Good day, and welcome to the Exxon Mobil Corporation Second Quarter 2014 Earnings Conference Call. Today's conference is being recorded. At this time, for opening remarks, I would like to turn the conference over to Vice President of Investor Relations and Secretary, Mr. David Rosenthal. Please go ahead, sir.

Good morning, and welcome to ExxonMobil's Second Quarter Earnings Call and Webcast. The focus of this call is ExxonMobil's financial and operating results for the second quarter. I will refer to the slides that are available through the Investors section of our website. Before we go further, I would like to draw your attention to our cautionary statement shown on Slide 2. Moving to Slide 3. We provide an overview of some of the external factors impacting our results. Global economic growth improved modestly in the second quarter. U.S. economic activity recovered after contracting in the first quarter. China's growth rate strengthened due to increased exports and government stimulus, while Europe's economic recovery remained moderate. Energy markets delivered mixed results. WTI prices increased by more than $4 a barrel, narrowing the discount to Brent, while Western Canadian Select prices also strengthened. U.S. natural gas prices decreased compared to the first quarter. Global industry refining margins strengthened, while strong chemical commodity margins were offset by weaker specialty margins. Turning now to the financial results, as shown on Slide 4. ExxonMobil's second quarter earnings were $8.8 billion or $2.05 per share. The corporation distributed $6 billion to shareholders in the quarter through dividends and our share repurchase program. Share purchases to reduce shares outstanding were $3 billion. CapEx was $9.8 billion in the quarter and $18.2 billion year-to-date, down 17% from the first half of 2013. Cash flow from operations and asset sales was $12.8 billion, including proceeds associated with asset sales of $2.6 billion. At the end of the quarter, cash totaled $6.3 billion and debt was $21.8 billion. The next slide provides additional detail on second quarter sources and uses of funds. Over the quarter, cash increased by about $500 million from $5.8 billion to $6.3 billion. Earnings, depreciation expense,…

[Operator Instructions] We'll go first to Paul Sankey with Wolfe Research.

David, what have the impacts of sanctions been on your operations in Russia?

Yes, look, Paul, I know our activities in Russia are a matter of great interest to you and everybody else on the call and rightfully so. But what I can tell you as of this morning is that we are waiting for further details on the sanctions in order to better understand how we need to comply. But I have to tell you, given that we simply don't have sufficient information, I'm just not in a position this morning to comment any further on the impact of the sanctions.

Okay. The CapEx in Russia, is that financed from within Russia? I was thinking that given the scale of your operations in Sakhalin, maybe it's kind of an internally -- an internal Russian financing operation?

Yes, I really don't have the details of that. We finance our operations in a number of different ways. And I don't really have a specific comment on Sakhalin or the rest of our activities.

So essentially, the status is that we're -- you're waiting for more clarification on any limits that may be placed on, I guess, investment and operations?

Yes, and as you know, what's been in the press has been people's thoughts and expectations, but we really just haven't seen the detailed written sanctions. And so until we have those and have a chance to assess them and evaluate them, again it just puts me in a position this morning where I really can't make any specific comments.

Understood. And then my follow-up is totally separate. The construction started at Baytown you highlighted, that, I think, is advanced against schedule, isn't it? And is that fully permitted, and obviously, final investment decision and everything else? And what is the expected completion date?

Yes, that project is right on our plan. We do have all of our permits in place. Construction has started. We put that picture in the slides this morning to kind of show we're digging dirt and the project's underway. Even throughout the permitting process, we were well underway getting all the engineering lined up, all the contractors, all the supply chain so that once we had the permits, we were ready to go. So no change to what we told you at the Analyst Meeting. We're on schedule so far, and we do expect to have that project up and running sometime in 2017.

We'll go next to Doug Leggate with Bank of America Merrill Lynch.

