Q3 2021 TotalEnergies SE Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to Turtle editors third.
Third quarter 2021 results conference call.
At this time all participants.
After the speech there will be a question and answer session.
I ask a question during the session you will need expressed star one on your telephone.
I must advise you that this conference is recorded today, the 28th of October 2021.
Now I'd like to hand, the conference over to Mr. Sean Brown CFO of total energy. Please go ahead Sir.
Thank you good afternoon, and good morning, everyone.
Hugh.
So let me say that.
I Hope you and your close ones are safe despite the COVID-19 situation.
I think we the whole hope.
We are close to the end of this crisis to consolidate the recovery what couldnt see weaknesses.
And that's why we put them back to a normal life in the near future.
So then on the recovery continued to drive energy pricing is higher this quarter and thats purely each was particularly the case from Asia.
Oil and gas price realization increased by 42% to six to load up on me to you.
At quarter end.
Other H LNG sales price increased by almost 40% to 9.1 immune disease.
As you know Brian continued.
You'll know rights moving up 7% from the second quarter to average more than seven keep dollar per barrel in the third quarter.
Leveraging the strong environment.
<unk> nearly as adjusted net income increased to $4 8 billion.
38% compared to the second quarter.
And the cash flow to debt adjusted cash flow.
Increased by nearly 25% to eight point for <unk>.
These first quarter results show that our <unk> model and notably our position as a world leader in LNG is capturing the full benefit of the on divestments.
Thanks to the old El Paso loans also on gas and energy trading activities, which we are able to liberate our global LNG portfolio.
Operationally the company fourth quarter oil and gas production was $2 8 million barrels of oil equivalent per day.
2% from the previous quarter, particularly seeing the gradual.
Let's take place, but it is good.
And so knowing that fills in November.
Sure.
So I'm projecting biodiesel euro and yen.
This should continue and outlook calls for fourth quarter production to be in the range of 2.8.
The 85 to $2 9 million barrels oil equivalent per day.
Let's have a look at the segments now.
<unk> integrated gas when you blend both segments reported record results for the fourth quarter.
How do you see net operating income of $1 6 billion represents an increase of 84% from the previous quarter and more than five times from the same quarter a year ago.
Operating cash flows before working capital changes.
One 7 billion.
Increase of 90% from the second quarter and two five times the same quarter last year.
Cash flow was impacted by working capital outflows of $2 1 billion EBITDA neutral.
The issue with <unk>.
<unk> codes.
Q2, adding contracts in a context of highly volatile gas and electricity markets, but he is marine hull will reverse in the near future.
Rick.
LNG business and he says the worst 10 million ton saltwater.
24% from a year ago and year to date LNG sales.
30 million.
Given the links to oil and gas prices and the lag effects. We can expect continued strength in LNG prices, we the fourth quarter price expected <unk> $12 per million btu compared to $9 1 million.
In the third quarter.
Regarding our electricity business, we continue to grow when you ballpark Wozny Alicia.
So our objective is to 35, gigawatts and whenever we do get a gross install capacity by USB actively 2025 and 2013.
We are confident that we will achieve these objectives, we have nine five gigawatts installed at the end of this quarter. Thanks, mainly to the addition of one gigawatt in India, plus six gigawatts under construction and more than 25, you get less in the development portfolio.
On the supply side, we continue to grow our customer base with a number of electricity customers, reaching the 6 million mark during the quarter.
Yeah.
Turning to the E&P segment strong results were driven by rising hydrocarbon prices and the increase in production base defense as well.
Adjusted net operating income was $2 7 billion in the fourth quarter close to a 25% increase from the previous quarter and more than a three fold increase from year ago.
Operating cash flow before changes in working capital was close to $5 billion in the first quarter.
16% from the second quarter.
Almost 90% increase from the year ago.
Moving now to the downstream European refining margins have improved but results are impacted by higher energy costs.
Petrochemical strongly contributed to the refining and chemicals results.
Thanks to margin that remains high particularly in the U S.
We fully benefited in the dynamics of elements from our refining and petrochemicals integrated model.
Marketing and thirdly is confirmed is return to pre crisis level results, notably supported by the recovery network sales.
While aviation is still 40% below 2019 average an increase in fuel demand from this sector is beginning to materialize.
Yeah.
Adjusted net operating income from the combined downstream refining <unk> chemicals, plus marketing <unk> services.
Those two 1 billion, an increase of 12% compared to the previous quarter and nearly three times the level from a year ago.
Operating cash flow before changes in working capital was $1 6 billion.
10% increase from the second quarter, and a 66% increase from the third quarter last year.
Okay.
Finally, some comments at the company level, mainly in terms of cash flow allocation.
As you know we are maintaining our discipline as planned at the beginning of 2021.
