Hello and welcome to the LyondellBasell teleconference. At the request of LyondellBasell, this teleconference is being recorded for instant replay purposes. Following today's presentation, we will conduct a question-and-answering session. I'd now like to turn the conference over to Mr. David Kinney, Director of Investor Relations. Sir, you may begin.

Great. Thank you, Carla. Hello and welcome to LyondellBasell's second quarter 2017 teleconference. I'm joined today by Bob Patel, our Chief Executive Officer; and Thomas Aebischer, our Chief Financial Officer. Before we begin the business discussion, I would like to point out that a slide presentation accompanies today's call and is available on our website at www.lyb.com. I would also like for you to note that statements made in this call related to matters that are not historical facts are forward-looking statements. These forward-looking statements are based on assumptions of management, which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. Actual results could differ materially from these forward-looking statements. For more detailed information about the factors that could cause our actual results to differ materially, please refer to the cautionary statements in the presentation slides and our financial reports, which are available at www.lyb.com/investorrelations. Reconciliations of non-GAAP financial measures to GAAP financial measures, together with any other applicable disclosures, including the earnings release, are currently available on our website. Finally, I would like to point out that a recording of this call will be available by telephone beginning at 2:00 p.m. Eastern Time today until 11:59 p.m. Eastern Time on August 28, by calling 800-294-5423 in the United States and 402-220-9786 outside the United States. The passcode for both numbers is 2526. During today's call, we will focus on the second quarter results, the current environment and the near-term outlook. Before turning the call over to Bob, I would like to call your attention to the noncash lower of cost or market inventory adjustments for LCM that we have discussed on past calls. As previously explained, these are adjustments are related to our use of LIFO accounting and declines in prices of raw materials and finished goods inventories in previous periods. Comments made on this call will be in regard to our underlying business results, excluding the impacts of the prior LCM inventory changes. With that being said, I would now like to turn the call over to Bob.

Thanks, Dave. Good morning to all of you, and thank you for joining our second quarter earnings call. Let's begin with slide four and review the highlights from the second quarter. Our second quarter diluted earnings per share was a record at $2.82 per share. EBITDA was $2 billion. We delivered solid results with three of our five operating segments improving in profitability relative to the first quarter. Our Olefins & Polyolefins, Europe, Asia and International segment delivered record quarterly earnings in the second quarter with EBITDA improving by more than 30% relative to the first quarter. Our operations ran very well during the second quarter, driving strong volume growth within our global Olefins & Polyolefins business and our refinery. We completed planned maintenance at our Botlek PO/TBA site in the Netherlands and our Channelview methanol unit in Texas. Overall, planned maintenance impacted second quarter results by approximately $70 million. We continued to execute on our financial priorities during the second quarter and Thomas will provide you with an update on this progress in a few moments. Slide five reflects the leading safety performance that our employees and contractors continue to achieve during the second quarter of this year. While our goal remains to prevent all injuries, I'm happy to report that LyondellBasell's safety performance continues to be among the best in our industry. As many of you know, we believe that our focus and discipline around the health, safety and environmental performance translates to strong operational reliability and ultimately, profitability. Slide 5/6 illustrates our strong second quarter performance, with operating rates of 98% of nameplate capacity across our U.S. and European ethylene crackers. Our polyethylene production operated at 95% of capacity. And I'm particularly pleased to report the rebound in performance at our Houston refinery, where crude throughput rates…

Thank you, Bob, and good morning to all of you. On slide nine, we outlined our quarterly and trailing 12-month segment results. As Bob mentioned, three of our five business segments improved relative to their first quarter 2017 performance. During the quarter, strong ethylene co-product pricing and reduced feedstock costs benefited our Olefins & Polyolefins segments. The refinery ran very well at nearly full capacity. However, unusually small discounts for heavy crude oil restrained margins and negatively impacted profitability. Please turn to slide 10, which provides a picture of cash generation and use. During the second quarter, we generated approximately $1.6 billion of cash from operations, and about half of this amount was returned to investors through dividends and share repurchases. Our investments in maintenance and growth capital expenses were $407 million during the second quarter, driven by maintenance turnarounds and the Hyperzone PE and PO/TBA projects. During the second quarter, our cash and liquid investments balance increased by approximately $400 million. Over the past 12 months, we generated $5.3 billion of cash from operations and used approximately $3.2 billion for dividends and share repurchases. After investments in our capital program and other financial activities, the cash and liquid investment balance has remained relatively unchanged. Slide 11 provides a longer perspective as well as some current financial metrics. We finished the quarter with approximately $5.4 billion of liquidity and a total debt-to-EBITDA ratio of 1.4 times. Our share repurchase program continues during the quarter with another 5.4 million shares purchased. Since the inception of the program, we have now repurchased approximately 186 million shares, or approximately 32% of the initial shares outstanding. Our second quarter activity shows that share repurchases continue to have a role in our capital deployment strategy. Before I wrap up, I want to point out a few other items that might help you modeling of our company. Excluding the first quarter bond redemption charges, we are maintaining our previous annual guidance provided in February for capital, interest, depreciation and amortization expenses, as well as our effective tax rate. With that, I will now turn the call back to Bob. Thank you very much.

