Repsol, S.A. (REP) Earnings Call Transcript

Good morning. Hello, everybody. I'm glad being here having the opportunity to tell you about our strategic plan for coming years. It will be a real pleasure to bring you along this presentation over the coming minutes. This plan is very important step in the transformational journey we started a few years ago. In late 2019, we were the first integrated oil and gas company to commit [ 2020 ] emissions ambitions in the world. We did it because we consider that for Repsol, energy transition is not only a way of protecting our planet or society, but it's also a major source of business opportunities where we will thrive and create value for our shareholders, leverage on our businesses and our assets. Our industry playground is complex. But believe me, at Repsol, we are fully excited by the opportunities that we find in front of us. What we expect you to take from today, we are going to draw a value path for growth, fully compatible with our decarbonization goals, all that combining feasibility and ambition. Regarding the journey, I underline our financial concern about this appointment, always focused on making money in the oil and gas and in the low-carbon businesses. But you may also acknowledge where we are. We are not starting from zero. On the contrary, a platform with solid foundations from both, our advantages within the downstream and the leading position we enjoy in the Iberian Peninsula. Our key goal today is to define clear targets to be accountable about them. And our strategic plan 2021-'25 will be based on 4 main pillars: first, focus on legacy businesses, downstream and upstream; focus on maximizing the generation of free cash flow from them and going on in the continuous improvement with a great effort, reducing the carbon footprint of our industrial businesses. Second pillar, growth and development of low-carbon business platforms in areas where we have or we can build sustainable competitive advantages. Renewables and customer-centric businesses will provide solid growth during the strategic plan time frame and beyond. And we will also create the foundations for the new zero carbon businesses that will be core to our portfolio in 2025 and beyond, simpler economy, hydrogen and in fuels. And the third pillar, Repsol operating model will be evolved. The new corporate model will provide better value transparency and support the decarbonization of our portfolio in each of our businesses. And finally, shareholder distribution. That will be at the core of our capital allocation framework, ensuring a top quartile cash distribution to shareholders during the plan. These 4 pillars, always preserving our financial strength, will allow us to fulfill the main target of this plan, create value and free cash flow growth, doing that fully compatible with our 2050 net zero emissions ambition. Here, you have today's agenda. We have in front of us, a complex environment offering opportunities. And you can see in this slide, the description of that complex environment in terms of economic macro environment. There is an additional complexity for our sector, defining an non easy playground within the industry. The [ go ] short-term is here with us, although progressively recovering. And let me underline what is important in this kind of crisis. There are plenty of opportunities if you are prepared to get them. And Repsol is looking the future with a prudent optimism. Repsol doesn't start from zero. Repsol won't make energy transition from places it is not today or it is not good at. We have already started and will validate our credentials focus on downstream and in Spain and Portugal, where we enjoy a Tier 1 platform. This is a very convincing beginning for the success of our story. One key milestone of this journey happened by the end of 2019 when we were the first oil and gas company to commit net zero target. Many of the recognition came afterwards from leading ESG organizations since 2019. We are at the forefront of decarbonization and ESG in oil and gas. And a clear proof of it is that ESG investors double the presence in our shareholding structure versus older oil and gas option. And before talking about transformation, we firstly need to support this journey and the solid foundation of our advantages, but also on our double year cash engine. Our 2 legacy businesses have an impressive track record of delivering resilient free cash flow even under the tough conditions of lower scenarios like current COVID-2019. Starting with the upstream, let me only highlight the last 3 years of remarkable free cash flow with the year 2020 and its hard-hitting conditions. 3 years of free cash flow averaged above EUR 1 billion per year and last one at $43 per barrel of Brent price. How Tomás and his team are accomplishing that? We have continuous improvement of each operation, reducing cost and being very selective on CapEx deployed to assets, battling every battle with, let me use the term, with a downstream mindset. Don't forget that I'm a former downstreamer. Double gear machine or downstream. In the downstream business, we have our integrated sites with the trading business that allow us to obtain resilient free cash flow based on our Tier 1 refining operations. We're recognized by Solomon net cash margin benchmarking and also Wood Mac, the one you can see in this slide. In the commercial business, we are keeping the path of profitable growth even when volumes haven't been there in the past. More than 40% EBITDA growth since 2016. An impressive delivery of our people from service stations, oil and non-oil, LPG, lubricants, wholesale and the whole commercial businesses. And let me also highlight the milestone of free cash flow we are going to get this year, a EUR 0.5 billion under pandemic restrictions in Spain. Keeping up with our credentials, let me say that very few companies in our sector can demonstrate free cash flow positive every single year since the 2015 crisis. But on top of that, during these last years, we have taken quite seriously the initial steps on energy transition. Here we have set up these key deliveries. Our 40% of remarkable customer growth in gas and power in the first 18 months after the acquisition of [ Viesgo ] portfolio. This 1 million, adding our 24 million customers around mobility and our other retail businesses are now the stand for a conversation that we are starting to change with our clients. Digital platform, Waylet, is only the tip of this iceberg. Repsol's renewables growth is a clear story in Spain. This afternoon with Mavi's deck, you will realize how being selective Repsol has developed an impressive pipeline of competitive projects. And this is the way we commit to you. Also industrial sites have begun the journey of transformation with several steps toward production of sustainable biofuels and circularity. Well, where are we going to get to? Let's go to the core of this ambition. On this section, I'd like to take some time to reflect on how Repsol will be different by the end of this decade, the destination, let me say; and how this transformation will be achieved, the journey. Repsol transformation will be based on 2 key elements: first, decarbonization of the current portfolio, fostering the value creation and long-term sustainability, all that enhancing profitability and free cash flow growth in all our businesses. And second, a new operating model for the group to support and accelerate the transition that we organized Repsol in 4 verticals for the different businesses of the portfolio and a leaner corporate center, reinforcing the technology and digital drive as well as people as the key enabler for our transition. And finally, as you see in this slide, we will develop new partnerships because this is also something critical to successfully thrive in the energy transition. All the key decisions behind our net zero target and how we can support our commitment of leading shareholders' distributions are the goal of this section, a section just before of the business plans, 2021-2025. The evolve corporate model is based, as I said before, on 4 business verticals: a leaner and strategic corporate center and an extended global services unit. Each of these 4 business verticals enjoys different market dynamics and will hold different competitive position in each of them. They also have different growth prospects will play different roles in our portfolio strategy and add value with different multiples, so they do demand different financial structures. Therefore, we have a clear logic for this new corporate model. Each of these verticals will be reported separately. Increasingly managed in a more autonomous way, with increased accountability, ability to adapt other ways of working to the businesses' needs, and finally, prepare to develop appropriate partnerships. And this new corporate model should offer more visibility to the real value of our positions, driving potential value crystallization that today, we don't see in our share price. If we go to each of one, these verticals, let's start from the right-hand side of the slide. First, our seek of value growth in our current low-carbon businesses, which are the customer-centric businesses from the renewable business. In customer-centric, we will be leveraging our leading brand, our more than 24 million customers and our advantaged position in the Iberian market to grow, with a multi-energy and customer-centric approach. We will replicate and accelerate the success we are achieving after our entry in power and gas. And we are going to go with this success to some other low-carbon businesses such advanced energy services, distributed generation and e-mobility. In renewables, we will continue investing in a competitive portfolio with critical mass and international footprint, and a clear business model for value generation. Secondly, we will accelerate the decarbonization of our legacy assets of businesses, upstream and industrial. At the same time, they will contribute with 78% of our cash flow from operations during this period and 87% of our free cash flow in the next 5 years, despite the challenging environment we are considering, especially for 2021 and 2022. And finally, we see very attractive emerging opportunities in the energy medium term market, in large part driven by the technology developments we are taking part of. We are taking a business-oriented approach to these opportunities with the goal to create new profitable business platforms where we can deploy our competitive advantages and generate material value growth in a few years' time. And we believe that in some way, we clearly hold differential opportunities in the areas of hydrogen, advanced biofuels and circularity. As an early step, we will be exploring for the low-carbon generation business, a dual-track opportunity to either list a minority stake or alternatively search for a partner. We believe this movement is important to solve a lower cost of capital