Our net investments one were $1 9 billion in the first quarter, bringing us to $9 billion for the first nine months, which is in line with our target of close to $13 billion for the year.
We plan to activate about $1 billion of short cycle capex to benefit from high oil prices.
So our net investment in 2022 will probably be towards the top of the <unk>.
$13 billion to $15 billion range.
In the third quarter, we faced working capital build of $2 4 billion.
First quarter.
Mainly due to <unk> $2 1 billion of our changed mountain imagine goods as already committed a negative inventory effect of $1 2 billion and an increase in tax liability.
Zero 9 billion brand.
We generated net cash flow of $6 2 billion underlying the fourth quarter.
And return on average capital.
Well.
Again double digit figure and 10% and the oil and return on equity at 12%.
Okay.
Including the payment of 2020 final dividend of <unk> 66 euro per share of $2 1 billion.
We continue to reduce our net debt and gearing fell below 18% at the end of the first quarter.
As announced in September we will execute to $1 $5 billion of share buybacks in the fourth quarter.
And this will lead to a cash payout of around 35% for the year.
Our first quarter results demonstrated that we were able to fully leverage of environments and deliver strong cash flow from oil and gas.
Which allow us to invest in profitable renewable analytics with project one.
<unk> de leveraging the company and returning surplus to shareholders.
This is our way to building a sustainable multi energy company combining the <unk>.
As we transition and shareholder return.
On that positive note I am ready to go to the Q&A.
Thank you.
Ladies and gentlemen, we will now begin.
Question and answer session as a reminder.
Ask a question. Please press star one on your telephone Wakefield names.
Please kindly mute any order for phase one.
Asking the question if you wish to come from Macquarie. Please okay.
Okay.
Once again, please press star one.
I'll ask a question.
Okay.
And your first question today comes from the line of Irene Hey, Margaret.
Generale.
Thank you good afternoon, John P. I had two questions.
<unk> P M.
Firstly, obviously points to a fairly strong trading results in the quarter I Wonder if there's.
Is there any way you can.
Specifies the approximate magnitude in fact, just to help us really with the modeling the underlying profitability and then secondly.
You had a $914 million.
That acquisition can you remind us which particular assay that was please thank you.
Good afternoon.
Yes concern AIG ERP reserves. So you can know that.
We do not disclose the contribution separately.
I think that you can approximate trading contribution.
Because we provide LNG price and projection by the way within <unk>. So you have the crises.
He likes prices for LNG.
We talk about the hormones, which quarter of trading that we are able to leverage our global LNG portfolio.
All in all I will just EUR one indication so taken into account this over performance, so our trading and deliver both the $1 5 billion.
Our results this quarter.
We are benefiting again from that for this.
So the label environment.
And the second question, yes concerning a net acquisition so the main contribution of these.
And this figure is the deal we signed with VIP in Australia.
Net debt.
Janet.
Yes.
So we.
We have the VIP.
Ill now minority interest.
Partners in India.
<unk>.
They will I think will territory and any change of this study.
The pay down payments of sources.
$750 million something like that.
The main contribution.
This 900.
61 million EBITDA.
Physician interest free for IBM.
Thank you very much.
Yeah.
Thank you.
Your next question comes from the line of Michelle.
From Goldman Sachs.
Thank you John P. IV Micaela here and when we look at the results of your competitors throughout this third quarter gas derivatives have had.
Big impact across the P&L and cash flow with the market to market and with the margining I was wondering did it has some impact as well on your results I'm, referring especially to the strong cash generation in the quarter was there any positive impact from gas derivative margining there. Thank you.
So once again I gave this year's concerning the contribution of our oil and gas and energy trading to <unk> reserves vis vis quarter. So evolves.
So taken two counts.
The context of the volatility we believe it is.
During the Q4, you have the <unk> the average prices for LNG production that is sold on the market.
<unk>.
Through the use of your pool of who are trading until you get them.
Mitch you Max until you end up with.
With the peers.
<unk> results.
The impact of the volatility we have in our in our.
Accounts this quarter, leading to the margin growth as I had mentioned during the speech and the fact that we have the cash.
Margin growth for <unk> for both to be useful to point to when the billion dollar that's that's for sure.
Reverse in the near future.
Thank you.
Okay.
Next question comes from the line of video rainfall from Barclays.
Thanks, Anne and Hydro P. S T.
Question, if I could.
Yes, it does.
The extra short cycle Capex anything I'm worried about is that going and are you seeing any impact on inflation at the side of cost pressure and then the second question just linked by T D.
He made that the renewable hydrogen side I hear what you're saying.
The demand for more of these partnerships is that right.
Accelerating.
Thanks.
Okay, So short cycle so.
As I mentioned the re so in.
In September.
February we gave a guidance for the Capex 2020 to 2045 range between 15.