Thank you, Thomas. Let's turn to slide 12 and review our segment results. As mentioned previously, my discussion of business results will be in regard to our underlying business results, excluding the impacts of the LCM inventory changes. In our Olefins & Polyolefin Americas segment, second quarter EBITDA was $859, a $136 million improvement over the first quarter. The first quarter included a $31 million gain from the sale of property in Lake Charles, Louisiana. Relative to the previous quarter, Olefins results improved by approximately $100 million, primarily due to a $0.03 per pound improvement in ethylene margins. Ethylene operating rates remained strong across our system during the quarter, averaging 97%. Our Corpus Christi ethylene plant operated at 88% of the expanded capacity during the second quarter. 75% of our ethylene production was from ethane and approximately 88% from NGLs. In Polyolefins combined results improved by approximately $80 million. Polyethylene spreads improved approximately $0.04 per pound due to an ethylene monomer price decrease and higher polymer prices. Polypropylene spreads improved approximately $0.05 per pound, primarily due to decreased monomer pricing. During July, spot ethylene prices have decreased due to strong industry supply and increased inventories. After relatively light spring maintenance season, consulting services are predicting a return to typical levels of per-planned maintenance for September and October. Polyethylene markets are balanced, while polypropylene demand is relatively strong. No major maintenance is planned in our olefin system for the remainder of 2017. Let's turn to slide 13 and review performance in the Olefins & Polyolefins, Europe, Asia and International segment. During the second quarter, EBITDA was a record $699 million, $179 million higher than the first quarter. Olefins results improved by approximately $135 million, primarily due to lower feedstock costs. Utilization of advantaged feedstocks increased by 5%. Our crackers operated at…

Thank you. Our first question came from the line of Mr. Arun Viswanathan of RBC Capital Markets. Sir, your line is now open.

...statement. So you're saying more than 25% of the first wave of new ethylene capacity is in the market. Assuming that includes your own brownfield additions, that would be my first question. And then secondly, what's the cadence you see for the rest of the capacity coming on? And what do you think will happen with margins as that comes on in both North America as well as Europe? Thanks.

Good morning, Arun. I missed the very first few words of your question, but I think what you're asking was, the first 25%, does it include our brownfield? And the answer is yes, it does. The pace of the new capacity expansions over the next 12 to 18 months are well-documented in a lot of places and we still think that by one quarter or so, polyethylene capacity is phased earlier than crackers. So we still think that's still the case in the second half. And then the rest of the ethylene capacity will come online over the period of the next 12 to 18 months. In terms of impact on margins, certainly that's the nature of our business and we've talked about a modest or a shallow cycle here. So we would expect some margin volatility going into these next 12 to 18 months as these new units come on because of their size and as we trend towards the new normal of higher exports out of the U.S. But as far as the cycle goes, Arun, we continue to believe that this looks to us to be a fairly shallow and narrow cycle in terms of its duration.

And just as far as polyethylene goes, the industry announced an increase for July that some have pushed to August. What's your read on potential success for that increased initiative? And you'd made some comments on inventories. So maybe you can just relate the inventory and demand side to your comments on the potential success of that increase? Thanks.

Yes, I think markets are still relatively balanced here in the U.S. and globally. And so, as evidenced by initial reports of the rollover on polyethylene price here in July, I won't hazard a forecast on the future. But I think we're going into the second half of the year with pretty balanced markets and demand growing at a good pace globally. So I think that whatever lies ahead we're going into it with very strong operating rates and very constructive markets.

Thanks.

Thank you. Our next question came from the line of Mr. Stephen Byrne of Bank of America. Sir, your line is now open.