of the business competitiveness and also an appropriate financial structure and to provide better value visibility into this new business. As I have described in the previous slide, this new corporate model seeks to obtain certain answers to the realities we are experiencing in our businesses. Now just let me give you a flavor of our final photo at the end of this decade. In Repsol, what are we preparing for? Where are we going to get to? The answer is in this slide. Repsol is targeting a 40% of new low-carbon businesses by 2030, built within our industrial sites, our multi-energy retail and the renewables roadmap. We are fully determined to this agenda. And the speed required to get to this Repsol 2030. Our legacy businesses will continue to be an important part of our 2030 vision. And our value growth, as you can see in this slide, doesn't stop in 2025, and we will continue growing above 2025 free cash flow level to make a bigger, more sustainable, more balanced and more profitable company by the end of this decade. And this cash flow that we will persistently enjoy year after year, is the basis cornerstone for growing distributions during the decade. To finish this section, let me state an important message. We are convinced that Repsol is well positioned among oil and gas players to succeed in the energy transition. And I mean, there are 3 main reasons for that: right size, right ambition and right platform. The proportionality of our ambition makes Repsol story more feasible and profitable. First, we are embracing decarbonization as a very attractive opportunity to create value to grow and to be profitable. And there is also, let me say, a size issue. Repsol has the right size of ambition. It's large enough to enjoy a scale economies and being able to finance the development of large projects. But with our professional size, we are able to find enough profitable opportunities to replace some of our exposed businesses to the long term. And finally, our capabilities and portfolio are uniquely set to build new carbon businesses. Consequently, we have set the ambition on the right play. Our Iberian platform in Spain and Portugal, better regularly focused on other companies that are not mid-caps like us. We have a very strong and material customer business, providing us enormous opportunities to accompany our through energy transition. We have a top notch industrial platform, which provides assets, demand and capabilities to build new decarbonized industrial businesses such as hydrogen or sustainable biofuels. And finally, we have a significant position in the Iberian Peninsula in Spain and Portugal, where there are plenty of competitive renewable resources, which are a key advantage to build our future businesses. Let's move on some metrics of our strategy. We need -- always, we need to be very honest, but let me say that we need to be very honest about that. For the first 2 years, we'll continue in our best resilient mode deployed during the COVID year. The 5 years of the plan are set into 2 very different phases. First, 2 years in work mode, efficiencies, cost and CapEx reductions and a prudent financial policy, battling every cash out and pursuing any incremental opportunity with, as I said before, with our distinctive downstream mindset, our non-penny business for all of us. In the following 3 years, after 2022, is where they -- the main part of the project happens. This period of value growth acceleration is the key support for the investor cash distributions under a self-financed solution of $50 Brent and $2.5 Henry Hub. Probably, I think most of you recognize Repsol as a company that performs its best action under tough conditions, when the storm strikes, Repsol outside the comfortable support. And this year, we are proud to have delivered a top leading resilient plan that has found material opportunities to cope with COVID, OpEx, CapEx and working capital. It is true that not all the initiatives are going to stay, but certainly, they are going to allow us to be much better prepared for our strategy plan. This story maintains our confidence to perform and to provide free cash flow generation under these resilient conditions. So the first 2 years of the plan, we will continue this battle mode 2020 resilient plus plan. We look forward to delivering our high expectations, more than EUR 400 million incremental sustainable savings for 2021, behind these 3 programs we explicit in the slide: procurement, working capital optimization; as well as further corporate and G&A cost reduction. Altogether with the business plans will allow us to recover pre-COVID situational metrics by end 2022. What is going on along this following 5 years? This slide tries to explain it. Let me take a couple of minutes. It's clear that our legacy businesses are already performing on high yield mode. This story of free cash flow generation keeps on track. And during the strategic plan, legacy businesses are all able to provide with more than EUR 13 billion of free cash flow, 2021-2025 accumulated. There is 1 division that will still need cash because it's growing, with returns, of course, but it's growing. I'm referring to renewables road map. These 4 businesses are also contributing to Repsol's low-carbon strategies. Industrial circular economy business as well as zero carbon products strategy, customer-centric business and low-carbon generation with their exciting stories, and upstream, also upstream, providing cash, reducing its breakeven, becoming more short-cycle focused and being part of the intensive decarbonization of our portfolio. Let's keep in mind these 4 roadmaps to contribute to a net zero goal because today we'll also touch these elements later on even beyond 2025. If anyone wants to succeed in the transition, capital discipline is the top most important restriction. During this time, we are not especially deploying an impressive figure of CapEx. But what we are surely doing well is the CapEx allocation of all our funds. We have legacy profitable projects to develop during this plan. So we are still maximizing the value of current portfolio and business position. And we are not only squeezing traditional assets, but what is also clear, there is a shift in Repsol's story. We deploy the 30% of our cumulative CapEx in low-carbon opportunities. When we compare all these opportunities, taking into account their cost of capital, we can show that we have took the money on profitable projects that are well above their work. This is clearly a red line for us. We have size of decarbonization ambition to be as big as to become a profitable business. low-carbon opportunities are out there. We only take the top most of them. And before getting into details on business plans and -- because I realize that this online presentation can become a sleeping pill for you, we have preferred to give you the final answer of the plan. Yes, we are able to self-finance our plan at $50 Brent and $2.5 Henry Hub. Although we reduced dividend to EUR 0.6 share -- per share, I mean, in 2021, we are committing, and when oil price is above $50 per barrel from 2023 on, we will increase $0.05 per year achieving $0.75 per share in 2025. And at those prices, we will do share buybacks, 50 million shares by year from 2022 on. Over the last weeks, we have been building up a position consisting of shares and derivatives equivalent to 70 million shares at an average price of EUR 7 per share. As we consider that the current stock price is not properly reflecting value, we will continue looking for opportunities to further increase our treasury stock protecting future share purchase outflow. All in all, the distributions are only cut by 15% during the plan. And we are aiming to get back to a remuneration to our distribution of EUR 1 per share, again at 2025 with the flexibility that provides this mix formula, cash dividend and share buyback. On the right side of the slide, we offer you cash priorities if $40 Brent appears or $60 are coming faster than we envision today. Let me emphasize our commitment of EUR 0.6 per share dividend at $40 Brent. This CapEx plan and our investor proposition are well supported by both the business cash generation and the decisions we may take around this framework. But let me underline again, we are committing this dividend of EUR 0.60 per share in any price scenario over the whole period of the plan. Let's move on business strategies. Let's start with initiatives and projects with figures and targets, but also let's see with which metrics I'll be accountable to you in coming years, starting next month. Let's start with you, Tomás, our upstream business. For 2021-'25, the priority of our upstream business will be to maximize the generation of free cash flow from each operation and each efficiency. 4 key targets for E&P business: generate EUR 4.5 billion in free cash flow during the period, 5x the amount generated in the last 5 years, the figure in the last 5 years has been EUR 900 million; reduce its free cash flow breakeven to less than $40 per barrel to ensure resilience in a quite uncertain environment; maximize its efficiency and continue with its OpEx reduction, reducing total OpEx by 15%; and finally, contribute to the overall company emissions reduction target. The upstream business will reduce its total CO2 emissions by 75% during the period. We are also setting targets for furthering reduction for methane intensity, minus 50% and minus 25% in this period. Four priorities for our upstream business in line with the targets already presented -- first, free cash flow as a priority. The upstream will be a key cash flow generator for Repsol. For that, we will push forward our efficiency and also we'll leverage the quite high flexibility of our CapEx projects. Second, value delivery through our projects. We have set high demands on the capital allocation in the upstream business, requiring that the projects we are going to invest show short-term payback and low full cycle breakevens. During the next 5 years, we are going to invest as much as EUR 8 billion in upstream. Our project portfolio is top-quality and fully compliant with our demands. Digital will also be a key lever to enhance our ability to deliver value in our projects and operations as we -- I will develop later. Third, focused portfolio. We recognized that, I mean, we are not a major, we are a medium-sized upstream operator. And therefore, to generate value, we need to focus on those geographies in place where we have clear advantages. That will increasingly happen in this strategic plan period. We will go from having operations in more than 20 countries to less than 14. Our oldest in lines will be radically favored in value over volume. We are not concerned with the size of our production, but rather by its value. We expect that our production will move more or less around 650,000 barrels per day over the whole period. But we will manage all that with full flexibility. We will also be focusing our