<unk> 15 billion or up so now considering particularly the oil prices we own. These age of course mobilize short cycle Capex, So mainly field wells in Western African countries for example, so.
Nigeria Angola.
And so this after <unk>.
<unk> 1 billion of.
Additionally, capex linked directly to the social cycles.
That's why I indicated that in 2022, the capex should be close to 15 million instead of.
So these are the highest <unk>.
So if it were to $15 million.
So we are at present time finalizing work program for the <unk> 'twenty or 'twenty two.
Capex.
And so clearly we have a clear focus to deliver with this short cycle predictions.
In the future on future opportunities.
As far as the inflation is concerned so.
Sure.
At present time, so nicely.
Sure.
You have to remember our strategy regarding.
So when we sanction projects so when we sanctioned project.
For example in the E&P basis also the case for LNG of renewable projects.
Try to reduce the cost.
Husseini.
EPC.
So that means that for all the contracts that are under development. So I'll, just say that under development at the same time.
We will not suffer from this.
Placebo inflation on Capex, so in the future for future projects it.
It will be the case.
Be the case for E&P Addwest. So we will see will continue of course to be very disciplined and so.
To ensure that when we have some projects we project diluted.
The profitability that's in.
In line with our with our with our guidance.
The.
For sure by the time, we need more volume.
Paul Let me boil at TVT, we will.
We see we've seen during the next week John Fischer for E&P.
No other yards.
Far from being cooler because of course, all the or the E&P or major debt reduced Amit.
The investments so no no worries regarding email regarding this particular activity could be a bit different to CEO Forum.
Okay.
I'd say the time Nokia indications that.
In our.
The projects were recently.
Yes.
Core <unk>.
<unk> also.
Probably we will have more demand for hydrogen and hydrogen project. So.
We we we communicated in the Q over Q.
Three.
Around lease side Virgin subject.
On the fact that we want to decarbonize the hydrogen using our refineries and the last example, I gave in May.
<unk> is the partnership we signed with LG.
To decarbonize the hydrogen used in our normal refinery. So when they can pull that of course, we have a clear plan.
The galvanized hydrogen in all our refineries.
Could come through partnerships.
We have another.
Paul.
During the Q3, we announced the <unk>.
We will finance.
<unk>.
Develop.
I do again.
Infrastructure worldwide.
So we will.
With the objective of.
Investing $1 1 billion.
<unk> will be sold I think at present time.
We already have eight or something like that.
Alright.
In the phone so it's a partnership with <unk> the partnership with.
Also just to mention the potential cities, but also of course.
Will.
We will attract.
Uh huh.
Worldwide worldwide companies interested in these types of investments so just to give you.
Two main very recent examples regarding hydrogen partnerships.
Okay.
Okay.
Your next question comes from the line of Jon Rigby UBS.
Thank you hi jump here.
Two questions just to go on to the <unk> LP.
Number again in the guidance.
The $12 $3 increase three Q4, Q can we think about batches ratably impacting both your underlying.
Production to sales.
<unk> legacy business.
But also your trading business I presume you've got some visibility on volumes locked in or is there other moving parts in your trading business that might mean that you don't make the same kind of supernormal profits in <unk> that you made in <unk> I'm sort of conscious that access to volumes are important and you pay to have access to volumes.
Some of your competitors don't.
The second question is if my memory serves me right is that the <unk> call I think I remember, Patrick saying that as soon as you got back from your vacation, which I believe was the end of August you'd be buying back you'd be buying back stock in the market.
It is evident that you didn't.
I just wondered what the reason for that was it technical or was it a decision that you made.
What was the background to the application of your buyback. Thank you. Okay. So first let me start with the second question because it's easy.
I think from the beginning when we announced that we will.
<unk> buyback.
'twenty, one we mentioned very clearly that it will be done in Q4 and not in Q3.
It was announced in July two days before the election, but at that time. It was very clear that it will not be implemented in August or September until that meeting limited in Q4. So we do not have any technical shoes, except the fact that in October to be very clear, we do not.
That's possible for us to buyback our shares for obvious reasons, because given that the traditional ratios today there is a theory.
Yes.
So all that knowledge all youll several months.
We cannot we cannot implemented buybacks.
I confirm to you that yes, it's a blackout, but I can tell you in October.
I confirm to you very clearly that we didn't plan on this $1.5 billion buyback and that's just what I'm gonna be executed starting in the garden illiquid in days or weeks and so end of this year you will see in our.
Balance sheets.
John Sleep, so $1 5 billion of buybacks implemented executed right.
Swedbank.
Sorry, before the Christmas holiday.
Yes.
[laughter], yes.
So regarding the pie so to be the Acs the $12 per million Btu, We we gave guidance for LNG pricing is the pricing on our.
LNG.
