Q1 2021 Total SE Earnings Call
[music].
Okay.
Ladies and gentlemen, thank you for standing by and welcome to the total first quarter 2021 results conference call.
At this time all participants are in a listen only mode.
After the speaker presentation, there will be a question and answer session to ask a question during the speech and you'll need to press star one on your telephone.
Must advise you that this conference is being recorded today.
I would now like to hand, the conference over to Mr. John P. S per CFO left her child. Please go ahead Sir.
Thank you very much and Hello, everyone.
So we when we began the year with a strong set of first quarter results that demonstrate total ability to fully leverage the upsides of the improving environment.
Why are your brands was up by 22 per cent compared to Q1 'twenty.
Total first quarter of 2021 adjusted net income jumped by about 70 per cent to Caribbean or 1.1 euro per share.
Debt adjusted cash flow was very strong.
Five 8 billion low.
But by one third compared to a year ago.
And gearing you know one of our key matrix was brought back down to less than 20 per cent by the end of the first quarter, which is a top priority for us in terms of restoring sustainable financial flexibility.
We have indeed recalled are up significantly from a difficult consultant 'twenty 'twenty environments, when Brent deep below $20 per barrel and.
And we have benefited from it we are the only markets, including Brent, which average more than $60 per barrel in the first quarter.
However to be clear, we created mainly the Saudi led opex price discipline for the current oil price.
We note that many parts of the global economy are still screening, we especially turnkey weak demand for aviation fuels and Lockdowns are scaling effect in many areas.
We remain prudently optimistic and focus on the fundamentals that got us through the crisis and contributed to the strong first quarter results.
As a reminder, the key actions and lessons learned from 2020.
All of the following.
First discipline on costs with more than $1 billion of cost reduction in 2020, we target an additional 0.5 billion write off course, Steve English here.
Best in class production costs of $5 one per barrel in 2020, we have a target of hydrocarbon.
Within the context of developing a world class renewable power business, we manage capex down to $13 billion in 2020 and set the targets between 12 and $13 billion for 2021 and.
And I will give you more details on this later.
We are continuing to high grade the portfolio and the organic breakeven was below 25 drop per barrel in the first quarter.
And this allow us to capture the upside of the stronger environment.
Operationally the group's first quarter production was up slightly compared to previous quarter.
<unk>, 0.8% to two point 86 million barrels per oil equivalent per day, and still reflect the impact of Capex plus quarters.
This is in line with our guidance for stable production in 2021 compared to 2020.
Product sales benefited mainly from reported we see return of Libya as well as our project at <unk> and.
<unk> <unk>.
Including <unk> in Russia, Korea, and in the UK, you unveiled looping, Norway and here in Brazil.
All largely offsetting the natural decline.
Looking now at <unk>.
The operating segments, we are pleased with the performance of the <unk> segments.
Which sets a new record high for adjusted net operating income in the first quarter of $1 billion.
And generated strong cash flow of more than $1 billion.
Although LNG price were down compared to a year ago.
<unk> posted very strong results, thanks to growing LNG sales and the positive contribution of renewables and electricity.
The restaurant ramp up in oil prices will continue to have a positive impact.
LNG prices, although the coming six months due to the lag effect on pricing formulas.
Regarding the situation at our Mozambique, LNG project, let me answer value that security is a top priority.
We reported last month that the security situation Youre Palomar was very serious and considering the evolution of the security situation in the north of the Caddo Cabo Cabo Delgado presents in Mozambique, total decided to withdraw all Mozambique LNG project personal notes from the <unk> sites.
We have declared force measure and we are managing the situation with contractors to minimize spending as long as we do not have clarity on the situation.
We hope that the actions carried out by the government of Mozambique, and its regional and international partners will enable the restoration of security and stabilize the Cabo Delgado plants in a sustained manner.
Obviously this evidence will impact the project schedule and at this stage, we estimate the impact of at least per year of delay.
As we have a large portfolio of LNG project, we will give priority to Cameron LNG extension and Papua LNG project.
Turning now to the hernia growth and electricity at TVT, we're continuing to accelerate growth in 2021.
Notably with the restaurant book by 20% stake in at any Green.
And they're really muted company.
We are increasing our level of disclosure. So you can see that our proportional share of EBITDA for these activities increased by <unk> 40 per cent year over year.
Close to 350.
$50 million in the first quarter.
Growth in store renewable power generation increased to seven eight gigawatt from pre Gigawatts a year ago.
Net of our production grew to $4 seven Terawatts hour from pre two channel with all the same value.
We are continuing to add to the portfolio focusing on early stage acquisition opportunities and in 2021, we allocate we will allocate more than 20% of our capex developing with activity.
In addition to the acquisition of 20% of it any green energy the largest solar developer in the world and our four gigawatt of portfolios in the U S.
During the first quarter, we will lease the rights of one five Gigawatts UK offshore wind project and we found down our equity interest in more than 300.
<unk> worth of when you will assess in force on the basis of 600 billion Euro Entre price value at 100% in line with our capital light model and also contributing to Derisking the portfolio.
Moving to our oil business. The E&P segment successfully leveraged the rebound in oil and gas prices and increased first quarter adjusted net operating income to 2 billion nil.
Nearly triple the same quarter last year and cash flow to $3 8 billion Euro.
By about 50% compared to a year ago.
E&P continues to be the cash flow engine that is powering the group through the transition and into the future and total total clearly benefits from low leverage off.
On the oil price.
We the signature of definitive agreements, enabling to launch of Colombia in Kingfisher upstream oil project and construction of East Africa.
Good oil pipeline buildup and Tanzania. The group is implementing a strategy to invest in resilience low breakeven projects that reduce the carbon intensity of its portfolio.
Unlike the upstream the downstream continue to.
Too faced a tough environment generating net adjusted operating income of 527 million and the cash flow of.
Close to 900 million.
European refining margins remain in the single digits, reflecting mainly the still depressed demand for audition two.
Impacting the world distillate market, but also the global in all of the non <unk>.
EMEA is building in the first quarter of 2021 15.
Million barrels per day in the fourth quarter of 2020.
In contrast, petrochemical margins were strong showing improvement year over year and quarter to quarter.
Marketing results were resilient, despite ongoing lockdowns that decreased volume by about <unk>, 5% mainly in Europe.
We started production of sustainable aviation fuel stuff at La Meds, and our facility at <unk> in force.