Yes, thank you. Bob, you had just mentioned there about exports being the primary target for a lot of this new polyethylene capacity. I was wondering if you were seeing any of it targeting any of your legacy U.S. polyethylene customers, either from this new wave that's on now or any preselling from capacity not yet onstream.

Yes. We have not seen any significant impact in terms of local market dynamics. But still, the capacity hasn't come online. So I think we'll have to see how all this plays out. But so far, we've had a cracker and derivatives come online in Mexico, and that's in the market today. And we haven't seen a lot of impact from that. So far, I think it's early. So I don't want to, again, predict too much here. But it seems to me that exports are the destination for a lot of this new output that will come out of these new plants.

Thanks. And do you see opportunities for more consolidation in the olefin and polyolefin industry? What would be your interest level in participating in that, say, versus diversifying your platform into more downstream derivatives or into new base chemistries? What would be your preferences in that, in those buckets?

Well, when we think about inorganic growth, if you will. We first of all think about what creates the most value and how can we leverage our strengths. And so, our strengths, we continue to believe, are in the safe, reliable cost-efficient operations. And I think certainly, given our base in olefins and polyolefins, if there were value-creating opportunities that were compelling, they could be of interest. And for the rest, I think we've discussed in many different forms that unlikely that we would pursue real specialty businesses. We would want to stay close to our core and leverage these strengths that I've described.

Very good. Thank you.

Thank you.

Thank you. Next question came from the line of Mr. Jeff Zekauskas of JPMorgan. Sir, your line is now open.

Thanks very much. Over the past month, natural gas has been flat-to-lower. Ethane is probably moved up from, I don't know, $0.23 a gallon to $0.26. Do you see anything in that? I realize that there can be a lot of volatility in these numbers, but it seems that the trend is, for ethane, moving up and natural gas moving down. What do you make of that?

Good morning, Jeff.

Good morning.

I don't see anything specific that's driving that today. We step back and we look at the amount of ethane production; it continues to remain strong. Inventories are on the high end of the range. So you know, sometimes these price movements are just kind of what's happening at the moment in terms of logistics or local inventories near where crackers are. So far, we don't draw any conclusion from this recent diversion between ethane price and natural gas. Again, I come back to, I think there's still an abundance of ethane and plenty of it close to the Gulf Coast.

For my follow-up, on slide 16, you have a potential EBITDA from your propylene oxide TBA new unit. And in the old days, I think you used to size the potential EBITDA as $300 million to $400 million, and now you've got $450 million to $550 million, though you footnote it and say it's a 2012, 2016 average margin. Has your view about the potential EBITDA of that unit changed? Or this is just a different guess?

So Jeff, it hasn't changed. We just looked over a longer period of time, 4 years, which incorporates a variety of market conditions. So we've had 2015, which was one of the best years in that business and 2016 was on the low end. So you know, as we've sort of span the range of outcomes. And so no real change in our long-term outlook of the oxyfuels business.

If the current environment was the environment that, that plant came on, would $300 million to $400 million be the right number?

No, we'd certainly be in the $400 million sort of range in the current market environment.

Okay, great. Thank you so much, Bob.

Thank you. Our next question came from the line of Mr. Don Carson of Susquehanna Financial. Sir, your line is now open.

Thanks. Bob, a couple of months ago, the view was that ethylene would, supply would be tight as derivative units started ahead of the new crackers. Instead, I think you've notably seen spot prices decline quite significantly. Is this due to delays in the derivative capacity? Or is it more just better operations? And how would you see these ethylene prices unfolding as we move into Q3, the rest of Q3 and Q4.

Yeah. Don, I think it's a combination of both. I think incrementally, this new polyethylene capacity has been delayed a month or two, that's our impression. And on the operating side, certainly, U.S. industry has run quite well through the summer. But now we are coming into September, October where there's relatively high planned maintenance schedule. I would anticipate that during that period, some of this new polyethylene capacity will come online. So both of those trends will sort of reverse. And we continue to think that through 2017 as derivative units are phased ahead of crackers, we think ethylene should be constructive through year-end.

Then a follow-up on Europe. You had very strong, I think, record quarterly EBITDA in EAI. You often don't seem to get much credit for your European operations. What is the sustainability of this strength? Is this more just a function of relatively low oil to NGL prices? Or is it more sustainable than that?