LNG, we produce and so why we're able to give you guidance because of course, we know the different formulas.
Used to sell this.
These volumes.
Yes, you are right.
The contract.
Something like 80%, we did earn index long term index and 20% gas long term guide of spot gas prices index, so that means that the.
And given that there is.
Timeline between three to six months in a different formula as we know we know of course the crisis our bags for the main indicators.
To conclude more or less the lease.
Lastly, different formulas and so these trends coming on that day, we indicated compared with $9. One Doral community. We benefited from in the in Q3 is is the consequence.
All of the different formulas on which our R&D is also is that not taken to account the <unk>.
<unk> activities of the additional value that the <unk> will be able to capture many given the volatility in the market.
Right.
And do you have visibility on what <unk> playing out in that part of it.
<unk>.
Honestly once again, we do not we do not give guidance regarding your trading almost and obviously it will depend on the dilution of our <unk> LTE in the prices in Q4.
But you can you can easily compute.
The portion of the AG results coming from our EQT production given that we gave you at the volumes.
The LNG predictions. So you had the price increase that's very difficult to assess.
Is it reasonable to us.
Sure.
Q4 results, but you have to take into.
Delta.
Do you have to take into account that of course Q3 was whether the theory.
They've got almost offsetting was very very good.
In Q3.
Okay. Thank you very much thank you.
Your next question comes from the line of Christopher Copeland from Bank of America.
Yeah. Thank you Hi, just two quick questions.
No you're not going to tell me what the next court decision will be but I, just wonder how youre thinking around the attractiveness of your dividend, it's been flat on a quarterly basis in nominal terms for some time and maybe you can remind us of your priority regarding growing that EPS, particularly now that your share count is starting to get reduced with the.
Kickoff to your share buyback program and as a second question again, I'm not expecting formal guidance as I'm sure you know, but maybe you can help us understand a little bit the moving parts that youll refining margins will be exposed to in Q4, how does your indicator.
European indicator capture the rising costs of <unk> gas and power any color would be much appreciated. Thank you.
Okay. So on EBITDA and so you will not be surprised.
<unk> ongoing dividends because of losses.
That's to be made by our board what I can tell you to repeat that we see dividend as a long term component in our shareholder returns.
As a matter of course once again as to what has been said.
Terminal during the Investor day is that this EBITDA increase.
<unk> will be supported by the <unk>.
Long term cash flow growth and so we that's why we are very clear regarding the fact that our cash flow will grow by roughly a $5 billion between 2021 and 2026. So that this underlying cash flow both that will.
That will support this dividend and so on top of that.
Let's call it obviously and so the two <unk>.
Again, a new a new concept of course, we're able to leverage on the <unk>.
On the entire months and so we.
We're committed to retail.
Part of the surplus cash flow generated by environment to our shareholders our clients well.
Yes.
Your guidance.
That's 40% of the surplus cash flow overall.
It will be a return by return for our shareholders and so that's the rationale behind a $1 5 billion barrels a day rates that will be at the market before end of this year.
So the next question.
Yes.
Sure so the our.
Our educators valuable ECM capture of the rising cost of energy because it is reflect both inside the refining environment.
I'd say the spread between refined products and crude purchases so that those cost components.
You seem to get the ECM and the second component of course is our operational performance and so it's a matter of valuable costs and of resigning for boots.
And in a in a less valuable closed of course, you have in Africa.
And particularly.
The guys over in all of the steam to the field to give.
Two given given that given the size of this indicator takes into accounts because the synergy. The decision was made in Q3 to make the restatements and two and two to report this yen.
We've only statement so excluding the impact of the.
The cost increase between Q2 and Q3 to better reflect in fact, the underlying growth in our refining margins.
To summarize in short yes.
Lithium capture rising cost of energy MTO too, but to give more clarity in Q3, we decided to make a statement.
Excluding this the increase in <unk>.
When we discuss with near D&C with two and so to make a statement and to.
To give you a little better understanding of the underlying those same margins.
Okay understood. Thank you so thank you.
Okay.
Question comes from the line of Christian <unk>.
Okay.
Hi, Joe.
Good afternoon, just two questions from my side. Please first of all.
But mainly around the capital frame, but just firstly on the Capex guide.
It always starts.
This was the middle of the range, Greg to talk about the range.
<unk> raised guidance and you mentioned short cycle Capex.
Yes, it makes sense.
The oil price environment I just wanted to in terms of just how you think about <unk>.
The raise in the future.
Why it is that you've focused on capex.
Basically raising capex over and above <unk>.
Single dividend I know that should potentially put you on the spot with chipotle to options, but I just wanted to your thinking around that.
A casing incremental free cash flow.
Towards towards your Capex relative to cash return, particularly as you're in this period of time, if prices and the second question, it's sort of pertains to the <unk>.