Early stage by demonstrating the group's ability to transform and adjust to the changing environment for growth.
<unk> is a different business units.
Finally at the group level, we generated $5 8 billion of cash flow debt.
Debt adjusted cash flow in the first quarter. So for now we are back on track at pre crisis levels.
In the first quarter. We also benefited from a working capital release of about 0.3 billion dollar profit.
For the full year equally maintain nitro caliber in environments like the first quarter with brands around $60 per value European gas around fix the rough immune btu and assuming European margins refining margins.
Around 10 to 15 direct pattern than we would expect to generate around $24 billion of debt adjusted cash flow.
First quarter net net investments, which include acquisition and asset sales was 4 billion EBITDA.
Our guidance for the year 2021, net investments is range between 12 and 13 billion.
With is split roughly half, while maintaining the existing business activities and half for sustainable growth.
Our strategy is to invest responsibly in profitable projects that reduce the carbon intensity of our portfolio.
And achieve a transformation of the group to a broad energy company.
To this and talk about the net investments will be allocated to maintain the group's activities and half for growth.
Nearly 50% of these growth investments will be allocated to renewables and electricity.
Gearing was 19, 5% at the end of the first quarter.
<unk>.
The influence of the hybrids to finance renewable acquisition in India in at any Green.
The current environment is allowing us to restore balance sheet strength faster than expected.
We confirm that our priorities for cash flow allocation or to invest in growing and transforming the company to support the dividend through the economic cycle and to maintain a strong balance sheet and a minimum long term single a debt rating, we are gearing sustainably and growth below 20%.
I remind you that at end of 2018, the gearing was about around 15% of core 15% is better than 20% to face volatility.
We have a strong start to the euro and confident in the fundamental of the group the board of directors decided to distribute.
First interim dividend of zero point 66 euro per share.
That means that.
The first interim dividend will be stable in euro, but considering the foreign exchanges rates compare to a year ago. This interim dividends represent an increase of about 9% in euro.
Overcoming the challenges of 2020 has made us a stronger company and the markets rebound.
To accelerate our transformation to total synergies.
At our shareholder meeting in May we will propose the adoption of total linear is as the new name of the company to Moscow expansion into the renewable power generation business on a worldwide scale transforming the group into a broadly diversified energy company.
And we will submit to lead.
And we will submit to the advisory vote of shareholders. The resolution set out our energy transition strategy towards carbon neutrality.
This move demonstrates our commitment to the energy transition and to carbon neutrality that we have presented in a number of targets.
First we left room, the clear ambition to get to net zero emissions by 2050 per across our worldwide prediction and energy product used by your customer scope one two.
<unk> together with society.
Specific commitment taken by 2030 per next decade is key.
Minus 40% net emissions and operated oil and gas operation worldwide by 2030.
<unk> 30, compared to 2015 with day to the base agreements.
<unk> share and in absolute terms of Capri worldwide emissions by 2030 versus 2015.
Or are the only ones among our peers, having set an absolute figure or targets.
Minus 20% carbon intensity reduction for energy products sold to a customer it's corporate.
<unk> is a more stringent targets that the one announced previously.
In Europe, 30% reduction of absolute emission by 2030 extended scope one two per suite versus 2015.
Our climate ambitions are well.
And over a sustainable development are embedded in the strategies of the group and like our name Mark the beginning of a new phase in the developments of the company.
And now let's go to the Q&A.
Thank you if you would like to ask a question. Please press star one on your telephone keypad and wait for your name to be announced that's accounts. So you have a question compressed ASCII once again.
One to ask a question.
Your first question today is from the line of Jon Rigby from UBS. Please go ahead.
Thank you.
John.
Hi.
Two questions if I can the first is on <unk>.
Your segmental.
Our earnings numbers.
<unk> your downstream numbers.
I should say your refining and chemicals almost half.
A couple of quite big moving pumps, and we can't see I, just wondered whether you were able to.
From characterized particularly I think from refining and chemicals.
Some kind of split between the contribution from refining and contribution from either both came in and.
And another chemicals operations from simply because.
I am conscious that those two numbers.
A very widely different than actually the market, probably ascribes very significant different values to them and then if I can just talk on just on TRP I take the point about the renewables improvement sequentially, but it doesn't explain.
Even closely the delta from the earnings.
And I'm guessing there's a contribution from trading in there I'm not expecting you to give me an exact number because we shouldn't think about the moving parts go into <unk> with rising energy prices from a contract basis, but presumably not the kind of windfall earnings.
<unk>, you able soon or at least give us.
A little bit of color.
On that.
Please.
So perhaps I will start with the second question regarding <unk>.
Diesel price it without giving you.
The detailed figures regarding the performance of trading so I can confirm that given the volatility.
We are able to given our global footprint.
Our portfolio, we have now in our hands, we're able to capture.
<unk> hitting the market I have in mind from.
Recall the sales done by our trading day in January in the U S.
In the situation of the very cool.
Winter.
And so that's good assets.
One of the driver of the range.
Also this quarter.
You do not have to minimize the contribution of <unk> and <unk>.
Contribution as well we gave you the EBITDA of this of this.
Segment, I would say in the in the.
The press release until you have all the details I think in the index is that any sales well and so you will see that this this segment alone contribute hazard EBITDA more than a three year between three and 400.
$100 million and so it's.
It starts with being slightly more I would say so.
The second question regarding <unk>.
You are you have the right analyzes the performance of.
Refineries, particularly in Europe.
Cool.
During the first quarter in the U S were impacted by you again as well.
Until the <unk> of close to zero in Europe.
Honestly.
The summer should see some improvement.
No.
And so this improvement could come from the U S and low and the recovery that seems to happen.
In this country.
In the coming in the coming in.
The amounts in the index seats from the from the economy.
Obviously help to restore the margin even we you've noticed that.
We continue to be very cautious regarding the margins. So we gave the guidance for the debt adjusted cash flow using a I would say a conservative assumption.
10 to 15 tons for from a refinery margins.
For the full year.
On the opposite Petro Chem results were very good.
And because before margins were strong in Q1.
Showing improvement by the way a year on year year over year, although Q to Q.
The volumes and margins really proved resilient through the.
The COVID-19 crisis.
The volumes remain robust for both PAA and NPP.
And it is clear that.
Some segments like food like EG Medical's protective equipments.