Yes. I appreciate you pointing out that we don't always get credit for that. As you know, I was over there during the more darker days in that business. And I think, first of all, I'm really proud of the results that our team over there is delivering. There's a few factors. Early in the decade we made a lot of change that I think structurally improved the earnings potential of that segment. We took out fixed costs. We improved the feed slate and we improved our market positioning. I think those things are structural that have improved the underlying performance of that segment which are internal improvements. The market has also improved as operating rates have increased. There's not really been any new capacity that's been added in the past few years and none anticipated in the next, at least, couple of years. So demand has started to grow again. Weak Euro, lower oil price environment. I think all those things are constructive to the EAI segment. Now, as the new U.S. capacity comes online, we would expect that the EAI results would moderate some. But clearly, in my mind, there's a new level, given changes in oil to gas, Euro and then our own internal changes which we made.

Thank you.

Thank you. Another question came from the line of Mr. Bob Koort of Goldman Sachs. Sir, your line is now open. Robert Koort - Goldman Sachs & Co. LLC: Thank you very much. Could you guys talk a little about what the volatility in RINs prices did either in the quarter, or what may do in the future, and how it affects your refinery profits? Thanks.

RINs prices, Bob, went up a little bit here in Q2. And I think we have to wait to see how the regulatory environment evolves. Dave, maybe if you want to add a little bit more into that.

Yes, Bob. There's been a lot of volatility in the RINs prices and I think we've seen higher RINs costs for the company during the second quarter as we had higher throughput through the refinery. But as you know, there's a lot of talk around the renewable fuel obligation and we're waiting to see what the administration has to say about that, so there's a lot of speculation in the market right now. Robert Koort - Goldman Sachs & Co. LLC: And if I might, Bob. Could you talk a little about, you mentioned trying to keep close to your core competencies here in terms of doing any acquisitions, or maybe going further downstream. How far downstream would you go? We heard a pretty impassioned discussion from Dow yesterday about how much value they get added by going cracker plus 9. We heard from Eastman this morning talking about vertical integration helping them in downstream. So how far would you be willing to go downstream? And then secondly, you guys aren't all that big in Asia. Is there any appetite for doing – and getting larger over in Asia? Thanks.

So Bob, first of all, downstream. The way I think about it is, when you get really far downstream you start to compete in various fragmented markets that have many competitors, and the scale becomes smaller. For us, I think it's sticking to large-scale assets, large markets, and where operational efficiency costs, competitiveness create value. And even within that, we do have differentiated products like our polypropylene compounding business, and Catalloy and so on. So if you would consider that downstream, then I think we're certainly interested in that and we participate in that today. Unlikely we would get into the polyethylene conversion business. Now, that's a different kind of business and in prior lives, I've even seen the pipe business downstream and some mixed results. So I think it's really sticking to large-scale assets and not going so far downstream that we're competing in fragmented markets that have a very different competitive structure. In terms of Asia, I step back and think about feedstock advantages being an important driver for our investment decisions. And clearly, in the ethylene chain, the U.S. is more favorable to us than Asia. As we move into C3-C4 chains, certainly Asia could be interesting. Today we participate through joint ventures. And it's possible that we could expand within those joint ventures which are very – we have great partners and strong positions that we could build upon to participate in the local markets in Asia in C3 and C4 chains. And of course, we have a joint venture in propylene oxide in China, which we could build upon. So I think all those things are under consideration, and we just need to think through what drives value in terms of where we place our asset. Robert Koort - Goldman Sachs & Co. LLC: >: Got it, thanks very much.

Okay, thank you.

Thank you. Another question came from the line of Mr. P.J. Juvekar of Citi. Sir, your line is now open.

Thank you. Good morning, Bob.

Good morning, P.J.

As oil prices ran up last year then dropped earlier this year, what is the mentality of converters in their purchasing patterns? Are they reluctant to build inventories because of this volatility or because of the new crackers starting up?

P.J., I think converter inventories, their bias has been to keep lower inventories, especially after what happened in 2008. So I think that structurally changed how people think about inventory. I would say probably most importantly in the psyche of the customers, my sense is that the expected new capacity probably has them leaning towards the low side on inventories with what's expected in the second half. So I think we'll just have to see how these units start up and the timing of those units.

Okay. And then with oil prices between $40 and $50, what changes are you making to Europe, feed slate in Europe in terms of LPGs versus condensates versus naphtha?

In Europe, to the extent that we can purchase propane and condensates at a discount to naphtha, we continue to seek those opportunities and we're finding them. Especially in the summer months, we tend to find propane is more economical. So incrementally, we continue to push for ways to get non-naphtha feed into our crackers. And we're having some success, and we continue to push the envelope on that.

