So that’s the nature of it and that’s what we expect to see over the next few years.

Thanks. Rob?

Hi. This is Rob West here from Redburn. One of the messages I’m taking away from today is that you could have taken CapEx much lower if you wanted to. You haven’t given us a number of where you could have taken it except when I got my ruler out later and read off your slide. If you want to say a number that would be welcome but you’re spending more than that because of counter cyclicality and desire to grow. And on page 23, you gave us a useful 20% IRR at $50 oil on these upcoming projects which are the basis of the growth. So my first question for you is to me 20% IRR makes sense to put that money into new projects rather than getting rid of the scrip or paying more of the dividend or buyback. Is there a hurdle that you need projects to clear where you maybe not so sure and say actually say 10% or some low number, I’d rather give it back in cash. That’s the first bet? And secondly related to that sorry to break the hot and rule about two questions. So one from Margareth I think, that 20% IRR pre-sanctioned and I'm guessing that would not be too dissimilar to IRRs and projects that you saw pre-sanctioned previous points and previous cycles. I guess one reason those IRRs might not have been achieved previous days because of re-inflation once projects get going and change orders and design weaknesses. So could you talk a bit about higher levels of design certainty going into these projects today. I guess you talked about simplifying them so they should be less complex and less prone to overrun. But is them more engineering per project going in on that list of projects he showed us a little bit later in the presentation, I think any about that would be great.

Okay, I'm very reluctant to give any hard lines anywhere really, that’s blocks in sort of flexibility and you know in terms of what is good enough for a project, I think we are impressed with what we had achieved and what Margareth has achieved U.S. $27 dollar breakeven. And you see there is a range of projects and a lot of them hasn't been worked yet. So to say this is the kind of project that we want to invest in. And we will do something else for the money that I can't offer that kind of you know hard line and criteria. But like what I can say is that you know the oil price assumption gas price assumption is not kind of a criteria that it used to be you know we look at and NPVs and so on based on our long term price assumptions, but really what is the key criteria now is okay is this project as good as it can be your value driven. So we have time to wait to make it as good as it can’t be. And do we have the resilience and the best outcome, and then you know that is the more important criteria in terms of breakeven than actually in terms of does it meet the criteria in relation to an oil price assumption. So very different mindset I would say the oil price assumption is more actually for an accounted purpose than for decision making purpose in terms of the new projects. In terms of project and uncertainty on this and I would say Margareth knows very clear again that we take the time did you mentioned the Peregrino II project we spent one more year. We felt it was not good enough. One more year…

All right, thank you. We’re going to take the last question now, because we're nearing election to over time. Tom?

Thanks Peter. This is Tom Robinson from Deutsche Bank. Just one question and it really relates to strategy in the new energy business, which I think how do you effectively start your comments of today and could you just talk about a long time shape of cash flow in that business and how you measure it success in that business. And the way I’m thinking about this is to me it feels like you know you go through an investment phase that potentially may last a number of years, and if you follow the CapEx outlook that you presented in Slide 11 certainly a number of years when do you move out of that investment phase into something that generates cash for the group?

So the earnings from year end was positive in the last quarter. We don't report it but it was positive. So we are already there. I think this is a very different business. It has a different risk profile, mainly slight to similar when it comes to project execution as such, but when it comes to the revenue side, and operation side it's very different. Also the risk profile gradually will change as we will take on more market risk that will make it also more similar, but not quite, because it's different markets than received in upstream oil and gas. So to me this is attractive, but you have to relate it the attractiveness and the reward to the risk profile of the relevant projects that you're talking about, that's something we always have done. We relate projects to project specific risk pipeline projects for instance, different risk that regulated them than E&P projects. So we see returns in the range of 9% to 11% , 11% is basically the Dudgeon project and Hywind is more at the 9% the pilot project. So that's kind of returns that we see. And these are quite a distance from the cost of capital to these projects. So they are creating value on behalf of our shareholders. Fort we will look at the same type of returns, but they were always if we see higher risk or market exposure we will look for returns that is capturing that and rewarding us for that, but it also offers opportunity in the marketplace instead of having a fixed rate you can really work with the market. So the condition for all of this is that here is able actually to deliver a product. I don't allocate 15% to 20% of anything I give a roadmap here on the slide in terms of how this could look like I think it will be back loaded. I think it will have to struggle fight really hard to get project to fill in to something like that if we doesn’t we want, if we does we will, but it's really tough commercial exercise exactly in the same way as we do within oil and gas.

Thank you.

With that I’m going to call the Q&A session to a close. Is there any summary at the end held on that you’d like to say?

I hope you got a good understand of where we are. I really tried to come through today explaining that we have fundamentally reset this company in terms of cost how we run it, in terms of efficiency, but also the opportunity set. And that in many ways comes together into when I can say that you know we can actually be cash flow neutral at U.S. $50, not only today we could do that going forward. That's the place I didn't think that we would be actually, now we are there and that gives us a whole set of new opportunities. High value opportunities and I think also we have for the longer term strong organizations from capabilities to add resources to our business through business development have demonstrated it through exploration be patient. We have demonstrated in the past and I feel confidence in our capacity to not only run the short term and our current portfolio, but also sustain our oil and gas business while also developing a highly profitable renewable business. So thank you very much for coming. Really appreciate it. Look forward to see you all again next year. Thank you very much.