<unk>.
More than compensate the slowdown in other sectors, such as automotive and construction, but we continue to be too to be optimistic regarding Europe. It's again, we benefit.
From Integra.
Integrated platforms.
Our specialty sales concern and so we are well positioned to capture.
Placebo.
We continue.
Market that's.
For sure will continue to be to be a.
Relative area, our two to continue to be strong.
And therefore also the trading.
Yes, I have already commented that.
Just maybe if you can just reversing out.
What level.
<unk>.
Finding money.
Back to the half to half two refining business to be breakeven.
Second some gauge the relative negative positive.
But the net result.
<unk> is different of course, the issue or if youre dealing with integrity platforms are more easily.
Refineries.
Uh huh.
Once again, we were conservative and so we use these 10 to 15 direct often a sanction for forecast rooting for beating guidance doesn't mean that of course will be true.
The I would say that what has been done and so we will continue to do that if it is so.
Voluntary.
Cash <unk>.
In terms of our refinery. So it was the case in doing some particular refinery and cost so we could do.
We continue with the same or the same policy.
And on the <unk> side.
You know perfectly that we.
That we are that.
We have sold our UK refinery in the U K, so that we have weather.
W bearish in countries or another refinery interests and assets.
So the plan is of course too to adapt our hour.
Our our footprint to the to the markets.
Uh huh.
That's.
What I can answer to you to this to this question and two to adapt our model or our.
Al assets to the to the situation and to different buckets, but once again.
We can.
Bit more optimistic than before even though it was really we see in China and Asia margin early in the U S.
The fact that hopefully the the vaccine.
We'll head to exit from the from the current situation.
And by the way the stocks good either the stocks OECD countries.
They are back to around I think 70, <unk> 70, or 70 days. So it gives us some hope.
Regarding regarding the service sector, and the convenience of months or quarters.
Well I hope to contribute to aviation demand over the summer months, Okay. Yes.
That's clear.
The situations.
The land company and yet your share in and decided that we'd have to pull the COO into distillate.
Just related to the time, it's a it's one of the reason why the Marina to Hello.
Cool.
Thank you so I don't know when visa.
Uh huh.
This sector will come back to pre crisis level.
Not so sure that it will it will.
<unk>.
Many.
Many many quarters.
So we have to be patient and once again to be breakeven to two to focus on what we control all this year.
Difficult to control.
Demand and towards debates with what could turn into continuing ops.
Okay. Thank you.
Thank you. The next question is from the line of Oswald Clint from Sanford C. Bernstein. Please go ahead.
Jump here. Thank you so much.
Just on Capex, I mean, I had a 12 billion.
Number of my head for this year I think you talked about 12 to 13 potentially up obviously, the $12 12 per set of lower oil price, but.
We're now going to minimize the capex in Mozambique, as well for the rest of the year. So it is there is there a capex pickup taking place somewhere else in the business relative to the plan.
And the second question I wanted to ask you about the Siemens energy collaboration on.
Reducing your C O two around the LNG portfolio.
What's the timeline on this initiative is it short term longer term is it focused on greenfields or can you really retrofit your brownfield LNG plants.
Any emissions intensity numbers that you are kind of playing with it at this point. Thank you.
Okay. So regarding the capex, so thats low that we when we when we have made our budgets we are not at $60 per value and so the budget reserves for the 2021 was done at 40 a day.
So at that time.
We mentioned in the guidance for Capex or the global Capex organic Capex plus the net between acquisition and station.
The divestments at 12 being low.
<unk> said in our February doing the day we.
Sure.
In the better.
EBIT prices remain low below the service level, we can increase capex until we gave a range between $12 billion to $13 billion.
Having said that.
And it's clear it's now in the end of the day, we want to maintain discipline on Capex. So honestly I don't know if <unk> to evaluate.
The impact on the Mozambique, LNG project in force measure.
Either the Capex for the full year, but is there has been that even if we if we say from some capex that will use these capex too.
To increase.
Significative Lee investments.
In E&P or in.
In downstream.
We want to keep we want to keep the discipline, we want to be selective and once again I'll tell you we tend to invest in profitable projects that will contribute to the to the transition of total into Bosnia AG company, having said that we have some flexibility.
And particularly for the upstream segment, we have some flexibility.
On the short cycle.
Investment that we can.
Starting with <unk>.
Part of the social cycle investment has been stopped or postponed last year in the middle of the crisis. So it's possible for us.
To to come back into sanction or these are new new.
Through cycle project and we can.
We can allocate part of this additional capex will go to a twist to interact with them or when you would.
In electricity project, if it makes sense and that means that EBITDA profitable.
So that's the main guidance.
The main guidance for us.
When we when we when we select.
When we have to say that the different projects.
Yeah.
On the CMS agreement I have to admit that I'm not very familiar with vis a vis agreements. So I suggest that you have.
That you come back to the IR team and he will give you some more details regarding these agreements.
I think it's clearly in our narrow relative to.
Two lower or to reduce the <unk> emissions and it's part of this global strategy and once again in the transformation of total into total linearity suites.
When step.
In this transformation.
Understood. Thank you jump here.
Thank you. The next question is from the line of Paul Cheng from Scotiabank. Please go ahead.
Thank you.
That's two question one.
When I'm looking at your LNG and renewables.
The cash flow from operation excluding.
Working capital changes versus the fourth quarter, just relatively flat.
Wow, that's up a lot. So wondering if you can maybe help us to pitch the GAAP and that why that that's a big difference on here.
Secondly that.
The.
On the asset sales.
With the farm down you see any gain.
Gain that you have reported in this segment.
<unk>.
So your question regarding.
The IGF.
No.
Sure that's correct sorry.
Sorry.
That's correct yes.
In short what I can tell you is that in the fourth quarter. Although the results. The net operating income in the fourth quarter of 'twenty 'twenty last year was negatively impacted by noncash element assets.
He has a.
The mark to market demands or deferred tax elements that the main driver behind this.
Sure.
That explain the phenomenon you bought.
Does the state guarantees.
The seasonality in dividends as well.
So you do not have the same the same impact of our.
Assets consolidated on an equity basis in the net operating income and in the cash flow.
Of course, a decision that would be the ceiling ADT.
Dividends. So that's the two main elements that explain this.
The difference, but overall, which is a more relevant to compare.
Uh huh.
And <unk>.
Increase year over year.