So a couple of questions, please. The promise of improving on operating cash flow is obviously a big theme from your Analyst Day. We don't really see any substantial margin change this quarter with the startup of PNG and, I guess, Kearl ramping up. So I'm just wondering if you can frame for us how you see the -- what the drivers of that change in cash flow are in terms perhaps of how the margin could change for your new portfolio of assets, which I guess will be about a quarter of the company in 2017? And any color you can give, qualitatively if necessary, but just to give some comfort that, that turn is coming? And I've got a follow-up, please.

Yes, sure, Doug. Let's talk about that a little bit as we look at how things have really evolved over the last, say, 12 months. We have seen some pretty significant increase in our unit profitability and our ability to capture changes in the realizations as they come along. If I look at where we are so far in the first half of '14 on Upstream profitability relative to 2013, we're up over $4 a barrel on unit profitability. And if I go back and I take out all of the asset management, asset sales, related gains in all the periods, unit profitability is up right at $2. So I think you're starting to see the impact of the trend that we talked about in the Analyst Meeting of reducing our exposure to lower-margin barrels and barrels where we don't have quite the upside potential. And you're just now starting to see some of the projects that we've talked extensively about coming online. I mean Papua New Guinea LNG is an example. It's just started up, but it's one of several projects to come on in the next couple of years, as we talked about at the Analyst Meeting, all of which are accretive to average unit profitability and average unit cash flow. So I think, in our production volumes, we're starting to see the benefit of that. Again, it's early. We've just started up the project. We have a number of projects yet to come over the course of the year. Of course, Papua New Guinea will be ramping up. We'll have the Lucius project coming up later in the year. And I might give you an update on that, as you know, at the time of the Analyst Meeting, and when we put out our F&O review, we…

I'll make my follow-up a very quick one, hopefully. So assuming the spending level does hold around the $37 billion number, all things equal, it's the age-old question for you guys: You're going to have a lot of free cash flow. How are you thinking about the dividend nowadays as opposed to stepping up the buyback? Because when we traveled recently, I think your message was, "well, that cash flow will go back to shareholders." So if you could help frame the importance of one over the other as you stabilize the underlying production base, that would be helpful. And I'll leave it there.

Sure. Thanks, Doug. As you mentioned, at constant prices, yes, as we deliver the plan that we outlined at the Analyst Meeting, we do expect to see a continued increase on our cash flow generation. And keeping the CapEx at the levels we discussed would, by definition, improve free cash flow, again just as we've seen dramatically here in the first half. In terms of the capital allocation, no change to our prior approach. We're going to stay disciplined on the capital. We're going to fund our best projects. And I think, as we've talked about in the Analyst Meeting and folks are beginning to recognize, our opportunity portfolio is quite extensive at this point, and that's going to allow us to be selective. So we'll continue to be disciplined on the capital side. We will continue to pay a very consistent and increasing dividend over time, and I think you've certainly seen evidence of that over the last few years. And after you accomplish those 2 things, the rest of the cash flow will flow back to the shareholder through the share buyback program. So no change in approach, no change in how we're doing our capital allocation, but again, we are certainly looking forward to continued success in our project ramp-up, continued success in upgrading the value of our molecules in the Downstream and Chemical and delivering that profitable growth that we talked about a lot in the Analyst Meeting. So thank you.

We will go next to Ed Westlake with Crédit Suisse. Edward Westlake - Crédit Suisse AG, Research Division: David, very small question first, just on asset sale gains in the quarter, if you shout out the actual number in this quarter, if you have that?

Sure. In total, the gains from asset sales on an absolute basis were about $1.7 billion, $1.6 billion of that in the Upstream and the other $100 million in the Downstream and Chemical. Edward Westlake - Crédit Suisse AG, Research Division: Let's talk bigger picture about the Permian. Obviously, at the Analyst Day, you spoke about 1.5 million acres. Do you have a breakdown of how much of that is kind of CBP, how much is that is Midland? [Audio Gap] Delaware Basin for more the application of horizontal drilling?