Activism that we're seeing in shell.
Kate I'm going to ask about.
But just sort of lateral read across as you know when you think about how to extract value or crystallize value within your own business like carpet renewables.
To what extent are you.
These statements.
Statements listening to investors as you would be on the road.
To sort of think about realizing that that is potentially earlier expediting. If you don't see that fully appreciated in the equity and the equity market. Thank you.
So regarding capex so.
I mentioned, an additional $1 billion directly in line or slightly leading to the reactivation of short cycle Capex I would say its just $1 million. So that means that of course will continue to be disciplined and they lease.
So within the range, we gave for 10 to 15 to justify that considering the environment. So we'll be close to the top.
A range of other than.
Those two two <unk>, although that goes to <unk>.
Either xyrem and <unk>.
Just to give you and you know the CTO so for an additional $10.
Barry.
Great.
More than $3 billion of additional cash flow, so that means that either either lateral length there.
<unk> remains high.
Hi, so both of those.
So we will be able to generate.
Considering this additional 1 billion dollar revenue.
A reasonable amount of additional cash and so once again this additional cash will be will be.
Up to 40% return to the shareholder so thats.
That's why I do not see any.
Any change.
In the.
The way, we tried to we tend to to allocate the cash losing it.
So capex, but once again in a discipline way just.
Taking advantage of the of the government.
<unk>, obviously that was part of a portion of the Capex that we <unk> in 2000 22020, and the medallion was quite pleased to note that the prices are high gear, that's where the one 1 billion.
Let me I'll equivalents reserves leading to this.
Yes.
Sure. Thank you.
It is the right time to activate this.
But once again, it's just 1 billion in Alberta.
And I feel that we.
We are the market leader.
We did.
Dividend will increase but not linked to the environment leading to the underlying.
Cash flow or cash flow growth will.
We'll continue to do they relate to the company. So we demonstrated over the last couple of quarters that we were able to deliver companies, where we are now below 18 billion 18, sorry, 18%. So you look at is the ideal environment continue to yield to be high of course, we will continue with strategy.
<unk> and <unk>.
EBITDA below below 20% and once again with Xiaomi.
Well done.
To share additional values with our shareholders.
But because I just mentioned that.
Before.
In our Capex allocation.
We confirm that in 2022, we delegate something like 25% of the Capex too. When you were at <unk> 3 billion and 3 billion thereof, the DCP anyway.
To feed our growth.
And to meet the objective we have.
To having now in.
Innovation 35, Gigawatts of renewables, when you would give us portfolio by 'twenty five.
Yeah.
I'm not sure.
Yes.
I think thats that.
The DNA of <unk> and so we stick to this capital to.
<unk>.
Yeah.
I don't know if I can.
It can be.
Way, we see.
Should we should allocate our cash flow.
In the convenient in the coming months or coming years.
Thank you and the second question on the third point activism.
Just around Chris Anthony.
Or is there will not commence an unchanged you would know the strategy.
No. It's repeat all what has been said in September.
Uh huh.
We are definitely seeing that we can we will.
Create value implementing our strategy Khomeini retransmission and shareholder dose investing in particularly in growing markets.
So that's the model.
We.
We want with acute and in use.
So the best way.
To create value in the long term for shareholders.
Thank you.
Okay.
Thank you. Our next question comes from the line of Bertrand <unk> from Kepler.
And it was up yet.
One question relating.
Again on.
LNG.
Many thanks for giving us.
The guidance for.
Wrapping up the MDT U S.
For Q.
Q4.
I'll try to make it kind of takes a size for <unk>.
Q1 next year.
Again, if oil price, let's say stay at $80.
For Q4, plus some.
Hey.
Particularly too.
Spot spot LNG it looks to me that.
Uh huh.
If those assumptions are.
Prove correct in terms of the right macro environment.
We could look for about $14 <unk> in Q1 have you done this exercise.
No.
Give us can you repeat it.
So I do not have the CTO. So we will enter into our budget 2022 is designed to for sure. We will have this year honestly I haven't made the calculation.
And then also of course, you can then get trying to look at EBITDA.
Thank you.
The main the main assumption so the fact that 80% 70, 580% leased.
Oil prices towards something like 15% to get prices.
And the talent to accomplish the EQT.
Finally get back to depending on local type is the right value.
For our Miss it from three to six months.
But for sure in Q1, we benefit from that.
The increase in Q3 and in Q4, and we benefit from that.
Hi.
We'll get to the high <unk> in Q3 and Q4, that's only what they what they can say stupid.
In the past.
Okay.
Fair enough.
With that clearly directionally it looks yes, absolutely yet given that.
Component in the tightened in the Formula.
Under the poor trend.
<unk>.
This will support.
High LNG prices in Q1.
To provide you with the deal.