The cash flow.
And so you see that's a.
It really is very current and they are very much in line.
Asset sales.
Yes, I think in the short term.
I understood your question, but.
Of course the the.
Come down of our.
On our.
Yeah.
The assets. They are they are reported of course in a in IGF segments. It's it's kean our capital like model to what we explained.
Best way for us to monetize.
Soon as the production soon.
As soon as possible.
When we project to start two buckets too many times.
Sophisticated part of the future results of the PPA side.
<unk>.
And it's another way for us too by the way to the rigs are projected with so it's part of the module and of course it's.
It's a reported into the <unk>.
Segments.
From the reserve.
For the investment otherwise because when I mentioned when we when we say that we'll allocate more than 20 per cent of capex to the segments.
Net capex was net investments so he takes into accounts.
The divestments and Lisa.
This.
Divestments are part of this.
Sales as well.
Luckily, we understand that yeah, no I understand that I'm, just I think that what that from dong had with Celgene and the gang that we caught that.
In the first quarter in this segment.
I'm not sure to understand which you have in mind.
When you from Tom Yes depends on the value we see.
Yes, they do book.
And each day.
Yes, if you book and it came in yet.
Cash cost and to Kansas.
Can you share that I'll pick out those game, it's a meaningful number.
I gave you decided that we found on two projects in force, so and I give you the.
The price value so it's around $600 million enterprise value 100 per cent and so the way we the.
We consider these found one to found out 50% of deposits.
At the same time as you know leverage with projects until the figures of the low debt to equity ratio you can use for you on the disposition is in.
Between 770 80 per cent for the Athena.
So we found down 50% until we until we believe weighted project assets.
T 80 per cent and so all these are they getting it done I would say either included into into <unk> reserves.
Cash rules and investments.
Alright.
I gave you a lot of years regarding the step down.
The <unk> 600 million.
On the 100 babies each saw something like <unk>, which was let me get right. I think you said you you say you're from.
If I'm correct.
So that means that.
Yeah. If you consider all day, so let me do it out of the Capex for when the megawatts.
A project that means that we doubled.
The value of the of the initial.
Cash we we we we.
We use for developing this project to lease from them.
And it's too low.
With the metrics, we gave I think in February because at the time, we gave some somebody should really example.
Five or six different from the one that we that Ohio.
Over the last couple of years.
Thank you.
Thank you. The next question is from the line of Christian <unk> from J P. Morgan. Please go ahead.
Hi, good afternoon. Thank you.
Well, let me ask the question I've got two first on.
Capex, but not necessarily capex in the context of the range, but more in the context of.
A broader point on whether youll be able to demonstrate discipline on capex.
Medium term I think one of the major concern is that the free cash flow that you're generating.
Free because it's going to either pay down debt.
Then.
Look to see how that capex, whether in the world or transition. So you've gone from 12 to 12 to 14.
Admittedly at a $40 Brent I mean trying to relate to 60, where are we getting on Capex is basically the first question the second.
Please is on buybacks and cash return you mentioned 50 percentage of comfortable gearing target.
What sort of cash flow timeframe. It would you consider within that they previously suspended buybacks could you revisit before it looks like it turned into 17 is there a distribution of cash flow that's huge.
As most of the medium term and I guess, one of the things I wanted to sort of.
My question is.
Cash flow.
Abuse and relative to previous years.
When you look from a yield basis is only sitting around 20%.
And so I wonder, whether that's a sort of new norm the new norm for you on cash, particularly within the yield whether you would consider upsize. It once you get to 15%.
Yeah.
Okay.
So regarding the cash flow allocation.
So you know where coffee sales in total so perhaps I will repeat sorry for that.
We what we said in February.
Yeah.
What are the alpha routine in terms of.
Cash allocation of total so first the capex and so it's exciting to the to your first question. So you had I gave you the guidance for 2021, we gave.
Guidance between the.
$13 million to $16 million for the year of 2022, 2025, assuming a benign environment between 50 to $60 per line why because once again, we want to keep.
Keep your discipline and invest only in profitable projects. So you know the.
The metrics, we use for sanctioning the project and the best way for us to to be sure that we will continue to be resilient and profitable is to continue to be disciplined and to stick to this.
Targets so for for oil.
Our stream project is a <unk>.
15% IRA.
<unk>.
You know that from when you blend power.
And I think you will in particular, it's a double double digits more than 10% profit.
The ability for our.
Our equity.
The total.
So that the discipline, we want to implement and Thats why by the way, we're unable to spend money like that to capture additional additional net assets onshore NOLA.
Development.
Well, if it make no sense.
You said that meets our criteria.
How do you say that the second priority for cash flow allocation east reporting evident through the economic cycles I think the day this year and my made by the board in the middle of the crisis when prices were below $30.
To maintain the dividend is a key and strong commitment to be the either the shareholders. So this year was not to cut the dividend.
I repeat again confirm that really redone as reported at $40 per value and of course, we will maintain the dividend this year.
The first priority in each day and it was actually I think now.
Shipments from the February we want to have a strong balance sheet and we want to keep long term grade <unk> credit rating.
And so the best way to do that of course is to have low gearing and towards the objective of ours is to anchor do I believe I would say the gearing below 20%. So we are we are already at this level.
We at 19, 5% end of March.
That's it.
It's not too low to joke, we were at 15% in the end of 2018.
And obviously, a 15% is better than the 20 percentage wise I mentioned in my speech.
My introduction.
Because of it.
We are in the commodity markets and so we ought to be ready for the next possible new downtown so having the strongest balance sheet for us is key.
And is the key.
Is a key element in our in our cash flow allocation.
Frame.
So that mean that.
It was the ETR as well in February we mentioned that buybacks.
We can only if oil prices will come.
<unk> was $60 per value and one year in.
Will be duopoly in your EBITDA I think is very important.
Below 20% total.
To be clear.
For 2021.
We'll maintain with EBITDA, so in Europe and so.
Document I remain low at one two.
Europe or a product or a.
Compared to the one we had one year ago, you mean that it is.
Reasonable increase in Doral Baidu App, so it's a.
Eight 910% increase in the out when you when you translate that you're willing to go out and.
So maintaining this dividend in euro and.
That mean that.
Buybacks will come later.
Alright, thank you.
Thank you. The next question is from the line of day Rash book Cataria from RBC. Please go ahead.