Sure. I'll start out by saying, if you look at that whole 1.5 million acres, it is spread throughout the Midland basin and the Delaware Basin. We're in a number of different areas, and that really gives us the opportunity to do a number of things to grow our production there, including a lot of things in the conventional fields, water floods, CO2 floods. We've got 65 workover rigs still running in the Permian, in addition to the other rigs that we have drilling exploration wells. So we have a lot of exposure to both conventional and unconventional, again, across -- broadly across the basin in Texas and in New Mexico. As we look at the various areas that I know people are interested in, we certainly have some very good acreage in the prime areas for the Wolfcamp, and we're just getting started in there. The Bone Springs is another one that we're working on. So when you look at this ramp-up in growth that we've seen to date, and you've seen the numbers of the significant growth in liquids in the U.S. year-over-year, we are just now beginning to scratch the unconventional plays and getting some of those wells down and see what we've got going on. We've got about 5 rigs drilling horizontal wells today in, again, the Wolfcamp, the Bone Springs and a number of areas. We have brought 93 wells online this year. That's up almost 70% from last year about this time. So a lot of activity, a lot of growth but just scratching the surface of the potential in that area. So we're excited to have the opportunities that we have across the basin, across the platform and, in particular, the wide variety of things we have to work on in that play. So it's not just unconventional. It's a number of resource opportunities, and you'll continue to see us ramp up activity there and see that production. Again, as we talked about at the Analyst Meeting, that is a big-time focus area for us, as is the Bakken where we're having tremendous success as well, and the Woodford Ardmore area. So I can tell you, sitting here mid-year, the opportunity is there. We're developing it, and we're seeing that production increase right in line with our expectations. Edward Westlake - Crédit Suisse AG, Research Division: And if I can be very sneaky: Is it fee acreage, or is it more recently sold in the Permian? I'm thinking about the royalty position. Some are starting to disclose where they are on that.

Oh, yes, we -- no, we've got -- most of our acreage is fee acreage. And as you know, that's a big help on the royalties.

We'll go next to Blake Fernandez with Howard Weil.

I had a question for you on the production profile. I know you kind of confirmed that you're on track to meet your full year target. 2Q came in a bit light compared to what we were looking for. I know you referenced some maintenance and European nominations were weak. Is it fair, as we kind of move into second half, to think that 2Q is a low point? I know you'll have CLOV ramping up and maybe some of that maintenance coming back online. Or any color you can give us on how to kind of think about second half of the year?

Yes, sure. If we look at the first half in particular, if we look sequentially where the volumes came down quite a bit. Just on the liquids side, downtime was worth 66,000 barrels a day for us from first quarter to second quarter. So we had a very heavy maintenance load up in Canada; in Kazakhstan, at Tengiz; and a number of other places, in North Sea, for example. So while we did see the benefit from projects at PNG and Kearl, they were masked by, again, this planned maintenance, seasonal maintenance, but it did have quite an impact on us. As we typically do going forward into the second half, that maintenance gets done and those things come back. And the other impact we had sequentially again was a sharp reduction in gas sales. I think our demand in Europe was probably worth over 150,000 oil-equivalent barrels a day on the gas side. And then we also had some downtime. So I'd characterize -- if you're looking at the second quarter, characterized by a extremely heavy maintenance load and your typical seasonal decline in Europe volume coming off a low base, because of the low winter. So the offset of that, of course, is PNG LNG starting up. The increase you've seen in the higher-margin U.S. liquids volumes. They just weren't enough to offset these other factors. As we head into the second half of the year, you will see these maintenance items come back up, as they typically do, and then the project startups that I talked about: full ramp-up of PNG LNG; and then the other projects that I mentioned, Lucius and some of the other ones. So we would certainly expect to see the benefit of both of those factors coming out of the second quarter. And that's why I really wanted to focus a little bit of time this morning on how we're doing year-to-date, because I think the real key measure of our performance and whether or not we're delivering on the targets that we established at the March Analyst Meeting is we are right on plan. In fact, we're a little ahead in some areas, like U.S. liquids production, for example; PNG LNG, a little ahead. Some other things are a little behind, European demand, for example, on the gas side. We continue to ramp up Kearl, and that progress is also looking good as we head into the second half of the year. So again, if we look past the quarter-to-quarter fluctuations and focus on where we're at year-to-date and what we're expecting in the second half, I can assure you we are spot on to deliver the outlook that we gave you.