exploration to those areas where we have advantages and where investment may have a short-term payback. And fourth, Tier 1 CO2 emissions. I mean CO2 is not only for the other businesses, it's going to be also a priority for the upstream. And all that is going to have an impact on our portfolio and on our investment decisions, where we will reduce our exposure to high emission assets. By the end of this period, we will have a more competitive, more focused and a strong free cash flow generating upstream business. And by then, we will have the flexibility and the optionality to decide which route we want to take forward with this business from 2025 and beyond. And as I anticipated, we have a strong portfolio of development projects for 2021-2025 with low breakevens and short paybacks. Our large share of these projects, all in orange here, are brownfield -- are near field projects where we leverage existing infrastructure and we are able to build with good returns. More of these projects offer also significant flexibility, and we will be able to manage the spend actively in case the macro scenario is different from our base case today. We have also greenfield projects, Alaska Pikka and Campos 33 mainly. They are large projects with attractive potential. We have been working intensively over the last years, pushing down the breakeven of these projects with our partners, and we have improved their economics significantly and now show attractive breakeven, $38 in the case of Alaska Pikka and $41 in the case of Campos 33. I also like to mention Sakakemang, which is also a very attractive gas project base on our large gas discovery in Indonesia, which is progressing well in its price. All in all, we will be investing EUR 8 billion within the next 5 years in our upstream, EUR 5.5 billion of them are driven by the attractive portfolio of projects we just saw in the previous page, which offer us a very attractive base for value creation and a great free cash profile. As I said, we are being extremely selective in our investment in upstream and those projects offer an impressive low intensive figure of capital, less than $8 per barrel. In fact, according to external benchmark carryout by Wood Mac, the upstream investment portfolio offers one of the most attractive value creation prospects among peers. Exploration spend during the next 5 years will be limited with a total of EUR 700 million for the period, very targeted to our higher-value prospects, including Mexico, Indonesia and Alaska. And as I anticipated after a 2025 and beyond, we will have high optionality to decide which route we want to take with this business. Last, but not least for upstream business, is their contribution to the Repsol Group decarbonization commitment. Before 2025, our upstream business will be Tier 1 in emission intensity in the E&P industry. Portfolio management and improvement in operations, energy efficiency and flaring will be responsible for such improvement. It must be noticed that low emissions is a critical factor for our investment decisions. As it can be seen in the center of the chart, the new developments are less emission intensive than the average, the current coverage we have in our portfolio, and in assets like Sakakemang with high CO2 potential emissions. We are implementing CCS projects as part of our development to ensure we minimize the potential impact on emission. Let's move now on the industrial business. Our industrial business strategy will prioritize cash flow generation from our current assets. I imagine that this moment of this presentation, that is new for you. At the same time, we will go on transforming our sites through the development of new low-carbon business platforms. In 2021 and 2022, we expect average yearly free cash flow of EUR 0.6 billion, impacted by low margins due to COVID pandemic. And during the second period of our plan, the free cash flow will grow significantly to EUR 1.3 billion per year, 50% above 2019 levels, thanks to the competitiveness initiatives that I will shortly describe, additional value coming from our current low-carbon projects and gradual recovery in the market context. That solid cash flow generation will finance future CapEx with an average of EUR 0.9 billion per year, of which we allocate at least EUR 0.2 billion per year to the new low-carbon businesses included in the industrial business. In line with our ambition, we have set a clear targets. We have defined a clear target set towards 2025, reducing the refining breakeven by more than $1.50 per barrel, a net reduction of the CO2 emitted by our plants above 2 million tons by year. The future of our industrial business is based in 3 main pillars that will maximize the performance of our sites: yield, digital and new low-carbon platforms. To maximize yield, key priorities are: refining, leverage our Tier 1 assets advantaged position, enhancing competitiveness and operational performance, areas in which we are already a strong performers, as shown by our first quartile net cash margin position in Solomon and Wood MacKenzie benchmark. In chemicals, we aim to continue exploiting differentiation through high-value products, increasing the flexibility of our feedstock, having a more or a gassier feedstock, better said, and look for attractive growth opportunities in objective with our positioning and capabilities. In trading, we will maximize integration and value structure from our current assets and look for incremental growth opportunities in key products and in key markets. Digital of our activities and assets will also be a key to drive integration and improve our decision-making. We will continue our already big progress in digital. And finally, we will prioritize the creation of new platforms that will provide material growth to our group and reduce our CO2 footprint. Of this, I'll speak a bit later. Our industrial business will remain resilient and will be a strong source of cash also in a complex environment. Focusing on refining business. Our main objectives in 2021-2025, in this period is to maintain a strong competitive position despite of the complex environment we will have to face. From 2021 to 2025, we expect a progressive recovery of the refining margin. As in the past, our superior competitiveness and top-tier assets will provide us with an edge over the reference market margins. In fact, this increase of competitiveness will be a main area of focus for refining during the period driven by several initiatives. First, maximize our margin through integration, digital and our continuous focus on operational improvement. Second, we are launching a specific OpEx reduction program for the whole period, 2021-2025. And all that is going to have a direct impact on the bottom line. And finally, the new decarbonization projects will bring significant margin contribution for our business. And all in all, these efforts will contribute to a significant reduction of our refining EBITDA breakeven of more than $1.50 per barrel by 2025. Our strong commitment with lowering CO2 emissions will be also one of our levers to improve margins. This commitment that materialize for industrial in [ 2025-2025 ] decarbonization program. That means 20%, 25% reduction of CO2 emissions by 2025, with this structure around 2 main pillars: maximizing energy efficiency with higher returns, of course; and developing new low-carbon businesses. Let's move now on the customer centric business. For 2021-2025, the priorities for our customer-centric businesses will be to continue delivering the path of results, growth while delivering strong free cash flow. Key targets for customer-centric business for 2021-'25. They are: first, we'll multiply by 4 our digital customers, that is those customers that interact with us mainly through digital channels such as our current wealth application; second, we'll also double our power and gas and e-mobility customers moving from [ EBIT ] above 1.1 million clients to 2 million in 2025. This is very feasible and consistent with the growth rates we have shown since we acquired the retail business of the former Viesgo. Third, our EBITDA will grow to EUR 1.4 billion, the EUR 1 billion of last year is going to continue growing as we did in the last year. And this EBITDA growth will be led not only by the growth of customers in the new businesses, but also by the increase of our mobility oil and non-oil contribution margins. And fourth, free cash flow will also grow to more than EUR 700 million per year on average in the 2021-2025 period. Just to mention, the remarkable performance and resilience of our customer-centric business, which in such a difficult year as 2020 have been able to generate more than EUR 500 million free cash flow In this COVID pandemic year. I'd like to introduce briefly this businesses, which may not have enough visibility to some external observers. The customer-centric business perimeter includes our commercial businesses, which are clear leaders in Iberia Peninsula with top market shares in Spain and Portugal. Repsol is the leading energy retailer in Iberia, serving more than 24 million customers with our multi-energy portfolio. And our research shows that we are the most appreciated brand for consumers across all energy players in Spain. This business has a fantastic story of transformation. We launched a Transforming while Performing program in 2016, and what was since once as mature or even, let me say, declining business has been able to increase its EBITDA by 30% -- 30%, sorry, over the last 4 years. The key for this performance has been a dynamic digital, the restructuring of network and channels and capture of new revenue sources despite quite stable volume evolution in the market. Our ambition for the customer-centric business is to become the leading multi-energy leader in Iberia. All that will be done, building on the strengths we have today: our more than 24 million energy customers, growing along the energy value chain; the power and gas retail; and capturing the opportunities that energy transition offer us, including the entry in new markets like e-mobility, energy services, where we have leadership ambitions in our markets. Three are the main strategic drivers for this business to grow and thrive in the energy transition during the next 5 years. First, our multi-energy approach. We are already launching the market bundle offers across energies like fuel, power station plus power supply at home. In this multi-energy approach, we are stressing our low-carbon footprint, ensuring that a large and increasing share of our power-based renewable, deploying gas, deploying LPG, points of recharge, electric recharge in our services station network and launching renewable distribution energy solution for our customers. Secondly, customer centricity. This means ensuring we can engage, understand and communicate directly with the customer and guarantee that we are able to personalize our offering to them. Customer centricity also means