And one quick one on Hyperzone polyethylene plant. Is this technology tested, or what's the technology risk here? And in your EBITDA forecast, do you assume a price premium for Hyperzone PE versus regular PE? Thank you.

So this technology, we actually practice an analogous technology in polypropylene today, so it is a proven technology in polyolefins. We've modified it to apply to polyethylene. It in fact does have the potential to produce differentiated products. Without getting overly technical, it's a multi-modal process, so we can make products that essentially allow our customers to reduce part weight, consume less polyethylene per part, and offer better strength in some cases. So we do expect some premiums, and that's what we've assumed in our modeling. But I would say we've done a lot of product development work and some test trials with some of our customers, and those have proven out the characteristics of the polyethylene that we expect to produce.

Thank you.

All right, thank you.

Thank you. Another question came from the line of Mr. Vincent Andrews of Morgan Stanley. Sir, your line is now open. Vincent Stephen Andrews - Morgan Stanley & Co. LLC: Thank you and good morning, everyone. China has reduced its importation of recycled polyethylene by about 50% since oil peaked in 2014. And the, earlier this week, or last week I guess, they filed with the WTO to ban importation of recycled polyethylene. So I just want to get your thoughts on what impact do you think that could have to the supply and demand balance of the overall market as we head into 2018.

Vincent, I think directionally that's a positive in terms of global operating rates. We'll just have to see if that recycled material ends up elsewhere. But to your point, at lower oil prices generally, recycled materials make less economic sense compared to what they did when oil price was $100. So I think directionally it's positive in terms of operating rates. We'll just have to see how it plays out. Vincent Stephen Andrews - Morgan Stanley & Co. LLC: Okay. And just as a follow-up, as we think about 2018 and potential turnaround activity, should we be just assuming a normal year at this point or two years after 2016, will it be something more expansive?

No, 2016, we had a fairly significant amount of catch-up we needed to do. We had seven or so very large planned turnarounds. Our normal cadence is three to five, and you should expect three to five now for the coming years, and we'll phase it that way.

Vincent, I think we have two crackers on slate for next year, and one of the PO units and one of the trains at the refinery. Vincent Stephen Andrews - Morgan Stanley & Co. LLC: Okay, great. Thank you very much.

Could we please limit questions to just one question, so that we can get through everybody in the queue? Thank you.

Thank you. Our next question came from the line of Mr. Jonas Oxgaard of Bernstein. Sir, your line is now open. Jonas I. Oxgaard - Sanford C. Bernstein & Co. LLC: All right. Good morning, guys.

Good morning. Jonas I. Oxgaard - Sanford C. Bernstein & Co. LLC: Congratulations to finally getting that PO/TBA off the drawing board. I'm very excited.

Thank you. Jonas I. Oxgaard - Sanford C. Bernstein & Co. LLC: So I hope you don't mind, David. There's a couple of questions on this PO/TBA. The first one is, I'm assuming it's intending all for exports, since you're already exporting today. And the question is really where will those cargos land? Is there a risk that we will have to accept a lower PO price, we have to go further away? And then as a secondary question on this, chlorine prices have been up across the globe. How much benefit do you think there is to PO from chlorine, if chlorine keeps rising?

So on PO exports, first of all, we do not plan to export much of this capacity at all. In fact, we've already entered into some long-term agreements to place a reasonable amount of that volume today. And we would expect that most of the propylene outside that will be produced from this plant in 2021 will be placed in the domestic market and into downstream urethane markets and so on. So I don't expect a lot of that. In terms of exports, if it does go export, normally we export to Europe and Asia, and we have a system in Europe which we can plug into and supplement. So I don't expect that to be a drag on the project returns. In terms of chlorine, as chlorine prices rise, and if you think about our technology, we have a co-product that benefits U.S. natural gas or NGL advantage, because we're upgrading U.S.-based butane, which is priced more off of gas rather than oil, up to MTBE. So I think that favors the economics of this PO/TBA project, and given the scale we have, it should be very low cost, but I think it'd be very competitive globally. Jonas I. Oxgaard - Sanford C. Bernstein & Co. LLC: That makes sense. Now the point on chlorine is that's the marginal production technology, so if chlorine keeps going up. That should be beneficial, but I don't know how much?

Yes, exactly. Directionally, you're right, and it's difficult to predict how much chlorine will rise. But, yes, we're well-positioned in terms of the cost curve with this technology. Jonas I. Oxgaard - Sanford C. Bernstein & Co. LLC: Okay, thank you.