The second question. One of your European counterparts has just announced the -- I guess, the initial steps to form an MLP. And it seems like Exxon is flushed with assets that would probably fit very nicely into one and really highlight the underlying value that's probably not reflected in the stock. I'm just curious if that is even on the radar screen?

Well, I'd say kind of generically everything's on the radar screen. We are just constantly looking at all of the things that are out there, all the options we have to realize full value from all of our assets, including our midstream assets. The one thing I'd remind you, if you recall, back in the 2011 and 2012 time frame, we actually sold a number of our midstream assets and realized extensive value for those. And those are reflected in the very strong gains on asset sales and cash flow we generated. Now if you look, step back and look at MLPs: Most companies are using those as a means to raise cash and finance growth or reduce their ownership costs or exposure. Those aren't strategic drivers for us. In our case, when we look at our midstream portfolio, these are strategic assets to us. We think we are monetizing the value of those, whether or not you would assert that they're adequately reflected in our share price yet. We are certainly monetizing those and maximizing the value in the integration of our full value chain and also as part of our logistics and integration between the Upstream, Downstream and chemicals. So you probably won't be surprised to know that we've taken a hard look at this and look at the assets and the opportunities, but we're -- we like what we have. We like the integration benefit. And in fact, if you've seen some of our recent announcements, we're actually investing more dollars in that part of the business. We mentioned the Edmonton rail project and a few other ones. So midstream assets are strategic to us. We think we're getting full value for them as part of the integrated business model that we have, but I wouldn't want you to ever think that we're not aware of and looking at everything that's out there that others are doing and some things others may not have thought about yet.

Our next question comes from Roger Read with Wells Fargo.

I guess, maybe come back a little bit on the Permian question, just because we did see the -- I believe there was an asset swap that you did during the quarter. And since in general we're seeing a lot more activity heading that direction, maybe could you give us an idea, a little bit of sort of relative size? I know you don't like to get into a lot of details, but kind of relative size; and as we think about growth opportunities maybe of the Permian relative to the identified projects in the Gulf of Mexico, if there's any sort of, I don't know, additional detail, clarity, something there you could offer us?

Yes. We did sign an agreement in the second quarter to do a swap that basically added about -- additional 26,000 net acres in the Permian. And virtually all of it, it was in the Midland basin, which of course, as you know, is prospective for the horizontal drilling that we talked about. If you add that to the acreage we talked about that we picked up earlier this year, we've now added 50,000, 60,000 prime acres right in the sweet spot of where we want to be. So that's good. And that's one of the reasons why we've increased rigs in that area. I mentioned the 65 workover rigs that we're running. And I think we've got 11 rigs running on the exploration and delineation and evaluation side, so certainly ramping up activity there and very encouraged by the results we're seeing. It's a very, very active area for us. Now in terms of activity relative to other areas, I have to also say the Bakken has -- is an area where we're also ramping up production quite significantly, and you see that in our results. We've got a lot of activity there. We've got 12 rigs running. That's up from where we've been in the past. Operated production was up 26% in the second quarter. So again, we're continuing to ramp up. The other play we've talked about is the Ardmore, and we've got higher rigs running there as well. One of the things, if I just kind of think about adding all of that up and looking at our liquids plays, production across the Permian, Bakken and Woodford Ardmore in the second quarter was over 200,000 barrels a day. And that was up about over 25% from a year ago and up quarter-to-quarter. So we're continuing to…

And then it kind of segues into what my other question was going to be. Mexico, clearly, they've made progress on the legislative side. We still need to see what the actual rules are going to be and get a good feel for timing, but can you talk a little bit about what Exxon sees as the possibilities in Mexico over the next, oh, I don't know, 3 to 5 years as this develops?