having the ambition of serving the full energy needs of our customers, either in e-mobility or at home. Third, world class digital. Our Waylet app is the leading mobility app in Spain and has already today 2 million subscribers. We use data analytics extensively to personalize offers, reduce churn or optimize maintenance at our service stations. They are some examples of things we are doing around the digital in the commercial business. Still, we believe we have plenty of potential to be more digitally and leverage it to expand our business. Today, while we are ahead of most players in the market, we still have a limited presence in the digital because I thought our 2 million customers is a huge figure, but we have to compare this figure with the 24 million customers we typically serve in a year. Registered customers, those that we know and can reach RGAs above 10 million across all our commercial businesses. Those more engaged customers are the ones who are cross-selling of our multi-energy offering will be more successful as we know them and can communicate them in a better way. To accelerate these goals, in 2021, we are launching our Transversal digital loyalty program. It aim at integrating all data about our customers from the different businesses, improve the personalization of our offers, improve the customer experience and orchestrating our multiproduct offering and promotion. Increasing data and customer relationship party to provide all the energy needs to our customers, both of mobility and at home. And the business works as we expand into broader set of energies. We may multiply by 2.5 the margin for average registered customer when we extend our service station supply to our full energy service, including energy at home. This is also why we are so confident about the future of our customer-centric business even in a world were we may reduce our traditional fuel mobility sales in the future, but we'll be growing at home our convenient shops and non-oil opportunities. Let's move to the low-carbon generation business. In low-carbon generation, we have a strong ambition to build on our current position and become a competitive player in the renewable market. We are aiming to reach 7.5 gigawatts and 15 gigawatts of carbon generation capacity in 2025 and 2030, respectively. This includes our current CCGTs, our co-generation, although the future growth will come from development of our renewable portfolio with 4.2 additional gigawatts in 2025 versus the end of this year. Profitable growth is a priority. So we will make sure that bring at least a 10% equity return to the projects we develop. This new business deal will be funded with relevant CapEx. This year, we expect to spend EUR 0.6 billion figure that will be progressively increasing next year until we reach EUR 1.4 billion CapEx in 2025. As a result, we will project to grow our gross EBITDA, excluding the cogeneration results to EUR 330 million in 2025. We have defined our 3-phase plan to execute our fast growth renewables strategy. First phase that we are concluding now. It was mainly focused to build our team, developing solid capabilities to successfully execute our long-term ambition and to build a pipeline of projects at different stages for which we acquire some early stage projects. This year, we are entering and we will start the second phase. In the second phase, we are scaling up our operational capacity, and we are starting to develop our international platforms. An Chile is a good example of that. We aim to install more than 500 megawatts per year of fully greenfield or ready to build projects during this period. And we may also divest our stakes in operating assets to partners with lower cost of capital, reducing overall ratios to facilitate our expansion in this business. And this plan will enable us to achieve significant scale, distributed between Spain and our local market -- Spain as our local market, I mean, reaching 3.2 gigawatts by 2025 and 6 gigawatts by 2030 and our international platforms. This will be developing countries with a strong renewable growth and positive fundamentals, of course, reaching 2 gigawatts by 2025 and 6.7 gigawatts by 2030. I won't get into the detail of our projects as Mavi Zingoni will soon introduce you to our renewable pipeline by then, but I want to underline 2 main messages. We have a diversified and satiable portfolio of projects at different stages of maturity and with a balanced mix between wind and solar. And all, and I underline the term, all of projects present with relevant equity returns above the 10% threshold. And I also want to highlight the experienced management team we have set up these years. Let's move on our future zero-carbon business platforms. I have already mentioned this a few times today. I mean decarbonization is for Repsol an opportunity to develop new businesses. It's not a restriction. It's an opportunity where we can deploy our competitive advantages and distinct capabilities. Several of the technologies that will enable the creation of new businesses are still in development. Most of the ongoing technology developments will have an impact to our portfolio beyond the time frame of our strategic plan. But we really think some of them can be material, or can have, better said, material impact in the building of a decarbonized business. This is why we want to dedicate some time today to share with you what our current thinking and plans are from those technologies where we think we can build an advantaged business that will feed our growth in the second part of the current decade. We will cover today the following opportunities: green hydrogen and sustainable and advanced biofuels. Hydrogen production is one of the new business platforms we want to build, not only to decarbonize our industrial assets, but also to become a relevant source of profitable growth for the company. Let me be pretty clear here. If hydrogen becomes a reality and boost in Spain, Repsol will be the staffing player. We will help this to happen. Shaping the framework gives us to get to the most competitive source of renewable hydrogen in Spain and clearly the lower cost of production in Europe. We are best positioned to lead the renewable hydrogen development in Iberia for many reasons. The first, we are the largest consumer. We consume 72% of the total hydrogen consumed in Spain, and we are the main producers in Spain. Secondly, we can leverage our carbon infrastructure in industrial sites to maximize efficiency of these new plants. And furthermore, we have a great retail renewables storage industrial position that we allow us to integrate all that along the value chain. So we have set an ambition of 400 megawatts equivalent in 2025 and 1,200 or 1,200 megawatts in 2030. And this ambition is multi technology, combining hydrogen produced in electrolyzers with production from biomethane in our current steam reforming plants. I want to highlight the relevance of the biomethane pathway as it will allow us to produce renewable hydrogen competitively in a short time frame. And our hydrogen ambition is strongly supported by our competitive advantages for this production. We plan to leverage our current steam reforming plants to produce hydrogen from biomethane being economically competitive in the short term. We believe that, thanks to this together, with the possibility to integrate the new electrolysis plant, leveraging our carbon sites renewable production, all in all, integrating all that, we'll be able to achieve a 30% lower production cost than an average player in Spain. And I'd like to underline this point. Spain has a privileged position to produce hydrogen with electrolyzers. The strong renewable resource we have has a direct impact on cost. If we compare, for example, Spain with Germany, we believe they have, German, I mean, a 35% higher structural cost and that we will achieve competitiveness 5 years earlier along the way. As the main consumer in Spain, it is in the interest of Repsol to accelerate technology development and drive down costs, which will have a very positive impact, of course, to the final customer. And to achieve this is really essential that we have the appropriate regulatory framework and investment support that is going to support this renewable hydrogen to become a reality. That is our bet and we are going to go with ambition in that direction. Now I'd like to move to another of the new low-carbon platforms that will nourish our industrial transformation, that is the production of sustainable biofuels made from wastes and other advanced feedstock. Biofuel production is not new for Repsol. We are the first biofuel marketer in Spain, 66% share. And currently, we have a production of 700,000 tons per year. Our features provide us with solid advantages for production. We want to set our new ambition to reach 1.3 million tons per year of production of sustainable biofuels by 2025, and 2 million tons by 2030. And this is a relevant increase versus our previous target we had before of 600,000 tons per year of HVO in 2030. We are multiplying by 3 our target. We are managing a strong pipeline of projects to support this ambition. We have a balanced mix of technologies and flexible feedstock approach that is going to support all that. I already described some of them when discussing our industrial decarbonization efforts, and I'd like to emphasize that we are seeing very attractive returns in all these projects. All cases above 12% is key to secure the advanced feedstock for production, that is key, and we are working on that. And for our 2023 target, we expect at least 65% and potentially up to 100% of our biofuels are going to be produced from waste. And the decarbonization effort requires a disciplined approach to ensure we generate value for the company. Based on the cost implication and the abatement potential of each initiative, we have defined a clear path forward to drive our emissions to net zero. For now to 2025, we will focus on implementing technologies and measures that will generate today, at current costs, a profit for the company. This includes our business as usual emission reduction initiative, focused on energy efficiency, methane and flaring reduction in the upstream, but also implies the introduction of new renewable electricity and ways to energy technologies to supply our assets. In 2025 to 2030, we will progressively introduce innovative emissions reduction technologies, depending on technological and cost evolution, of course. And all that is going to include carbon capture and storage projects; increase renewable hydrogen to supply our refineries; development of carbon use initiatives, including e-fuels production, mineralization and so on; and energy storage technologies to complement our renewable power assets. For the long term, the focus will be on implementing these technologies at a large scale, driven, of course, by an improvement of technology costs and driving further electrification