Hi, Thanks for taking my questions first one was on Mozambique.
Originally the intention was I guess too.
The two projects in there on the entrepreneur I'm wondering it's water to run along in sync, but I guess the operating other side has deferred the project pre S idea and now you've had to declare force majeure.
So I was just wondering if you are able to get back in and you've you're likely to be ahead of the other operator.
And you'll be building infrastructure that maybe he's joining us for the two projects.
Is there an agreement already in place.
So the other block partners compensates vitale for any kind of early expenditures or was that still to be a great that'd be my first question and then the second question is on cash.
Capital structure, you know as you've been doing as you've been growing your low carbon business. Our most recently issued a hybrid which looks like a very competitive rates.
So I'm just wondering how do you think about the overall capital structure of total as you build this business and the mixture of instruments like that versus just you know for net of debt and equity. Thank you.
On Mozambique honestly at present time.
Is net.
Priority two to enter into discussion so too.
To enter into agreements throughout the day difference like we mentioned you have in mind.
The priority is.
222 to maintain.
Right.
To ensure the safety and the security of our employees.
To minimize our costs.
With our contractors. So we see I mentioned to you that at present time, we anticipate.
As to when.
When you are at least delay.
So we see the.
Honestly, it's a it's not a it's not a top priority on the agenda to two.
To discuss with them.
These are the subject with our.
With our appeal.
Yoga returns.
Hybrid bonds.
Well you know we were very opportunistic in our in January of last year. When this yesterday when we issue visa.
The median U of a breach to finance the 20% acquisition.
Uh huh.
And then you win.
I consider hybrid as a long term component in my balance sheet.
We we will continue to be to be opportunistic. It's a it's a very competitive way to to finance. When you were born with a value with a.
Low cost.
Capital with low cost capital.
That's that's that's that's the strategy we have implemented.
By the way are most of the.
Being able to project the.
The day to you that you the project financing that you that you raised on.
In your booth, it's a non recourse basis, so that mean that you transfer the risk to the to the lenders Baidu Baidu index.
Okay understood. Thank you.
Okay.
Okay.
Thank you. The next question is from the line of lithium rainfall from Barclays. Please go ahead.
Thanks, and good afternoon.
Good afternoon.
And just last one can you just what's really I can't think working capital release in the quarter.
So that's why I think at some point you might to background that working cap side going forward.
And then the second one was just to come on to the renewables business.
If I think about the.
Any cash.
Good day.
How do you think about managing the currency basket. So for that I guess that kind of what we're seeing in terms of kind of thing and then just linked to that the offshore project.
In Taiwan that you went through this morning.
Just talk about me and basically paying income situation based on the shattered Pascal.
And you see when you sell things down that you get a premium so Boston development.
Only thing kind of from what it is that and test that that pocket that being attractive for you.
Okay. So the first question regarding our working capital.
So it was.
So as we as we reported the cash in this quarter the main driver behind this.
This caching, what's the timing of some tax elements. So in a day. So you'll know the wells, which is weighted in Germany in Belgium for for downstream in Norway for upstream.
<unk> and.
On your fleet.
Of course, the impact of the oil price or Google either the hydrocarbons price increase that impacted obviously, our stock values and customer credits.
But all in all it was a pretty cheap, especially positive impact on total debt. We continue of course to make some some optimization I would say.
Our working capital and I remind you that he given.
Given that it works well end of last year, we continue or we decided.
From a level to continue to enter to incentivize our managers.
The two collectively I would say the manager working capital and so to be sure that the they made all the all the actions to minimize the working capital.
When it's needed and so there is very difficult for me to give you a color regarding our working cap in the convenient meal kudos because the main the main uncertainty of course is the level of pricing.
And that impacted.
Obviously incorrect.
We will get what they can confirm to you is that we will continue to be a two to mobilize our staff our people too.
To manage price is a visa visa visa working capital.
The subjects.
So the India.
Well, obviously we.
We took into account these.
The currency risk.
In our economics, when we decided to go into it from a different project net any.
We then.
Yeah, so it's taken into accounts.
And again again again share with you that given the predictability of the cash flow coming from from PPA in AR.
In renewable businesses.
We can we can consider for world aging as well that's in the end.
It's it's it's under consideration at present time, so we'll.
We'll see in the can.
In the coming months.
The outcome of these studies.
Hum.
Once again, it's taken into accounts when we decided when we decided to go to.
To go into that project and.
Each day.
And they did I would say in our in the.
In the fact that we sanction project only easy the value.
Able to deliver double digit profitability on calls with you.
For the offshore agreement in Taiwan that we that were announced this morning.
Uh huh.
The.
It's the same this MSR I will not give you all the details regarding the capex or the cost of a project, it's an opportunistic deal.
That we were able to.
Two two design.
Now that we have a I would say a lot of connections in this world and this when you're going from now.
We know the people.
We know that we know the assets. So we are able to move very very quickly and to capture and to seize diesel.
But it is we have obviously a good PPA.
For this forest assets so sure so the capex on the same of course.
When you compare to two onshore.
Oh sure wind, but all in all the same of the same in South Florida.
If we if we decided to go to the project because it's a coherent is in line with the double digit equity profitability I mentioned to you.
Hi, Schwartz and it's.
It was of course.
The way for us to be present in our in this day when the market is very active as far as the offshore wind just concerns.
Alright, thank you.
Thank you. The next question is from the line of come off at all from Credit Suisse. Please go ahead.
Hi, Good afternoon, two questions from me as well please.
Firstly going back to what he said.
So for this year.
RPC paint a dividend next year as well as higher than 60 day might be a buyback, but once the world gets back to normal whenever that is you know the next.
Next summer.
You pre pre COVID-19 you did have a preference for a progressive dividend. So how you think about the progressive dividend since no I'm gonna do buybacks to bring down the cash dividend.
What has changed.
Currently so that's first question second question, just going back to Mozambique on the force myself just to understand that.
Precisely D Force Majeure is a global one so it includes.
All the EPS the P.
P C contracts any contracts you have in upstream, but also the S. P. A.
And if it includes the S. P. H I was just wondering about the process.
Once you wanted to go back to constructing construction construction activity do you have to re contract the volumes I.
You start from scratch. Thank you.
Okay. So buybacks.
But the beauty of how you see.