Well, we're certainly encouraged by what we've seen to date. And we're certainly respectful of the process of deliberation that's going on and as they work through their legislative process, and we're monitoring that closely. We have a long history in Mexico, and we are certainly anxious to see how all this comes out and what opportunities might be available for us along those lines. Again, as I mentioned a minute ago, we do have those 3 blocks awarded to us right there on the boundary of the Mexican blocks in the deepwater gulf. And so we'll see if that can help generate opportunities, but we're encouraged today, anxiously awaiting the -- how all of that finalizes and all the details come out over time. And then we'll pursue any opportunities that are attractive to us, but we certainly like our position.

Our next question comes from Doug Terreson with ISI.

So for clarification, how does the $1.6 billion of Upstream asset sales that you mentioned a minute ago reconcile with the $1.2 billion other figure that you highlighted on Slide 8? And do you have any geographical segmentation for either of those results?

Sure. So if you're looking at the $1.2 billion that we mentioned, that was kind of the delta quarter-on-quarter, okay? And -- because we had a number of asset gains last quarter and then last year. So if you're looking at the total picture there, and again there are other items in the earnings rec, but just to be clear, in the Upstream, the total value of the asset sales in earnings was $1.6 billion in the quarter. And then if you look quarter-over-quarter, that's about $1.5 billion, with an offset of a couple of hundred million dollars in some other things like startup expenses and that sort of thing. If you're looking at the sequential comparison, we had about $400 million of gains on asset sales in the first quarter this year, so the delta there is about $1.2 billion in earnings. So I hope that sorts it out for you. And then we talked separately in the call about the impact on the cash flows.

Okay. And then secondly, over the years, ExxonMobil and its peers have employed fairly substantial portfolio management programs to support returns on capital. And with the decline in returns across the sector over the past 4, 5 years, the pace has accelerated for some companies and with positive effect on returns and their values in the market. So my question is, with ExxonMobil's returns following what the industry did over the last several years, why wouldn't the company be using portfolio strategies -- portfolio management more rather than the same, or less, to enhance its returns profile? That is, if you think that it's not. So really, any updated thinking on portfolio management strategy in light of the industry context is appreciated, David.

Yes, yes, thanks, Doug. I would say there's really 2 items to talk about in return -- in regard to the return performance here over the last couple of years. First, with regard to asset sales, they're not linear. We had a number of asset sales in '11 and '12. And I think the combination of those 2 years yielded about $20 billion in cash flow, very strong. Last year was less of a year. This year, we're off to a pretty solid start between the first quarter and the second quarter and, in particular, what we've generated here with our asset sales. So the program is ongoing. We don't make an announcement in advance of what we're going to do. We find that gives us a little better negotiating strategy when we do actually sit down and talk about selling assets. So we don't have any stated objective. We don't have any target that we feel we must make, but we're certainly able to take advantage of anything in the market that gives us a chance to realize value for our shareholders. Fortunately, for us, we don't have to sell assets in order to make a dividend payment or another distribution because of the cash flow we generate. And again, reference back to that chart I showed you. I think one of the other things to keep in mind when you look at Upstream ROCE over the last few years, particularly in our case, and I can't speak for others. But one of the aspects of these very large legacy plateau-volume, nondeclining-volume projects, however you want to call them, is all the CapEx is upfront. And so there, as you're building these projects, and particularly in our case, I mean we talk about bringing on 1 million barrels oil-equivalent a day of production between '13 and '17. By definition, you've got a lot of steel in the ground to produce 1 million barrel of oil-equivalent a day. And until that capital starts up, that's nonproductive capital. So that, I think, at least for us, has been a big driver in terms of ROCE. And as you know, as those projects crank up, Papua New Guinea being a perfect example, you go from nonproductive capital in the ground to productive capital and, in this case, highly productive capital. So again, part of bringing all of these projects online, part of ramping up the production is the earnings, the cash flow and the ROCE that comes along with that. And then on the Downstream side, of course, we continue to have industry-leading returns and continue to make incremental investments there to at least maintain, if not increase, that advantage.