Thank you.

Thank you. Another question came from the line of Mr. David Begleiter of Deutsche Bank. Sir, your line is now open.

Thank you, good morning.

Good morning.

On polypropylene, back in June, Braskem announced a large new plant in the U.S. As a market leader, why wasn't the next new plant in North America yours as opposed to Braskem's?

That's a good question, David. I ask my team that often. You know, I think, look we were working on ethylene debottlenecks. We were working on the Hyperzone polyethylene plant, PO/TBA, and, frankly, you know, we're ramping up our resource and our capability to do several capital projects at one time. And so, I think it's a very logical sort of next step for us to consider polypropylene, and even perhaps propylene in the U.S., so stay tuned. Nothing today really to discuss, but it's certainly on our mind.

Thank you.

Thank you. Another question came from the line of Mr. Aleksey Yefremov of Nomura Instinet. Sir, your line is now open.

Good morning. Thank you. At your Investor Day, you talked about several projects to extend ethylene and polyethylene beyond the current La Porte HDPE project. Has your level of interest in those further expansions, especially downstream in polyethylene increased since then? Have those projects advanced?

Yes. So, Aleksey, in terms of organic growth, beyond the PP and propylene-related investment that we might consider, we still have one more debottleneck we can do at our Channelview cracker. In fact, we delayed that in 2015 in preference for the Hyperzone polyethylene plant to make sure that our merchant position doesn't grow further. So our plan is to execute that debottleneck, which will come in two phases, early in the next decade. And it would be very logical then to build polyethylene to consume that ethylene to maintain kind of a merchant ethylene position of something like 15%. So I suspect that as we work through the next decade, we'll do these two debottlenecks, which total about 550 million pounds at Channelview, both of them combined, and then another polyethylene unit behind that.

Thank you.

Thank you. Another question came from the line of Mr. Kevin McCarthy of Vertical Research Partners. Sir, your line is now open.

Yes, good morning. Bob, within the last week or so there have been some headlines emanating from Europe whereby competition authorities have paid a visit to a few different purchasers of ethylene in that market. Do you have any insights as to what's going on there? And as a manufacturer of ethylene, does Lyondell stand to benefit in any way? Perhaps you could educate us a bit on how monomer is sold locally in Europe?

I think it's not a whole lot different than how it's sold here in the U.S. And we weren't approached. So, I don't know all of the details around the nature of their inquiries, but my impression, having worked in both regions is that it was very similar in both regions in how the market functions, and how buyers and sellers negotiate price. So at this moment, Kevin, I don't expect some sort of an impact, one way or the other in terms of the ethylene market over in Europe.

Thanks very much.

Thank you. Next question came from the line of Mr. John Roberts of UBS. Sir, your line is now open.

Thank you. Back to the question on the PO plant. Do we need to see some isocyanate expansions announced to be able to absorb that propylene oxide?

I would say for two-thirds of it, not really. We've already – we have anticipation of demand and because it's out in 2021, I would suspect that we'll see some announcements as the next couple of years progress. So we've done a lot of work around placement of the PO and given the rate that markets are growing and the conversations we've had with some of our key customers, we think that we'll be able to place most, if not, all of it here in the U.S.

Thank you.

Carla, can we move to the next caller?

Thank you. Another question came from the line of Mr. James Sheehan of SunTrust Robinson Company. Sir, your line is now open.

Thanks, Bob. Could you share with us your outlook for naphtha prices in Asia, and whether you think that crude oil prices are helping the naphtha-based production in that region?

Yeah. I think in Asia, naphtha still is a very large source of ethylene production. And I think with low oil prices, certainly naphtha has become more competitive. I think with Asia, we continue to believe that as time goes on, methanol-based olefin production will be more relevant in terms of price setting. About half of the new capacity that's planned for ethylene in Asia, and specifically in China, will come from MTO or CTO. And so we think that the more relevant marker will be MTO-based economics, as it has been recently, but as it becomes bigger and bigger, even with slightly lower operating rates. We think MTO will be in the money and will determine the marginal cost of production.

Thank you.

Thank you. Another question came from the line of Mr. Hassan Ahmed of Alembic Global. Sir, your line is now open.

Good morning, Bob.

Hey, good morning, Hassan.