It appears that day back the beauty of write backs is a flexibility that we that we offer when you at the day when you when you announce increasing dividends of course, it is not to get with you to answer two of four hotels. After I saw the announcement.
We want to be have to be coherent and honestly once again, which we demonstrated last year.
And I will not we'll not comment on might be.
Two to increase Oh to communicate on buybacks. When you have cash you'll have you done by.
It went from two fell in the middle of the crisis.
So buyback.
Its flexi board once again.
And we will consider a dividend at the long term and the long term piece.
Sure.
Financial book.
So I think I was very clear for 2021, we do not anticipate to increase the dividend.
And so.
If we have excess cash this year it will be allocated to the low to continue to deleverage the company.
I saw that.
Next year is the prices, even though environment is good.
We could do we could consider all day like that.
At present time in this case.
Right.
To confirm or to enter into this mindset.
Ooh on Mozambique, LNG Force, maybe also too.
To be clear.
What does that mean declared is the force measure.
Sure.
For total E&P, Mozambique, as you cannot tell if the project. So it's a force measure.
Okay.
And so now of course, we are considering.
The cost measure decoration contractors or these are really the difference.
Gaza values.
We are entering into discussions or when the fleets are it's pretty much right for me to to share the outcome of the discussion with you.
On one side you Ricky is to minimize the spending the last basketball.
The last couple of months.
That's the main driver will be mined at present time.
That led to.
Let's wait and see the outcome of the discussion with the different stakeholders.
For involving these Mozambique LNG projects.
Inside the contractor on yoga Hines energy by Us.
Thank you very much and of course, you can imagine that we have a lot of different contract via contracts with different too.
We're adding in different so we have to negotiate.
To discuss a contract by contract with the different values.
Perfect.
The situation is very unusual.
Please give us some time.
To answer to your question.
Thank you.
Thank you. The next question is from the line of shortly from Us from.
See I think mechanically. Please go ahead.
Hi, good afternoon.
Make survey recently mentioned.
Potential projects for the time.
Iraq.
Could you.
What is moving both gas and perhaps could you elaborate a little on that.
Yeah, we've not commented that you so you're correct, but I will not comment on Uh huh.
In discussions sorry, sorry from my answer.
Thank you.
But Martinez Martinez speaking.
Yeah.
We get when we when we when discussed vis vis kind of projects.
<unk> once again, it's a coherent with our strategy in terms of profitability in terms of our carbon footprint and the fact that perhaps in some cases you can have on one side.
Our net screen project in Copel do I would say with renewable project of course, it makes sense, particularly in our.
In our.
Ongoing transformation, but discussions on your like ongoing so I will not I will not share with you more and more index.
Oh very much.
Thank you. The next question is from the line of Martin Rats from Morgan Stanley. Please go ahead.
Hi, Hello, I am I am.
Also have two from me I wanted to ask you about the EU taxonomy.
I find it somewhat of a tricky topic to be honest. So I recognize your question is a little broad, but I was wondering if you could say a few words what would you think that you took some of them. It could mean for a company like to talent and specifically with regards to day decision that we're all anticipating later this year, but they're natural gas could come under U K E U.
But what does that mean anything for total maybe not in the short run, but if you could say a few things about that would be most helpful and secondly, sort of a little bit building on the previous question I actually said I got the quite the same one about Iran.
Because it does look like Nick Ocean surround to synergies.
Gaining tremendous momentum and.
There is a realistic probability that some sort of unwind of sanctions might be sort of in the cards and to all of US I think are the only European major at least who had to project. The last time. The sanctions were reactivated then I was wondering.
If if the town would be would be pursuing sort of re entering the country if that was possible.
Okay.
Very different questions.
Yeah, I realize identity.
Well you know that's a we consider all of that gas is the is there any idea on the transition so of course.
It's a concern for us not to have natural gas.
Consider it I would say into the taxonomy.
The natural gas and nuclear power.
To be addressed separately by our by end of 2021, well know diesel.
In our nuclear but of course.
We are not concerned regarding the natural gas.
Having said that the taxonomy.
Anybody who is the comment we made to the to the to the commission.
And also it was the end of the.
So we see a.
Different subject or different programs in relation with respect to them.
First one is natural gas, but in terms of mid to low Rudy.
The second issue most of the hour.
Transition collection activity saw a new energy when you boil electricity there.
We have.
They will be reported using the equity method and you know that's a taxonomy you have to report.
Okay.
Oh, yes, sorry, the Opex and the Capex and so if you are non equity method. So they are in that.
Right.
The tunnel in Virginia, It Opex and even generate capex because most of the Capex is financed through external debt. So it's a it's.
One of the limit of detection to me that means that for players like your total, but it's not the only from total on most of the book exactly in this institution that means it needs a force I would say ER to ER towards a low carbon business. He's a linear we'll do that soon will not be captured through the corona.
Taxonomy routes.
And the second or the third comment.
Comment we made at the time.
We commented I think in February or even in the September 2025.
We will use Oh, we will.
The carbon footprint of our T V T.
Green.
The decrease in electricity supply for our assets and so we.
We have a plan to supply.
To supply electricity produced by our solar farms in Spain.
Our European refineries, we will do exactly the same in the U S. Using some sort of pumps that we will develop in the coming years to supply green electricity to barstool and so given that it's in hadoop entitled Pros in fact.
It will not be captured in the taxonomy current a current metals. So it's honestly, it's a real concern for us. So the message is we try to convey to the to the commission is that the taxonomies that from intact very very low.
To narrow in fact, because it does not reflect.
Not capture all investments all the force that's a key.
Company like total could do.
To to.
To meet our ambition to be a net zero by 'twenty.
That's what I can tell you regarding regarding index annuities.
And who are Iran, but honestly, what we need what we need to we need to long term I would say.
The BG.
<unk>.
On the sanctions.
The 222 to start considering coming back to you at all honestly, it's not the case at present time, So and then I'm not so sure it will be the case.
In the next day.
Next future.
Now I can imagine that was very helpful.
Let's wait for further developments with revenue.
U S Degen administration, but once again, what we need clarity and study.
The 222 to be in a position to make.
Dora.
Stop considering of course, you've always come back to you right. So it's not a it doesn't have the agenda for some time and it's far from being the case.
Yeah.
Okay. Thank you.
The next question is from the line of Christopher Copeland from Bank of America. Please go ahead.
Thank you and good afternoon jumped yeah.