Our next question comes from Paul Cheng with Barclays.

Dave, on Kearl phase 1, the ramp-up has been -- I think, probably is lower than what the investor has been expecting. From you guys standpoint internally, that -- when do you think all the startup issue will be fixed and then you will be running at a sustainable rate towards the full capacity? Is it going to take another year, 6 months? Any kind of rough time line that -- internally that you guys is forecasting?

Yes, Paul, let me give you a quick update on Kearl, because we have seen a continued ramp-up in the production. I did -- I mentioned that in the second quarter although on the surface it looks like production was flat at about 66,000 barrels a day first quarter and second quarter. But recall we did have some planned maintenance there in April that took us way below that number. I can tell you, as we came out of that April downtime for maintenance, production picked up quite well. And in fact, we achieved record production in the month of June of almost 80,000 barrels a day. So we've not quite reached the lined-out production and our expectations, but we are making progress. A number of the issues that you are aware of are being resolved and we're working on that. Again, I have to stress that although we're certainly a little disappointed in the ramp-up over the last year from what our original expectation was, the technology is working fine. We've actually been able to run each of the 3 froth treatment trains above their designed capacity. That's very encouraging. And so the objective for us now is to get all 3 of them running simultaneously on a consistent basis at or above their designed capacity. And when we achieve that, that's when you really see that volume change. So we're encouraged at the capability of the assets that we've put in place. We're encouraged with the -- with how the technology is working. We are working on the ramp-up and look to improve that. I can't give you a specific date on which we'll achieve 110,000 barrels a day or some number greater than that, but we are making progress, and we're looking forward to continue that progress. I can also say, on the other side of the Kearl initial development, the expansion project is going very well. I'm pleased to say for another quarter that the project is on schedule and on budget, which on the backs of the Papua New Guinea LNG project, very unusual in our industry for somebody in my position to sit here on an earnings call and tell you the projects are on budget and on schedule. So acknowledged that the ramp-up in Kearl first phase hasn't been quite what we were expecting, but again want to confirm that we're making progress, and we're encouraged with the results we've seen so far this year.

Dave, you guys have some very decent success on the shale oil. Do you have a number you can share what is your total shale oil production in the second quarter average? And comparing to the full year 2013? And whether you can break it down between the black oil, condensate, NGL and gas?

I can't break down the split between oil, NGL and gas, but the numbers I gave just a minute ago on the call across the Permian, the Bakken and the Ardmore are pretty indicative of what we're doing. Although, not all of it in the Permian, as I mentioned, is unconventional oil. But I think, without a specific number, again, when you look at the numbers that we had in the supplement to the press release, you see the 38,000 barrels a day increase in U.S. liquids year-over-year. And we look at how things are going, again, in the big three, the Bakken, the Woodford Ardmore and the Permian, we're ramping up to that level that we talked about in the Analyst Meeting, and we continue to move forward. And I'll continue to give you an update on a quarterly basis.

Can I just sneak in a quick question, a final one? There's a article, I think, out there talking about Exxon is evaluating to have a major expansion in one of your Texas refinery. That seems to be very uncharacteristic or quite different than what Exxon historically has been building or their refining strategy in the U.S. I want to see whether you can comment on that.