<unk> has made the calculation yet.
Thank you Javier.
You bet.
Thank you. Our next question comes from the line of Martin Morgan Stanley.
Yeah, Hi, Hello, I had two questions. If I may 1st of all I was very intrigued by the news the total shut down the hydro cracker at the Antwerp refinery and the reason why that is so intriguing is that the the headline refining margins in northwest Europe, including Hydro Cracker margins specifically.
Good day have improved a lot and there they are historically very high levels.
So that then sort of racist as sort of the question following on sort of.
Chris's question earlier that the increased cost of natural gas and hydrogen in the refinery actually is so large.
And that it does trigger.
Shut down so hydrocracking units for economic reasons and that and that therefore, we should think about a very significant erosion of the sort of headline refining margin. So I was wondering if you could elaborate a little bit on the shutdown of the hydro Cross car and tour for economic reasons and sort of how that came about.
The second question I wanted to ask you it does relate to the dividend and actually.
I think that the third quarter, it's never quite deformed to really to talk about the dividends, but given us quite a lot of others have asked about I think you've said a few things I do want to race at this point.
I totally understand that.
The dividend is linked to the long term outlook for cash generation.
That makes it a lot of sense, but but.
<unk> not growing the dividend.
You're sort of indicating to us that youre also seeing not a lot of increase in long term cash generation, Indiana. It becomes very hard for the share price to rally meaningfully. If there is no increase in the long term prospects for cash generation. So I just want to make sure that I'm sort of trying to understand the messaging.
And the signaling behind what you are saying.
Are you are you are you indicating to us that.
Actually you're not seeing an awful lot of improvement and long term cash generation.
No I think we.
We believe that this message September so we have a clear visibility regarding the cash flow the cash flow growth in a constant environment. So we gave the CFO.
Yeah.
Labour government and in.
And we have a different sensitivity by the way.
Six years EBITDA.
So is that typical for you. So given that we have used these tools give EBT regarding cash flow not leading to the environment.
We are able to <unk>.
To grow the EBITDA, but once again, we see it as a long term component in our shareholder returns.
First between us and our shareholders.
We then will take that.
Even with this policy.
We decided not to cut the dividend and 22 in the middle.
So thats the long term will benefit once again of the.
The issue of the kitchen.
To return to our shareholders.
On top of that.
Two if we are able to generate additional cash flow benefiting from from high.
Right.
Oh, Yes of course, when we do that.
Nearly behind us once again to Luciano <unk>.
So thats not why we are not confident.
Having a long term long term cash flow growth.
It's a matter of.
Uh huh.
Having a long.
Long term component in a short term component.
Directly linked to the new environment.
Concerning <unk> I do.
Honestly I assume that has this information so I suggest that my team.
Back to you.
This gives us we do directly.
Okay. Thank you that's great much appreciate it.
Yes.
Yeah.
Thank you. The next question comes from the line of Lucas from Exxon.
Thanks, very much for comex clicking.
Taking the question.
I wanted to touch again on I G L P.
And also move on to balance sheet.
I G. L. T can you just remind us what if.
If I look at what happened to your LNG price Q3 versus Q2 and think about what you are saying about the LNG price Q4, but Q3 the increases are not dissimilar.
Operating level, which I appreciate there's a bias towards refining sorry bought towards trading.
Opex have increased $500 million over the quarter why should I not think so.
Operating profit in Q4 will not be towards 500 million higher if not more.
Consequence of the process that you're already high license before I, even think about what's happening with the liquid fraction business.
That was the first question and the second is very simply when does your balance sheet become lazy.
Caring is improving at a rate of a short 10, 8% a quarter.
The environment is obviously pretty favorable the outlook for cash flow I'd say, it's definitely favorable.
At what point do you say, okay less than 20%, but we're now at 15 quota in 2012 and start to.
What happens with cash then.
Okay.
But for the for the last question regarding your gearing. So we do not have the.
Any.
<unk> so what what what is clear is that we.
If possible we want to do they relate to the company.
And each will be the case, either Easter too, obviously, those either email environments.
<unk> remains high.
And you.
So it's the best way to be prepared in case of.
No.
Lulu.
Yes.
Lisa.
Route.
In LNG.
[music].
Yeah.
You had you.
You had the guidance for the.
What's going on with will EBITDA be.
The prices for LNG production on top of it.
Once again, you would have been trading with us.
Able to deliberate on Google relation in the ability of the market.
No issue when you mentioned refined payment, Louisiana issue take.
Taking into consideration all the IGF EBITDA is.
The second box.
The other segment.
<unk> if I may.
So I'm just looking at what I can say, which obviously is the increase in operating profit given that you're trying to split the operating profit between.
LNG marketing between renewables and between the other.
Hydrocarbon businesses, but run through that line.