initiatives. Overall, we are confident that our approach based on the company abatement curve will serve as a light house to drive an efficient and successful decarbonization of our traditional hydrocarbon businesses for the future. All the low-carbon initiated I have seen describing today will contribute directly toward decarbonization goals. We have increased, and that is an important point, we have increased our carbon intensity indicator reduction target to 25% in 2030 versus previous 20% we state in December. Our portfolio of initiatives will allow us to reach this target, even showing a strong optionality and upside to comfortably surpass this value. We will do this by always ensuring our core principle of profitable decarbonization as a priority. We are making decarbonization to be more profitable. As you can observe in the graph on the left, our decarbonization is not based on a single curve. We have the contribution of multiple levers across all our businesses. And all that is going to mitigate the risk of a negative evolution of an specific technology or business environment over the period. When we look to the -- our long-term pathway getting to net zero emissions, our scenarios show a strong progressive reduction in our emissions, reaching at least an 80% reduction of our carbon intensity index by 2050, and with room for further reduction contingent depending, of course, of the future technology evolution. And additionally, we'll be complementing our decarbonization effort with the contribution from offsetting initiatives that will ensure that as we committed in December, we will reach net zero emissions by 2050. We also have increased our 2040 target to 40% of carbon reduction. We'll be able to get our targets if we successfully push the drive from people, technology and on our digital capabilities. And this section will show these key enablers of the transition and how they fit and how they push. We need to adapt our talent management and how we value and develop our people. But we also need to continue the simplification of the organization and how we deploy corporate functions all along the businesses. In this slide, we try to define some of the KPIs that combine these elements of a leaner and more efficient corporate center as well as a healthier organization with much more attractive development for everyone joining our projects. Now let me show a couple of slides where we demonstrate how serious we take technology and digital levers. Regarding digital, there are important progresses on the commitment we assumed with you in the last strategic update in 2018. We present financial results, financial figures, even with a [indiscernible] recognition from our peers. We launched some partners. We launched the program in 2017, and we are tracking it every quarter. Now we keep on track to take digital to the next step forward, both on transformation and also continuously improving our businesses, but also on the financials, we are putting as target to be captured in 2022. Artificial intelligence applied to our current advanced analytics, automation within our current operations and digital spot line for this transformation are going to be key levers, combining with the focus and the target of our businesses, mainly the area of the retail focus into customer centricity. Technology will be also critical for the solution of our net zero goal. And how we aim to compete at the very end of this decade is going to be critical for all that with solutions that are going to be based in hybrid renewables portfolio with storage, green hydrogen or integrated all that with the retail and energy management. The retail with the distributed generation, new services and solutions based on technical approaches to our customer behavior at home or mobility. And the same in the case of the transformation of our sites. I mean this disruption, they are going to happen. The relationship with the energy is going to change for all of us and we are prepared to take advantage of this energy system. And let me say, an excited era in the energy sector is coming. And Repsol is prepared to take advantage of all that. And we are starting the final part of the presentation. There is a change in the group's distribution policy. We get to a new remuneration framework that combines dividends plus share buyback. And first of all, we are reducing our remuneration proposal because of prudent financial policy, especially at the initial 2 years of our plan is pretty clear that the market is not borrowing our current level of dividend according to the dividend yield signal all over the year, but we have our own conviction about the Repsol valuation by fundamentals. And we think it's a question of time that -- that we can progress to the previous level of distribution. And the share price yield starts to collect the commitments and the delivery of this strategic plan. Therefore, we have a new, a resilient shareholder remuneration proposal. We have sustainable path of growth to reach 2021, EUR 1 per share, this remuneration level by 2025. Our resilient EUR 0.60 per share dividend paid in cash in 2021, ideally increased from 2023 to EUR 0.75 per share by 2025, if Brent prices in the year evolved, $50 per barrel are growing a strong dividend will be complemented on top of that with a share buyback program of 50 million shares per year from 2022 on, always subject to this $50 per barrel condition. That implies huge value at current share prices. And this share buyback will also boost financial metrics per share. In fact, taking advantage of the best prices that we strongly believe don't recognize the fundamentals of our businesses, we have already secured 70 million shares with compelling average price below EUR 7 per share. Even with this new dividend, Repsol still keeps to clear yield among peers. Just keep an eye on the fort that this distribution means for our cash, 16% of 2019 cash flow from operations and 20% -- 22%, sorry, of 2021-2025 cash cycle. What are the 2 highlights we see here? Repsol presents the mildest dividend cut among Europeans, when we reproduce at USD 50 dollar per barrel scenario, a 15% reduction. And Repsol is the only one that commits to a path that fully recovers [indiscernible] level at these low prices simulation, $50 per barrel. The plan, and that is very important, let me say is crucial, the plan is self-financed at $50 Brent and $2.50 Henry Hub. We carry out our business plan, pay incremental cash dividends and buyback 200 million shares without increasing our debt. But if we take into consideration that we won't increase dividends nor buyback shares if prices are lower, it is fair to say that the free cash flow breakeven is very close to $40 per barrel. Definitely, a flexible plan with our leading distribution proposal. With our prudent financial policy during the plan, we end up 2021-2025 period with an EBITDA of EUR 8 billion, but with the same level of debt we are going to have at the end of 2020. It is clear we are prepared for the time when we can take advantage from that low level of net debt EBITDA rate. And we are prepared to fund our value, path of growth and opportunities in the way towards 2030. In this plan, we are also defining on a specific gearing target range with a clear threshold, in line with our commitment with our current credit ratings. This slide will be on the very few selected by everyone to describe this transition -- this slide, I mean. The chart shows how we prioritize the use of funds depending on commodity price. I hope I don't need to emphasize the central part, the base case, but let me move to the left. What happens if $40 per barrel come to real? Then you already know that we won't increase the EUR 0.6 per share cash dividend, and we won't implement the share buyback, but we will pay this dividend. Additionally, we will use, if needed, the CapEx flexibility, and we'll demonstrate once again our resilience and performance in tough scenarios. What happens if we reach $60 per barrel during the plan? Well, it is pretty clear that we haven't included all the profitable opportunities we have been offered by our businesses because of the present financial policy that our tough CFO, Antonio Lorenzo, has set to all of us. If $60 per barrel come, we will push our low carbon ambition on 3 business platforms we have. All these 3 competing for the funds depending on the maturity and strategic fit and the risk-adjusted profitability they offer. And depending on the share price performance at that time and the dividend yield that we expect to get soundly reduced and depending also on the return of the projects, we also have to be aware of our special commitment with shareholders and the top quartile distributions we are setting for this plant. All that always, I underline, preserving our financial policy and our commitment with our current credit rating. This slide summarize the result of our business plan. It is an impressive set of growing per share metrics that are committed under our base case price deck. 7% annual growth of cash flow generation by 2025 is the cornerstone for both the investor distribution and CapEx plan we have set for the period. We also show you a couple of sensitivities, and you will find in the appendix the rest of the information needed to understand our base case scenario. Let's move on the conclusions. At the beginning of today's presentation, I summarized some of the key messages of our Strategic Plan. Now I'd like to close this presentation introducing the main commitments we are taking for 2021, 2025. And I underline the term, we are taking commitments with you. First, increasing our free cash flow in our main strategic goal. That is our main strategic goal. Repsol will generate our free cash flow, which will be, on average, EUR 2.2 billion a year during the next 5 years. This compares well with the EUR 1.9 billion that we generated in 2019 on a homogenous [ value ] basis, taking into account, of course, the Brent price we had in 2019. And it will have a growing path, reaching EUR 3.1 billion in 2025. Secondly, we will grow our profits even in the $50 per barrel flat environment we are forecasting. As shown before, our earning per share will reach EUR 1.8 per share in 2025, a growth of 10% per year. And our cash flow from operation per share will grow 7% per year in 2019-2025 period. The growth will not be linear, nor will be the deployment of our resources. As I explained before, we expected next 2 years, 2021, 2022, more focus on resilience and strength as the economic environment recovers. While 2023, 2025 period will be more focused on accelerating our transformation. It will affect, of course, our CapEx, and following our prudent financial policy, resulting in an average giving of 25% in the period. Third, transforming our corporate and operating model is a priority for us. In that sense, we include a clear target of a successful execution of a deal to either an IPO or find a suitable partner in coming months for our renewable business. Obviously, our transformation will be more visible than that, as you will see over the next months. Fourth, shareholder distribution are at the core of our plan. Our dividend per share for 2021 will be set at EUR 0.6 share. And it will grow to reach EUR 0.75 share by 2025, all that paid in cash under the oil price we defined. As you saw in our capital allocation framework, ensuring this evolution is our priority, and we feel extremely reassured about these targets. And finally, 2 key targets, which are highly relevant to reinforce publicly our commitment in this transformation journey we are in. First, we will be reducing our carbon intensity index by 12% by 2025 while increasing our ROCE 2 points in 2025 comparing with our current metrics. And we will devote 30% of our total CapEx in 2021, 2025 to low-carbon business, low-carbon generation, customer-centric business and zero carbon businesses within our industrial business. We believe the commitments we are taking with you and with our shareholders are ambitious and in many ways, industry-leading. We think they are fully aligned with our goal to provide our shareholders with a very compelling investment case. We expect that as we deliver on our commitments, this will be highly noticed and appreciated, building an attractive shareholder return story for our company. Thank you very much.