Paul, the first thing I'd say is I'm not going to make a specific comment on any rumors or speculation that are out there in the press. We are regularly looking at our portfolio around the world. I mentioned the investment we're putting into the Antwerp plant, which you might say, "Why would you be putting money into Europe given its current weak spot on the margin side?" But again, that's consistent with our strategy of upgrading molecules, very nice project to take what is currently a low-value resid strain and upgrade it into very high-value diesel and other project -- and other products. So when we look at the U.S., when we look at Europe, when we look at Asia Pacific, we're always looking at opportunities, and what we can do to either upgrade any molecule that's flowing through our system, how we can take advantage of already-advantaged assets, like our refining circuit, and improve that. So the -- for us to be looking at many different things should not come as a surprise. But rather than mention anything specifically, and coming back to the strategy that we've articulated, I think I can really go back to what we said at the Analyst Meeting: You look at our Downstream strategy. It's all about expanding feedstock flexibility; increasing high product yields -- high-value product yields; reducing operating costs; taking advantage of logistics, like we're doing in Europe that I mentioned in my prepared remarks; or pressing even more of the value we get from integration. So I would say there's no change in that strategy per se but wouldn't comment on any specific item that you might have read in the press somewhere.

Our next question comes from Pavel Molchanov with Raymond James. Pavel Molchanov - Raymond James & Associates, Inc., Research Division: On Russia, I appreciate the point that the sanctions have not yet been fully clarified, but can you confirm whether the Arctic exploration prospect with Rosneft is still set to spud in August?

Pavel, I -- again, I can understand the interest in the question, but I really have to come back to what I said at the opening. Until we have a chance to look at the sanctions, read them, assess them, evaluating -- evaluate them, it just wouldn't be appropriate for me at this point this morning really to make any comments specifically on any of our activities. Pavel Molchanov - Raymond James & Associates, Inc., Research Division: Okay, understood. And then on the -- you guys recently applied for a approval for the Gulf Coast LNG export terminal with Qatar. Any sense of when you're expecting that approval to be given?

I don't have a specific expectation. I think one of the things that's helpful for us is we went in a pre-FERC filing process for a while. We've been working on this, so this isn't brand new for us. I don't know exactly what the expectation is in terms of approvals or a number you have to get from the FERC, of course, from the DOE, et cetera. But I think, if you -- if we kind of look across -- how this thing might progress through the approval process, and if we can get to a position where we can FID this, you might be looking at some time frame for production around 2019, again without breaking it into its components. But nice opportunity for us. And we are certainly looking forward to an efficient process in terms of getting everything approved and getting our DOE approval for export to non-FTA countries and moving on with that project. But it's just one of many LNG opportunities we have in the portfolio. We're fortunate to have a number of things we can be working on around the world in various points of development, and this one is certainly one that we're working on real closely.

Our next question comes from John Herrlin with Societe Generale.

Just a couple of quick ones, Dave. With the PNG gas, is that all contracted sales at this stage? Because you had some spot cargoes initially.

Yes, we've been basically -- because the project has started up months early, the current cargoes that I talked about, they're basically, by definition, going in on a spot basis. And we're pleased with our ability to place those cargoes at attractive prices. As we get down to later on and the contracts all kick in, about 95% of the production is contracted on long-term contracts tied to the price of oil. And that is certainly part of -- if you'll recall, back at the Analyst Meeting when we said we would take the percentage of our total Upstream portfolio production from about 63% or 64% liquids or liquids linked up to about 69%. This is just an example of that, but yes, those -- the cargoes that we're placing now are basically spot but into the market. But again, we've been able to place them, and pleased with how that went and then really looking forward to getting this project continuing on. And again, just very pleased with the startup and very pleased that we were able to bring that project in under a budget that was 2 years old. The industry's gotten used to those annual updates of budgets on LNG projects and costs going up annually. And again, we're very pleased that -- to bring this thing in early and under our budget.

Last one for me is on your tax rate. Your effective tax rate was around -- maybe you said something, but I missed it.