Yes, that's right.
Given that for renewable electricity.
Like why not do I E.
We gave EBITDA by the way.
Equally there's a contribution in terms of reserved for that.
In <unk> results for on a quarterly basis.
This this quarter.
Gave an indication regarding <unk>.
<unk>.
So I think we gave a lot just for a few years.
To enable you to maybe look at patients who got the <unk>.
The entity by E or the volumes.
So even though margins are the trading the trading deadline, they can into gallons, but once again, we consider to be the third.
Having their own profitability.
I know, we're not prepared to give us any idea of what the.
LNG volumes that you have available to trade in your portfolio might be.
Obviously, if I look at what comes into your portfolio, you'll figure as to what Youre committed to deliver to customers for a long term contract in your portfolio I can see a very large difference between those two numbers, which historically led to his question.
Which you could add additional facility.
With a number that run at 15 million tonnes.
That she has a global LNG sales and you had the drop coming from Alex we can put it.
In the press release, so again, yes.
Okay.
Sounds good thank you.
Thank you.
Yeah.
Our next question comes from the line of Ken.
Okay.
Yeah.
Jump here. Thank you I wanted to ask about corporate renewable electricity ppas and some of the stuff you're doing here with <unk> and Amazon recently.
You know, obviously, you gave a weighted average PPA price and.
We should use that in some level of cost of production for but are.
Are these.
I already keyed Amazon type projects I mean are they more attractive more profitable then.
Say, certainly intergroup Ppas, you do between Spain, and France to hotel.
Or some of the stuff Youre doing in India is should we be thinking.
Differently across these different car.
Contracts into the Ppas, that's the first one it.
If you want to know what are the secret sauce.
Hum.
Industrial information currently we we gave already a lot of information because you have in the press release on a quarterly BD.
<unk>.
<unk>.
Under the Esa.
On the production and by the way as our clients.
The four assets.
The development well.
For sure you see but you have a declining trend in terms of PPA.
Turning to the fact that the costs are declining as well so.
It's a matter of.
Between between cost and MTBE price what I can tell you is the rationale behind this.
Corporate EBITDA to diversify and factor.
Sure.
A few weeks not to have <unk> with us.
<unk>.
State police.
But I will not disclose the obvious reason.
The prices, we negotiated with them alone.
Okay. That's clear and then my second question was around your the short cycle Capex. Some of it you said, it's going to Nigeria, obviously, Oh, you're in the summer we had this PIV Bill finally signed in Nigeria. So.
So you put that Capex to work next year.
Are the returns on this better post the PID being signed that then they would have been say two years ago as you put money to work in Nigeria. Please thank you.
I mentioned an idea yes.
One is of course, an example.
We don't define the different assets, we have in our portfolio. So we are told you season.
Thank you.
Well it can be easily connected to existing facilities and one point I will not give you a figure because this type of asset you have the profitability.
He has more than 30% so it's not.
I understand your question on the phone is clear.
Our RBC for us if we don't find this Richard.
Second asset to select the best.
The best profitable ones and to execute on time and on budget.
The capex.
Yeah.
Definitely I'm not sure if they go to Capex can you benefit each one varies.
Here.
If you go to.
Is developing.
Mountaineer, Lisa it's Marty noted investment and it gives us some some some cuts in relation with connections.
That's very clear thank you.
Thank you. Your next question comes from the line of.
Okay.
Pete.
Hi, there. Thanks for taking my question I want to ask a question on the Mozambique. So.
You've obviously pulled the project because of the security concerns, but it looks like the partners are in every four particularly Exxon.
It's got undergoing a strategic review with some new board members and they have cited some concerns around the project. So I was wondering you know one of the key benefits of putting those two projects together as economies of scale and shared infrastructure and things like that so if under the scenario that.
The area of full project doesn't go ahead, where does that leave hotels projects would you still be looking to push ahead.
When the security situation allows.
And then the second question is on a different topic.
You have a fairly sizable electricity and gas retail business now in Europe, and we've seen some very volatile markets. When you structure. Your sales are typically fully hedged or do you take a market risk, but I'm just wondering because a number of companies have reported fairly substantial losses being on the wrong side of things.
These volatile markets. Thank you.
So regarding <unk>, so what I can confirm to you that of course, we remain fully committed to develop these projects. So the resources coming from year round one.
Of course, when the conditions will allow so we.
For obvious reasons, a stable and peaceful environment to be able to we'll mobilize our stuff and it's not placebo at present time.
So we will see it will be possible next year in 2022 and issued against <unk>.
Could be there in 2026, exactly which we indicated.
And there are.
And investors.
So we are committed to this to these projects.
Yes.
Of course, so now we have to be patient.
And see how the.
How does the situation.
We include in the <unk> in the coming months.
So regarding regarding.