Hi. Good morning. I'm Upstreamer. I'm very proud of being Upstreamer. I'm firmly convinced that the oil and gas industry has provided quality of life to the human kind, and will continue to do it for a long time. However, I also believe in energy transition. The world has decided to take that direction, and the Repsol Upstream that I lead is being transformed to provide what Repsol needs for its success in that transition. A 4-wheel drive is moving our already initiated transformation. The first wheel in which we are transforming our [ apps ] and cash [ hedging ], to deliver $5 billion, EUR 4.5 billion, of free cash flow at $50 Brent and 2.5 -- $2.5 Henry Hub, maintaining our breakeven below $40 and $2. Our Upstream is now focused on cash generation without sacrificing the future. I insist we are sacrificing the future. We want to do it based on the stable cash flow from our legacy assets and the portfolio of self-finance projects during the period. In the second wheel, we're increasing our value based on our portfolio of key projects and the mindset of our people, center on efficiency and continuous improvement. We are just now focused only on short-term cycle projects with breakeven below $40 and $2 Henry Hub. We are now more rigorous about FID threshold and nothing beyond those $40 and $2 is approved. Third, we are transforming our product portfolio, reduce expense, less countries and more focus. In addition, we will be very selective in our investment in both exploration and development projects. Value is a priority and not volume. And finally, we will reduce our emissions to become Tier 1 of the industry. We strongly believe that being part of the solution requires commitments and emission reduction targets. We want to walk the talk and lead to reduction in the industry. These 4 wheels will also provide a lot of flexibility and optionality to adopt Repsol Upstream to the pace of the energy transition and the volatility of the markets. We have flexible enough resources to do it and decide about our production level, depending on the circumstances, but always protecting the cash flow. I started in this company in November 30 years ago. This travel has been long. When I started, Repsol was mainly a downstream company. Then it was decided to transform Repsol to an integrated oil and gas company, making [ grow over Upstream ]. The cash flow for that growth came from our Downstream business. Now we have 2 cash engines, even in a low price scenario. And Repsol [ has recurring the ] contribution from both to finance the transition and to offer a leading distribution. Know that our action contribution is required. Support Repsol transition that requires to transform our action [ program grew ] better to a cash generator and do it even at low prices. We need to deliver $1 billion free cash flow per year, maintaining a breakeven below $40 per barrel. We will support our value on cash delivery using 3 levers. Firstly, our excellent track record. We are recognized as a top explorer. Our recent project delivery is outstanding as well as our turnaround of the assets. Secondly, we will continue improving the asset using of our continuous improvement mentality, the digitalization and the implementation of operational and excellence centers. And finally, we will much more focus, both on exploration and development, reducing the span of activity and using our portfolio of 14 key projects with net present value breakeven below $40. Now I would like to mention some of our track record, which supports the credibility to deliver our plan, starting with our top-class explorer legacy. More than 3 billion barrels discovered by our people, we have [indiscernible] [ in Argentina ] in the last 15 years. Those are fantastic numbers for a company of our size. Our people are the engine of these discoveries. This is our exploration power house. We have a strong legacy and qualified exporters with top technology, process and relationships. We have already demonstrated, with the discovery we have done in the last 2 years, that our CapEx [ ROIC ] action and focus are providing results, demonstrating again that our qualified people with more focus will create more value. We will continue exploring, but in a different way. The driver will be the value and not the volume. And let me tell you something, exploring is still in the DNA of Repsol Upstream. Project execution, faster, leaner and safe is also in our DNA. We have here several recent examples of our capacity to deliver as well as the capacity of delivering of our partners. We have done this in different environments and countries, and we do it, exploring, developing and decommissioning. A track record that support the future delivery of our key projects. And finally, some examples of our excellent track record turning around assets. In Malaysia, U.K. and Norway, for example, we have been able to turn problems into opportunities with an integrated business approach, creating value where others saw problems. This is track record of an organization oriented to deliver. In Norway, we had a business with limited future. We bet on investing, managing decommission with technology and by [indiscernible] listening to the people, getting benefits of the synergies, and here we are, a complete new profitable business. In Malaysia, the improvements since we have the assets are remarkable and highly recognized by the regulator and partners. And in U.K., we have been able to create huge value, just improving the performance of the asset and being very rigorous on CapEx approval and execution. Here, we have 3 examples having more than $4 billion of value using our efficiency and continuous improvement mindset. We will keep on doing this in our assets and whatever new asset that we might incorporate into the portfolio. Now regarding the improvements in asset management, we have clear targets. Reduce our OpEx 15%, ABEX in 34%, and the cost of the structure in 30%. We will use again our efficiency and continuous improvement mindset to achieve those targets. We have also demonstrated in the past our capacity to turn problems into opportunities. The general situation nowadays is a great opportunity to implement new ways of working, increasing the efficiency and reducing the cost. The disruption created by the pandemic has accelerated the implementation of new ways of working, supported by our digital program. The digital program democratized the access to information globally, giving us the opportunity to accelerate collaboration within the teams and the teams support the asset at home, wherever home is. We were ready and the new ways of working, working out perfectly with no business disruption at all. The [ actor ] situation demonstrate that except for people in the field and offshore, the rest of the support we do, we can do it remotely in a very efficient manner. We have been able to adapt quickly to the circumstances, turning again problem into an opportunity. This centralized centralization of the knowledge is the purpose of best of online integrated operational centers, increasing efficiency and reducing cost. The thorough level of our free cash flow delivery and value creation is supported by the transformation of our portfolio in a much more rigorous CapEx allocation discipline. Our exploration will be more focused and leaner. We are recognized, as I mentioned before, as a top explorer after being very successful in discovering billion of barrels. We were supported at that point in more than 25 countries and investing more than $1 billion per year. In the last year, we exited from 23 countries, reducing our exploration investment to around $500 million per year. As a result of that past exploration activity and the acquisitions done, we have now a solid portfolio of contingent resources pending just [ FIDs ], which provides the sustainability of the asset for several years. This fact is driving our new strategy and exploration. We can adjust now our exploration investment to prioritize the development of existing resources. As Upstreamers, we will continue exploring, but in a different way. We will invest in exploration around $150 million per year to balance the free cash flow and the generation of new resources. Now our exploration will be focused on adding value around existing infrastructure with short-term cycle projects and very -- in a very few number of areas. We want to take advantage of our legacy top explorer performance to use it to improve this focus exploration. The areas of exploration are associated to our knowledge. We were very focused on the Gulf of Mexico, U.S.A. and Mexico, Alaska and Sumatra. In addition, we will finalize the pending activity in Guyana, Brazil and Colombia. In summary, a leaner and more focused exploration on productive basins to shorten the cycle. The reduction will [ span ] with more focus on North America is also a priority. We aspire to exit from some noncore countries to invest in that capital in North America, in which we have extra [ place ] to invest, Alaska and [ conventionals ] and also Mexico and synergies for possible acquisitions. We have a portfolio of 40 key projects to incorporate new production that defines the future of our Upstream. Our portfolio of key projects adding new production is very resilient with a looking forward breakeven below $36 and $2 Henry Hub. An important characteristic of the portfolio is the self-finance in the period, '21 and '25, demonstrating our focus on short-cycle projects. Let's point out a very important thing about the portfolio. '21, '25 cash flow are supported mainly by our legacy assets with a very well-known performance. The balance as a package between cash flow from operations and new projects -- of new projects under free cash flow generation is the key to deliver those $5 billion target. I now would like to emphasize that the execution of the project will be conditioned to this primary objective of $5 billion free cash flow since that objective could be generated just from our legacy assets. Also, the timing of the project provides CapEx flexibility. 