Yes, let me give you a little more color on that. You did see an effective tax rate around 41% or 42% or so. That is down from last year and also a little bit down from what we saw in the first quarter. The real impact you're seeing there is just a combination of the mix of our businesses, Upstream, Downstream, Chemical; geographic; some of our portfolio management activities; the expiry of the Abu Dhabi onshore concession. Of course, as is typical, asset sales tend to have a lower tax rate than earnings from your operations. So all of that kind of drove us a little low here in the second quarter. I can tell you, without giving a specific guidance and a specific number, but a normalized tax rate going forward ought to be somewhere in the mid 40s compared to upper 40s of prior history, somewhere in that order of magnitude, just to give you a feel for how that impact might roll through going forward.

Our next question comes from Guy Baber with Simmons Investment Bank. Guy A. Baber - Simmons & Company International, Research Division: Just one quick one for me and more of a point of clarification. But I wanted to ask about the U.S. liquids performance relative to your internal expectations. That's an area that's outperformed our model. You've given us some great detail on the call, so thanks for that. But wasn't sure if you'd said that the U.S. liquids production was tracking in line with the internal plan or it was outperforming? So just wanted to clarify there, as we try to think through the ultimate potential of your LRS portfolio in light of some of the longer-term guidance you gave at the Analyst Day previously.

Yes, Guy, thanks for the opportunity to clarify that a little bit. We are slightly ahead of our internal expectations for the year in the U.S. on liquids. I mentioned, in total, relative to what we talked about at the Analyst Meeting, we're kind of spot on, so -- but the puts and takes, kind of think of -- about it as still maybe a little bit behind on the Kearl ramp-up, but I addressed that earlier, but slightly ahead in the lower 48. We are very encouraged with the results we're seeing. We're very pleased with the additional opportunities. We are adding rigs. We are putting some additional resources into those areas. But bottom line, to answer your question, yes, we're a little bit ahead of where we even thought we'd be internally so far this year.

And our last question comes from Allen Good with Morningstar.

Just quickly, and I'm sorry if I missed it, but on the U.S. natural gas production, it looks like declines have been slowing over the past few quarters. This quarter, we actually saw sequential growth. Can you talk a little bit behind the moves there and what we may expect for the rest of the year and maybe into next year as well?

If we look at the gas business, yes, we're sequentially up just a hair but really about flat, down year-on-year, which is also consistent with what we talked about at the Analyst Meeting. So you are seeing that kind of year-on-year decline as we move those resources more into the liquid side. If we're looking sequentially, I wouldn't read too much into that. We are about flat. It's probably just timing of frac-ing and completions and bringing wells on to sale. I would say kind of as a follow-up to the prior question, everything we're doing on the gas side is per the plan, and that's a broad statement as well as in the U.S. So the second quarter, we had some good performance, but again, I wouldn't want to give an indication that our full year outlook on the gas side is any different than what we might have said at the Analyst Meeting. We are seeing the bump up, of course, from the early startup of PNG, but then on the other hand, we came out of a very warm winter in Europe and those volumes were down fairly significantly. So I think what I would just say to wrap up your question and the call: Think about all the things we laid out for you in -- at the Analyst Meeting, both strategically and the strategic choices we're making; and upgrading our portfolio, high-value, higher-margin, higher-unit-profit products into the market, that's across all of our businesses; selective investments to continue to press those strategic advantages. And then zeroing in on Upstream production volumes, right on what we had expected and maybe a little better in a couple areas. And again, if you look at that year-to-date free cash flow chart and you look at the progress we've made in a number of areas, we're -- again, we're very pleased with how our first half is turning out so far this year.

And that does conclude our question-and-answer session. Mr. Rosenthal, I'll turn the conference back to you for closing remarks.

Well, I would just like to thank everybody for participating on the call today and your questions, and look forward to talking with you all again in about 3 months. So thank you very much.

This does conclude today's conference. Thank you for your participation.