Bob, just wanted to revisit a couple of comments you made about EAI, and your feedstock slate there and the like. On the nearer-time side as well as the medium-term side. So and the premise of this question basically is that, at least as I see it, naphtha prices seem to be coming down on much harder than oil prices, right? Again, as I take a look at the sort of naphtha to oil ratio, it seems to have compressed quite dramatically relative to yesteryears. So the nearer-time question basically is, that Q1 to Q2 was there a meaningful change in your feedstock slate as far as EAI go? Lesser or more amounts of LPG used? So that's the nearer-time part. And the medium-term part is that if at all this new relationship that I'm talking about, meaning a compressed naphtha to crude oil ratio, does continue or does linger on, would it not be sort of more economic just to use naphtha rather than sort of doing the switch over to LPG? I mean just, your medium-term thoughts about this new phenomenon would be appreciated?

Yes. Excellent question. So the first question about Q2 and LPG cracking, it's incrementally, a little bit more LPG cracking, but not significant. So I would not consider that to be an unusual step up in LPG cracking. If there's some seasonality, generally in the summer months, we crack a bit more LPG. But it was not unusual. Your point around naphtha, I think, it's a very good one, is that naphtha cracks have actually been pretty good and naphtha price relative to oil was somewhat strong in the past couple of years. And now it's kind of – it's again going back to a more historical relationship, or even weaker. Simply put, the way we try to buy non-naphtha feed is there's a discount to the naphtha price. So if we can't get a firm advantage in the price mechanism, then we likely wouldn't buy it. And we would make the decision at the time. And to your point, to the extent we're not able to do that, then we would just crack naphtha and capture that. So the advantage has to be firm for us to crack LPG.

Understood. Very helpful, Bob.

All right. Thank you.

Thank you. Another question came from the line of Mr. Frank Mitsch of Wells Fargo Securities. Sir, your line is now open.

Thank you, and good morning, and congrats on the record quarter. I was going to ask you if you guys are doing this call from the bat-cave because of the echo that's involved, but Dave was limiting me to one question, so I'm going to have to follow-up on that later on. Bob, you mentioned that Corpus Christi ran at 88% during the second quarter. I was wondering if you could parse that for us as the quarter progressed. And more importantly, where is that facility running through the month of July?

Well, first of all, thanks for your compliments about our quarter, and we're calling from a conference room, not the bat-cave. Corpus Christi, so we were ramping up in Q2. I think we had mentioned in Q1 earnings that we have some maintenance we needed to do. And so we've completed that. Today, the cracker is running in the mid to upper 90s% in terms of operating rate. As many new investments go, there's some teething that you find, and we have to correct small things. So we've basically materially increased the size of just about every piece of equipment in that plant. And so as we work through that, we find different things that we need to adjust. But we would expect that as the quarter progresses, we would run pretty close to 100% over at Corpus.

Yes, Frank, we have completed the rate tests at Corpus, so we have demonstrated the full capabilities of the expansion, and it's just normal operational issues over the past few weeks here.

Terrific, thanks so much.

Thank you.

Thank you. Another question came from the line of Mr. Matthew Blair of Tudor, Pickering. Sir, your line is now open. Matthew Blair - Tudor, Pickering, Holt & Co. Securities, Inc.: Hey. Good morning, guys. Thanks for taking my question. My question is on polypropylene. Is there any pent-up margin expansion potential in the U.S., given that the inventories have been falling and sales have been pretty strong, yet you've seen spreads between polypropylene and propylene remain flat for the past, I don't know, nine months or so? And then also, it looks like there's been a fair amount of planned polypropylene expansions canceled either in China or other places of the world. Are you getting more optimistic on polypropylene margins going forward? Thanks.

Good morning, Matt. Thanks for your question. I think some very astute observations. First of all, yes. In the near term, inventories are quite low, as reported by different publications, so we have a $0.03 price increase announcement out for the coming month. So our sense is that the polypropylene market is very balanced, tight, and depending on the time of the year, and we would expect that to continue. And as I mentioned earlier in one of the other questions, it's part of our assessment in terms of our organic growth program going forward. So we do see – we see some of the cancelations that you mentioned and we're very constructive about polypropylene for the coming few years. Matthew Blair - Tudor, Pickering, Holt & Co. Securities, Inc.: Thank you.

Thank you. Another question came from the line of Mr. Laurence Alexander of Jefferies. Sir, your line is now open.