3 projects with FID are done with an amount of around $600 million in both. And the rest, close to $6 billion with FID in the next 2, 3 years, which we will permit to maintain the balance between cash flow from operations and free cash flow of these new projects, if needed. Of the portfolio of 3 projects, our focus on gas, Sakakemang, [ Trinidad ], Marcellus, with around $1.4 billion investment. And the rest to focus on liquid with more than $5 billion investment. The CapEx intensity is one of the lowest of the sector, $8 per barrel. The breakeven and internal rate of return of the portfolio is still one of the [ sector]. And CapEx flexibility, as I mentioned before, is there to allow us to adapt to whatever future prices scenario, obviously. This project supports also the future cash flow generation beyond 2025. Since they will generate $1 billion in the period '26-'30 at $50 and $2 with the possible upside provided by price. Remember, they are mainly focused on liquids. The implementation of these projects in the period '21-'25 will also provide total flexibility to our Upstream beyond '25. We might adopt the business as usual approach, maintaining production levels and investment, or we could decide to go and harvest mode and squeeze the assets, maximizing the free cash flow. In summary, total flexibility to adapt to the future. And here we are, the numbers. These are the commitments of our transformation to step up the transition: 15% capital reduction; $5 billion free cash flow; EUR 4.5 billion at $50 Brent and $2.5 Henry Hub, that multiply by 5, where we had generated between '26 and '28, those same $50 and $2.5; more than 25% reduction in breakeven to maintain it below $40; rate [indiscernible] [ the social work ] capital intensity in 15% without sacrificing the future, without sacrificing the future, becoming Tier 1 in that parameter; more than 20% value creation based on our performance of projects and people, also Tier 1 in the industry. The reduced 20%, the net present value breakeven of our projects to be below $40. We will reduce the presence in the countries to less than 40 countries. 70% of our future CapEx will be in OECD countries. We will adapt our exploration investment to the new circumstances, growing from value and not from volume. And we will reduce 75% of our emissions to become Tier 1 of the sector in low emissions. In summary, we are transforming our option to become Tier 1 low emissions, employee resilience, in CapEx intensity and flexibility and in value creation. Someone said that numbers proves the passion, but these numbers are our passion for never giving up overlaps in DNA, contributing also as upstreamers we are to the Repsol transition targets. Thank you very much. Take care and stay healthy. [Presentation]

Good day to all of you, I hope that you are all well and healthy in these extraordinary weeks that we are going through. I also want to give a kind word of support to those who lost someone during this pandemia. I'm going to focus today on the renewable business of Repsol, a business that both borne back in 2018, at the end of 2018, as a central pillar of our long-term strategy of becoming a net zero player by 2050. So this is a central pillar of the strategy of stepping up the transition. Today, after 25 months since we started this business, this is where we are today. These are the more important figures that we have today. On the one hand, in terms of pipeline and assets under operation, we have 1 gigawatts. We will have at the end of the year 1 gigawatts already operating. We also have under construction 445 megawatts. We also have a 3.5-gigawatt of high maturity pipeline. And on top of that, as we speak, we are working in the development and negotiation of other 8 gigawatts. On the other hand, where we're going to focus is in becoming an international player. And to do that, we are focused in a few number of countries with material presence. So far this year, we have invested more than EUR 600 million. Probably the most important thing is how we are doing that. To do that, the main focus was, at the very beginning, to build up a very experienced team, a team -- a senior management team of the renewable business that has on average 10 years of experience in the business and have built more than 15 gigawatts of renewable farms all across the world. In total, we have at this point, 145 employees in this business. 1/3 are in the hydro part of the business and 2/3 that is in the wind and solar renewable parts of the business that keeps on growing every day. What is the strategy that we put in place? From the very beginning, as I said, we want to be -- we set the strategy to become an internal -- an international player. And to do that, we set this strategy in 3 phases. Phase 1, let me use the word successful or successfully. It's the one that we successfully executed back in 2019. That was the phase where we set the strategy, we built up the team, we launched the development of the ready to build and early stage assets. That is what we have done last year. What we are doing right now, that's the second phase. We're in the -- we're starting the second phase, and that's the phase that covers all the strategic plan period. That's the phase where what we are going to do is build up and put in operation all the pipeline that we will have. And at the same time, keep on feeding that pipeline just to be able to have a long-term view of the business. And we are going to do that focused also on creating international and selective platforms. This is a period where, in total, we are going to put in operation around 500 megawatts a year. And then comes Phase 3. Phase 3 is the phase where we want to accelerate based on the pipeline that we are going to create in [ the land ], we are creating right now, and we will continue creating in the next 5 years. And that's an area where we are -- a period where we are going to put in operation around 1-gigawatt per year. We are going to do that strategy leverage on 4 pillars, 4 pillars that we want to focus on. First, we're going to have a technology and geographical diversification. In technology diversification, when we have a hydro, we have, at this point, solar and wind onshore. We might enter at some point in offshore, not today. Where we also want to close -- monitor -- closely monitor the advancement in other technologies like storage, in batteries, hydrogen, et cetera, because it will also have an impact in our business. Then we also want to have a geographical diversification. Geographical diversification is also very important because it allow us to maintain and to play with the different market dynamics at the speeds in the different markets where we are in or where we might be in the future. It is also important the energy management approach. Energy management is a key component of the renewal business. And we do -- and we are focusing on that on 2 main things. On the one hand, a long-term approach. The long term that means that we maintain regulated or bilateral PPAs, including with corporate clients, that's to the risk the projects. And also just on the other hand is where we can play with the short-term trading opportunities that we may have. So having an advanced energy management is really important to take the most out of the financial structure -- out of the financial opportunities that we may have. So it means that in this business, having the right cost of capital, having opportunities or flexibility to finance the projects in different ways, is really very important, and that is, as our CEO said today, where we are focusing on probably finding a partner or also launching an IPO in the future. So all in all, when we think about this strategy, the 4 pillars [ of ] maintaining there's a bottom line [ of it ] that is what the IR target that we are setting as a goal. So we are going to go ahead with the different projects as long as we have an equity IRR larger than 10%. And that's the focus that we have and the delivery that we commit to. In terms of ambition and targets, as I said, since the very beginning, we're going to be an international relevant player. For us at this point, and we have been changing always to the upside. The targets, at this point, is 15 gigawatts by the end of the decade and 7.5 gigawatts by mid of the decade. So to do that, what we need to do in this strategy plan is on top of what we have of low-carbon generation capacity on top of the one that we have today, is add above 5 gigawatts in the next 5 years. So that's the focus that we will have to end 2025 with more than 5 gigawatts in total. So it means that we will have, at the end of this strategy plan, 700 megawatts of hydro, 1,700 of solar and 2,800 of wind capacity. The focus right now by 2025 is mainly Spain, where we started operations, and Chile, our first international entrant. But we will keep on working in the development of international opportunities that we'll need to add above 1 gigawatt in the next year. Let me focus now on the portfolio that we have today. I said that we have, what we understand, a very attractive portfolio with a high maturity rate. As I said at very beginning, we currently have -- will have, at the end of the year, 1 gigawatt already in operation, 445 under construction, almost 303.5, sorry, gigawatts of high-visibility pipeline, pipeline with more than 90% success rate, and I will develop on it later on. And also the projects that we keep on working in terms of development. All in all, I said that one of the pillars was the diversification of technology. So if you take a look at the chart, the -- our approach is to have, on top of the hydro, more or less equal sizes in terms of the wind and solar of the pipeline that we currently have. We also said not only diversified from a technology standpoint, but also from a geographical standpoint. And you can take a look in here that even when in Spain, where we started operations, and Chile, after our announced earlier this year JV, account for around 75% of the total gigawatts that we will have in operation by the end of the strategic plan. We will keep on working with what we call rest of the world. So a balanced portfolio is also important. Let me talk a bit on the projects that we have in Spain. In Spain, we've got [ in here ] all [ JV ] [ Andalucia ] because we also have 1 project in Portugal in here. We are finishing the construction of the Delta project. This is a project of 335 megawatts. 