One quick follow up on the renewables.
I appreciate the U K, it's a somewhat peculiar place too bad for U K offshore licenses and C beds, but could you give us a little bit of an insight are not looking for numbers in terms of your assumptions that you've taken so that winning bids earlier this year, whether it's power prices do.
They come close to what you've currently disclosed in your Ppas, whether it's capex assumptions turbine sizes, whatever you can give.
Give us hints on them that that.
The underlying assumptions for your bed and my second question is a little bit wider and it comes on the back of the recent industry risk reassessment by S&P, you've been active in the renewable space now for some time, what's your assessment. So far is your balance sheet, a competitive strength or is it actually.
You're back relative to the competitors you are facing in the renewable world.
Sort of linked to that topic to the a credit rating downgrade. Thank you.
But honestly on the on the last you keep it will net share with you all the all the assumptions we used.
No.
Okay.
You are the details with you for years to come.
No.
Sorry, sorry, Chris.
Well.
The strategy is to is to Oh price when you were when you book.
And the.
Concern is too.
Try to enter at early stages.
Project.
If we can enter into discussion rather than go into action of course.
It could be easier to too.
To attract profitable project, but if we decided to go into this year from.
From a project that means that even if the assertion that we used.
For Capex for all the all the you mentioned the turbine size and so on.
Is that we think that this project could deliver.
<unk> to equity profitability when equally well.
Come on stream.
S&P perspective.
My I wish I will share with you my personal feeling regarding this subject.
The value the intrinsic value of our renewable portfolio is not a corporate values.
Well I mean, there are stores that value.
The credit agencies as well.
And so the the transformation of the group the the journey towards our towards carbon neutrality. This is not this is a.
Kept all at all I think in in.
S&P calculation and so the fact that we are well positioned and that's a.
Data by.
By the end of or by 20 year, he will be probably.
In the top five in terms of.
The electricity you could yourself is not well taken into account into.
The credit agencies calculation.
Having said that reflect that.
I have a.
The strong feeling that being a European company it doesn't.
I'm on page <unk>.
Uh huh.
And so you know that we do not share all the all the details of that calculation. So it's very difficult for me to compare.
The re treatment done by S&P compared to really take net done by S&P for appeals.
We we are in a in a.
On a regular basis in discussions or we change with both S&P and Moody's.
But honestly.
If I am optimistic.
I will tell you that our investment case, our transition strategy.
That is already in motion and so perhaps it's a factor or if you don't you shouldn't compare to some appeals that are better and better.
But you shouldn't be on diabetes.
That's in my mind, they are clear differentiating factors and.
That could lead.
Two two an improvement in our.
And I would say by the way the credit.
Credit agency and the convenience ease of getting in the coming months, but it's not the case to be honest with you at present time.
Total.
Transition strategy is not to use those value.
At all.
For me.
By S&P.
Yeah. Thank you very much from here just a quick follow up would you say, though that access to capital to invest in these renewable projects for you. It has not been a problem quite the contrary I think some of the financing costs that you are exposed to it looks to me extremely attractive well yeah. No. So it's not a problem at all.
No.
No problem.
We should as a hybrid bond to very attractive levels.
Uh huh.
Less than 2%.
Very cheap.
Capital.
In terms of modern earlier when do we go to market for issuing bonds with no problem and so now we can access to very low down the.
Maturity.
20 year olds at places like pretty good sense of it.
Net sales.
That has opened up it is a day.
Lower.
Lucas to financing until by the way you'll see that.
Our first quarter results, you'll see that because.
The final shows cash has been reduced dramatically.
Yeah on a year on year.
And so we did just that with traffic.
Transition of visa.
This situation.
There is a strong appetite from banks to finance, a project and particularly as you can imagine that when you build projects so no problem.
Thank you very much from here.
Thank you and the next question is from the line of Bertrand <unk> from Kepler. Please go ahead.
Yes.
Yeah.
My question is if.
If I may.
First congratulations for a very strong result is not every quarter is that.
Total beach, a consensus on the clean net income by 25% or whether when I look at the cash flow ex working capital ex inventory effect.
It was a it was a bit shy of my estimate.
Can you whether any a cash collection are headwinds in Q1 that is my first question and then the second question is is on LNG.
It's twofold, a where are you surprised force at Qatar petroleum decided not to renew terms.
Beyond and 2021 on GAAP tax guidance one.
One.
Have you had a 10 day.
And then on the LNG market you mentioned in your introduction.
We marked a key you will now concentrate on marketing platform.
A N G and Cameron LNG.
The expansion that's a how do you see at the market in terms of our long term off takers because sales.
There's a lot of.
New volumes yet.
To be marketed Qatar north field expansion.
Arctic two.
In a way also so any color on that Ah I would say long term off takes.
New LNG projects would be helpful. Thank you.
We'll give you a whole lot of questions, but you were a bit severe.
I think we delivered a very strong cash flow.
Honestly delivering cash flow into Q1 'twenty one.
<unk> 5 billion low.
In the.
The environment of the first quarter until you have to take into account decided that the margins were close to zero at the time, and so being able to deliver more or less per sales level of cash flow.
Compare to the cash flow, we generated two years ago.
In a in an environment better.
The value more or less to dropout value that's about the breadth and confirm also better forget that also much much better.
Better for flow refinery margins because at that time, I think margins were all over.
It's a I think it's.
Good day almost every channel.
So.
Uh huh.
You have to consider all that's.
On the on a quarterly basis, it's sometimes a bit difficult to reconfigure the cash flow with a with the net operating income even what I mentioned to you were previously.
The timing issue in relation with the with the dividend and decided that it.
We will talk to our business.
Uh huh.
And equity.
Consolidated on an equity basis.
Uh huh.
Yes.
It's a decision of COVID-19.
So the after the fact that yes, youll see to concentrate on new development until the North field expansion project.
When I think well I think keep he thinks that the.
Yeah, you can bring your highest value.
So we have decided not to renew the Q1, the cumulation of seasonally slightly its life as a business.
Does that mean, it's a.
Price points, you say that we have to accept that.
It's we're thinking I can't share with you regarding these <unk> get together.
And for.
But once again that's.
That's T.
Considering the low don't be getting the protest.
What day situation.
<unk> will give us will give priority to come on energy extension it but.
And then she project.
And so we will.
We are.
Focus on the <unk>.
Marketing.