Good morning. A question about the balance sheet. Given the optimism you have about the structural dynamics in the industry, the breadth of the projects that you have in your potential pipeline for review, and the broader or deeper engineering talent to be able to handle more projects, has there been any shift in how you're thinking about the amount of leverage you'd like to take on, either on a mid-cycle basis or on a trough basis, in order to take advantage of those opportunities?

I think so in the near term. Our view as we had expressed in Investor Day as well that we think we can continue to fund organic growth from our operating cash flow, given the level of cash flow we generate quarter after quarter. So I don't think we're going to necessarily need to avail ourselves of balance sheet capacity to undertake more organic growth. Essentially, I think the balance sheet is something we would use to undertake inorganic growth should we find the right opportunity. So our approach has not changed. It's more just a tilt towards organic growth as we find these opportunities to create shareholder value.

Thank you.

Thank you. Our last question came from the line of Mr. Marvin Schwartz of Neuberger Berman. Sir, your line is now open.

Thank you. It would make me very happy if you really put on the back burner any thought of acquisition of any meaningful consequence because you have a major alternative, and it's buying back more of your own stock. You've taken your shares from 575 million shares in the first quarter of 2013 down to the current level of 397,000 (sic) [397 million] shares. But in the last six months you have really throttled back on the buyback. Now your stock sells at one of the lowest price/earnings multiples of any company on the New York Stock Exchange. One of the reasons is that there is a lot of concern about your 2018 earnings outlook, whether with the increase in industry-wide ethylene, you can continue to have up and what I think is likely to be record earnings, but others may disagree with that. But my more specific question is why not accelerate your share buyback program? After all, a few months ago you did announce your fourth 10% share buyback. Why don't you implement it more aggressively and it would help to assure that you'll have an improved earnings per share year in 2018?

Good morning, Marvin, and thank you for your question. I frankly had expected this question to come up much earlier in the Q&A, so thanks for the question. Let me talk a little bit broadly about our share repurchase program and how we think about it. First of all, share repurchase continues to be part of our capital allocation strategy in our plan. You see that we bought back shares in Q2. We've shown in various forums that our cash deployment priorities, they haven't changed. They're very consistent. It's to pay a strong dividend. We're going to continue to invest in maintenance of our existing assets. We're going to invest in profitable organic growth, and we still have excess cash, which we have dedicated to share repurchase. I think there are two things, Marvin, that have changed in terms of share repurchase. First of all, when you think back to our first one or two – or actually the first two or three 10% programs, we funded those with about 6% to 7% of the 10% from operating cash flow, and then we incrementally added debt to supplement. One of the things we've said recently is that we would not add debt to supplement buybacks. We would take the excess cash flow, and then we would dedicate that towards buybacks. The other thing we changed is that we're much more opportunistic in terms of our buyback program. And I think in Q2, it really showed some of the benefit of doing that because we could stretch our buyback dollars further and buy back more shares. So we're more opportunistic. But we continue to believe, as you do, that we're undervalued. And it's sort of, how do we stretch this 5% to 6% or so that we can do from our operating cash flow to buy the most shares possible? So frankly, Marvin, I don't think anything has changed, and we continue to see acquiring ourselves as a very good alternative when we think about deploying our cash flow and we'll continue to do that. So, Thomas, I don't know if you wanted to add any more to that in terms of buybacks.

No. The only thing I would add.

No, thank you very much. The truth of the matter is, if you added $500 million or even $1 billion to your total current debt, it wouldn't materially change the basic picture of your strong financial condition.

This is Thomas Aebischer speaking. You're absolutely right with your comment about the size, if you use the size of $1 billion. However, buying back shares is an investment position like any other. And as Bob has mentioned, we are trying to create as much value as possible with our program. We have a 10% approved program, and we are executing this as we go forward. And you have seen, we have clearly increased our buybacks as the opportunities came across in the second quarter of 2017. So the capital deployment hierarchy really hasn't changed to what we have communicated over the last few months.

Thank you.

Thank you for your question, Marvin.

There being no other questions, let me close with a few thoughts. In the second half of 2017, we'll continue with our unrelenting focus on safe, reliable, and reliable operations, and a disciplined approach to costs. I think all of these things will deliver differential results for you, our shareholders. With no major planned maintenance for the remainder of this year, and a more typical cadence of about four turnarounds this year, we're well-positioned to capture market opportunities. So with that, thank you for your interest in our company, and we look forward to updating you in October. With that, our call is adjourned. Thank you.

Thank you. And that concludes today's conference. Thank you all for participating. You may now disconnect.