2/3 of it is already in operation today. At the end of the year, it's going to be fully operated. That's our first in-house wind project. On top of that, we also have the first floating marine wind float project in Portugal. We have a small stake in there in a consortium with other players, but it's a cutting-edge technology, and it adds a lot from that standpoint. We are currently constructing 2 solar projects, the ones that we call Valdesolar and Kappa, Valdesolar in Extremadura and Kappa in Castilla-La Mancha. They are going to be in operation in first quarter next year. On top of that, and that is where we enter into the high-visibility projects. We have 2 wind projects and 1 solar projects on top of the ones that are purely greenfield. So the reason why we said we have more than 90% success rate in this project is that these are projects that already have the interconnection rights, where we are already working. And in some cases, we also have the possibilities that in any megawatts does not go ahead, we have the possibility, we have the right to have those megawatts replaced. So it give us a lot of support in terms of -- and a lot of comfort in terms of the success rate of these high-visibility projects. You might see here at the right -- at the bottom right-hand side of the page what we call the greenfield projects. Because while we were working on these projects acquired at early stages, we also put in place a team just to work on the green, green, greenfield projects. So we have some alternatives in here, projects that are in Spain, with interconnection rights already obtained. And probably one -- another thing that is important and probably the differentiation in comparison to other wind projects is that we have the alternative to build some hybridization in these wind projects in Delta 1, Delta 2 and also in PI. So it means that not only we are adding more megawatts and -- but also this could enhance the profitability of the project. So the original one and the new one. So hybrid projects is a concept that we want to play on during this period. As I said before, we have the strategy, we have the how we are going to do that. But profitability is something that we are very focused on. Not only the fact that we can obtain the higher than 10% internal rate of return -- equity rate of return that we set as a goal, but also how we do compare to other players in this business. So what we have done in here is comparing the projects that we have, the 3 projects at the left-hand side of the page, the wind projects. We compare the levelized cost of energy of the projects with the ones that BloombergNEF provides, with the range that BloombergNEF provide. So you can see that in the 3 cases, the levelized cost of energy is equal or lower that the lower part of the range of Bloomberg. And in the case of the solar projects, it's even better than that. So all the solar projects have a levelized cost of energy even below the lower part of the range. So we can see here that the equity IRR of 10% that we ask the projects, all of these projects have it, and we are in the range of 10% to 12% of equity IRR in the Spain. If we move now into Chile, that's the other geography that we have right now, and we have a high visibility. I would say, first of all, why Chile? Chile is a country with a very stable regulatory framework. With a positive, I'd say, country conditions, a country that currently have more than 6 gigawatts of renewable in operation that is making an important bet for the growth, that is something that we look for, growth in the renewable size of the business where we can enter with a material size. So we're going to enter in some countries with material sources. And also it's a country with, I'll say, one of the best in the world conditions for quality resources, mainly, the north part of the country, that is where all our projects are located. So we will end the year with Cabo Leons III Phase 1 already in operation. So it says at the end of the year it's already operating and with under construction of the second phase of these projects. So on top of that, again, we also have projects in which we are working on and are going to be operating in the next 3 years. Half of them between 2021 and '22 and the other one in 2023. So it means that by 2023, we'll have more than 800 megawatts our stake in Chile. And on top of that, we also have additional opportunities in the agreement that we have and other ones that we are working on with. Consistently with our capital allocation approach, all the projects are very competitive in the Chilean renewables market. Again, as we did with the Spanish projects, we can compare the levelized cost of energy of our projects starting operations 2020, 2023 in comparison to BloombergNEF, always using the same methodology. So it means that we can compare the projects. And again, as in the case of Spain, we can see that in the case of the wind projects, again, the range of it, it means that our range is equal or below the ones that we can compare in Bloomberg. And in the case of solar, has happened in Spain as well, our range is below the levelized cost of capital of other projects in Chile, again, using the same methodology. So all in all, these projects have an equity IRR between 12% and 19%, depending on the project. These are very high-quality projects that we need to focus on, on the development of them on track, on budget and timely, and we are working right now in how we are going to commercialize the energy of the projects. We are thinking about a mix of PPA and merchant models allowing us to pursue the right balance between risk and value and the risk the projects in the first part of it and have flexible options in the long term. On top of the wind and solar projects that I've been describing, we also have the hydro. Hydro is also an important part of our renewable capacity. That's capacity that we acquired back in 2018. I would split it into 2 parts conversion -- conventional hydrogeneration, both reservoir and runoff river. And the other half, there is a pumped storage. That's the Aguayo project for which we have an opportunity to a large start. As I said, in Aguayo, we have the opportunity to add an extra gigawatt of pumped capacity. And that's reusing -- with the reutilization of the existing upper and lower reservoir. So this is important. We can do that with 4 units of 250 megawatts of pumping generation each of them. And it's a CapEx of above EUR 700 million. So this is a key projects, not only for Repsol, it's for Repsol, but also for the Spanish market. I'm going to explain that. As long as we develop in the country, the renewable business and the renewal capacity, and we have more and more renewable megawatts providing energy to the country, we'll also have some intermittent risk. So this storage is key to try to balance that -- to try to balance that power system. So this is a perfect complement for the renewables technology to avoid curtailments in each -- in some peak periods. So that is why this project is really very, very important. In this project, we are working, we are at the final stage of getting the interconnection rights. And we understand that with the right regulatory framework, this is a project that could be financially rewarded since the intraday price volatility is expected to rise between the peak and the baseload hours. So this is the focus of these projects and increased optionality and flexibility just to add stability to the system as a whole. Let me put all that into financial figures. In terms of CapEx, I started saying that this year, we are going to end the year with an investment of EUR 600 million. At the end of the strategic plan period, we're going to be investing per year more than double of that. And in total, we'll invest in the period EUR 4.7 billion. So that's the investment that we are going to do in the renewable business. For sure, this investment effort needs to have the impact in the EBITDA. As you can see, we will start next year with EUR 60 million, and we will end the year with more -- we will end the period in 2025 with more than EUR 300 million of EBITDA per annum. So that's the 4 keys that we have today and they deliver -- and that we are committed to. It's important to highlight that these figures does not include any potential upside for any potential partial divestment that we might have, not only to maintain a healthy diversified portfolio, but also to enhance the equity IRR of the projects. And this will allow us to play with the right financial structure, with the right debt levels and move on as aggressively as possibly in the business and at the same time, cut to the maximum value. Let me conclude in the way that I have started today. We started this business with an ambition to become a relevant player. Relevant player, 15 gigawatts of low-carbon capacity by the end of the decade, 7.5 by the end of this strategy plan at the mid of the decade. We are on track on this execution -- on the execution of this ambition, not only with the ones -- with the megawatts that we already have in operation, but with the ones that we have under construction, all of them on time and on budget. We also have been building, and that's something that we are really working on that is in creating or in building up a sustainable portfolio of material projects. And always thinking into considerations the balance between the technology diversification and the geographical diversification. So this is how we are securing the long-term visibility of this business. And for sure, without forgetting or more than without forgetting as having as an important goal to have all the projects with at least a 10% of equity IRR, as I showed, we are already doing in each of the projects that we have today. We understand that this is very demanding in terms of capital allocation on investment hurdles, but this is something that we are committed to. So that is why we need to have very competitive projects at early stages. To do that, we need the right financial structure. So we will keep on working on having the suitable cost of capital and the right capital structure for this business. And for sure, we can only do that if we have the right people, the right team, the right capabilities to go ahead and to execute this strategy. We have been hiring a very senior executive management team. We keep on hiring people and applying the best-in-class or the best capabilities that we have in our business in Repsol to this business. So all in all, this is a central pillar of our strategy. Renewables is a very important pillar of the long-term strategy to become a net zero player in 2050, and it's a central pillar of the strategy that we are releasing today that is stepping up the energy. So stepping up the transition. So thank you very much for your attention, and I can tell you that we are very committed to this business development and the execution of the goals that we have in here. Thank you. [Presentation]