The energy sales.
The District Court.
And then I can share that you mentioned in the past when you're getting a project to project.
Well position.
Yeah. It does.
Supply at a competitive cost I would say as you and as you know, but you also were quite.
Quite optimistic that we'll be able to look.
Looking like.
Right.
SBA.
The convenience in the coming months.
And.
What you have probably nine is that a.
In our strategy.
Total in total.
Our strategy, we sanction project when we are able to secure.
It's in the ballpark.
Yeah.
The future against sales.
Yeah.
Because most of the cases as well in LNG project, we will use a project finance.
Two there is that correct as well.
Yes, yes.
In fact that was a bit my concern because with all those volumes yet to be to be market Oh, no I was thinking that maybe you know.
Timing of trying to get up and come on at the same time on competition with Qatar could be could be problematic.
But that's not.
No.
I see.
No.
Okay. Thank you. Thank you yeah. Thank.
Thank you Beth.
Thank you. The next question is from the line of Jason <unk> from Cowen. Please go ahead.
Oh, Yeah, Hey, Thanks for taking my question how is that possible.
In the bathroom.
So.
It sounds like because Mozambique decided to move forward on these other projects so I guess in that vein.
Important is that.
<unk> maintained.
Maintain scale and relevance as well.
The LNG industry.
Does that kind of something that you need to maintain to be competitive in the business.
Are you pursuing now Bob that like laminate from them.
It wasn't previously.
Well not not a competitor.
Return part of your sanction projects are you pursuing projects that maybe.
Don't have as competitive per ton in order to maintain that day.
Now in the LNG business, that's a per platform.
And the second one is just on pipelines.
Given the strength that we've seen our margins can you give any indication of how much volume back earnings within chemicals to be this quarter versus first quarter and then more broadly it seems like.
I've been a decent amount of announcements on.
On chemical recycling technologies.
Moving forward and I think you were pretty bullish on those technologies.
Being used more widely in the peak or is that becoming a technology that could be profitable to deploy in the near term or.
You're starting to see more tech not technology advancements and maybe some government support.
Yes.
Okay.
It was not very good so I'm not so sure to have capture all yours.
What you say it.
So perhaps it would start we get whole game.
Well, that's what that we do not give a lot of details regarding a baseball game in our in our reporting and I confirm to you that <unk> is the main driver behind the.
They don't say too in Q1.
Will be Q2 be stronger when EQM honestly it will remain at the same level it will be more of an IP.
It is.
And if you're going to anticipate what the price either.
What are the prices could be because look in places will be given that we are integrated.
We we can capture.
The.
Only the market, we are well positioned.
Say that anticipating Q2 better than Q1 honestly.
I cannot.
Mike This is Beth.
Yeah.
Okay.
You mentioned I think the recycling technologies.
So we have some project and two two to two recycled plastics.
What does it mean announcing completion decided it will be.
Client recycled plastics is back to this are our abilities to be part of this this business in the Goodman Europe because of course it will it will.
Okay.
[music] roofing rule I think in the plastic and just things that could be yours.
I'm not a specialist in terms of technologies used for a second <unk> sales.
Right.
For LNG each.
Yes, that's true for.
Something else that came into my mind regarding regarding the question on recycling.
We have some some agreement.
To Oh, we are present time producer or bioplastic in dialogue I think we've always called me on so we have the same.
We expand these are these types of agreements.
<unk> costs as we complete and so we will be.
The producer of value classic.
On one side and.
We will have some some recycling capacity on the other side as well.
And then he.
No. That's the fact that we have.
Mozambique buffet that are as I mentioned to you there is a.
When you are at it daily.
In this project does that mean that.
The priority is getting back to two pathways to grapple LNG project in Cameroon the extension.
We sanctioned the project each per.
EBIT conditional on the goods that are.
We we are we are one of the.
A major LNG player in the world.
Having the capacity of <unk>.
Being being in position to produce LNG in the main LNG hubs worldwide, having a tagging that's able to do.
To play between the different areas and to capture.
To capture all the the discrepancy between the different markets are at all.
It's also a matter of size so we.
We see that when we acquired the E N G. LNG portfolio. It was a very very significant either.
Months and it's at the time that.
We were able to.
To leverage.
A very efficient way all LNG position.
So it's not a volume so low value too.
The value of the volumes are net.
We drive our strategy in each.
It's the case volume in the case of mogul belief all our business at that time.
Okay.
Okay.
Thanks.
Thanks.
Sure.
Thank you. The last question today is from the line of Jason Kenney from Santander. Please go ahead.
Oh, thanks very much.
John.
So I'm interested in the eight gigawatt green hydrogen Mou that was signed last week in Australia total Erin.
It's a massive scale I mean, a potential major play into Argentina for the total groups that.
Do you see capex.
And the next three to four years from on that particular position and if so is that already in your strategy.
And then separately on hydrogen as well.
I'm looking at technology for oxygen injection.
Into oil reservoirs in situ clean hydrogen production.
He leaves carbon dioxide in the ground and I'm wondering if you have any particular oil assets old mature end of life pre abandonments of economic stuff.
You could maybe try this out.
If you actually look to that technology.
[laughter].
Okay. So the first you mentioned that you're likely to tell us that.
The Mou was signed by total the answer to that.
Ah is a 30%.
The owned assets.
Three after that.
That's why I do not have ordered tests to be honest regarding this.
Well, you know I understand that.
At a very early stage, it's a PE study for.
So I don't Didnt project, so very very early stage.
Sales to injection per tonne.
There's no sales.
What I cannot share we view that of course, we're interested in a in a in a diligent in total so we have some some some projects for the on one side green hydrogen and Yogurts like like Virginia.
So I'm sure that in the coming in the coming months.
Perhaps in September or in February 2022.
<unk> reached to share more.
With you regarding these.
The strategy regarding like Virgin at the time.
Okay. Thanks.
Okay. So I think.
Thank you. Thank you very much.
And thank you for your attention and so.
I hope that's a.
Next time of course to show that.
The total knee will be just a matter of weeks.
We are optimistic.
I hope that will be soon in a position to have the.
The real action here, we'd say no true screens from phones.
And it's only a matter.
Non snow so having said that thank you very much and bye bye.
Yeah.
Thank you that does conclude the conference for today. Thank you for participating and you may now disconnect.
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[music].
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Yeah.
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[music].
Okay.