Our AG AG sweat disease.
That's good.
Most of the LNG portfolio is hedged.
If you are the all the details so I think in in February.
We will give you more more steps regarding regarding it.
Our alpha <unk>.
<unk>.
I noticed that Youre right.
Some of our peers have taken a significant losses, but for us what's important is to be in a position clearly.
Each of the LNG the use in the future to implement the heights.
Aging strategy exactly what has been done at <unk> until you see the visa.
The impact in our results.
Sorry, I was asking about the the retail side of electricity Oh.
Sure.
6 million customers you have.
But whether you can take any market risk on that.
You mean.
As far as the electricity that we sell to final customers.
Yes, essentially that yep yep.
Yes, the answer is yes.
Okay understood.
Thank you. The next question comes from the line of Anish Kapadia from policy.
Good afternoon.
Another question on the LNG business.
Given given the environment, we're seeing at the moment.
Mainly higher buyer appetite to sign longer term contracts as to entertain a number of deals signed in the market. So just wanted to get a little bit of an update in terms of.
Your <unk> LNG projects.
Yes.
About the U S and M.
M PNG in terms of.
How youre thinking about those and could we see some kind of faster progression in terms of getting to a five day.
And the second question was on on your chemicals business a lot of your peers, who can't give.
Yes.
Break out, let's say the chemicals contribution I was just wondering if you could give us some sense of.
So far this year, what's been the cash flow or the earnings impact in terms of chemicals.
And here the types of results. Thank you.
And so the.
So.
As you know we.
He will be there.
Buchu regarding decided as we near the end.
The transition and particularly LNG and suite that we have very good assets in our portfolio.
So that's why we do not need to be.
They seem to be a key one gave me designed to capture additional assets as far as LNG is concerned so.
So we have.
The PNG LNG project.
In our portfolio that could be sanctioned in the.
In the coming of euros, and who you have Cameron extension as well so the camera.
I'd say, that's where we're quite well.
On the engineering CFO.
Okay.
By example.
And on top of that but to feed the any of.
The growth beyond 2025.
We have access to the to the.
LNG.
The energy resources.
In Russia. So we have another tech with the possibility of launching additional additional development additional trains so in 2024.
LNG.
Predictions that we couldnt that will come on stream.
And.
You have yes.
I think.
Yes.
Yes.
<unk>.
Ah projects that I can respond, yes, with Mexico, we look at it based on plasma really well positioned to supply the market. So all in all and on top of that we already mentioned was only Q1 there'll be projects Hulu.
Sanction that had been taken this in phosphate.
There is a plenty of succeeding with Amit.
When when the conditions will be there.
<unk>.
And of course, we could sanction additional trains Venezuela, So no don't worry we have enough.
We saw sitting in our portfolio.
Our growth beyond 2025.
And the $50 million of says when DDT.
2025.
For chemicals I think.
Yeah.
It's true that.
Petrochemicals.
The main contributor.
In the Q4 results thus far.
As concerns to Ftes refining petrochemical attorney.
Is that fair.
That's the main.
EBITDA, we do not disclose separately the results of refining chemicals and <unk>.
Sure.
EBITDA margin for fiscal <unk> well.
Particularly high in the queue.
Both by the way in the U S and you're supporting.
Yes.
Economic recovery.
Alright.
The purchases.
Okay. Thank you.
Okay.
Thank you. The next question comes from the line of Henry Coffey.
Hi, Barry.
Hi, and thanks for taking my questions.
Two really one is and apologies if I missed it in your.
These statements, but I'm just.
Some of the main moving parts around the production as we look into 2022.
Could be would be great.
And then the second question is just on the ACC joint venture.
To build the battery.
Factories and the entries.
Let's say these into that joint venture.
Could you just.
Talk us through the sort of roadmap for the joint venture and then weather.
Soft in total all of these kind of leading on the battery development or whether other technologies are going to be.
Thank you.
So you have to be patient. So you have to wait I think.
<unk>.
March.
To have the production guidance for 2020 in September we gave Google trends as far as particularly concern so geely.
Giving the 2025 2026.
<unk>.
But b patients.
We continue with the Tms.
<unk>.
Paul.
APC.
Therefore, the talent we have.
The message as best you can.
Longer than the DTC is the Woodford yesterday Wednesday.
So.
So yogesh.
For this one.
The adventure.
It's too.
<unk> bye.
32, almost equal.
Equivalent on a yearly basis of $2 5 million does that mean.
This will be done 90% of the European markets and so by through the entry of messy. This within.
As a company. So we have increased the capacity of <unk>.
<unk>.
The 120.
Hi.
<unk> you.
Our sorry.
By 2000.
Thats.
And so the technology that we use in lithium.
For this.
The joint venture.
And so each partners we will soon expertise.
Of course as far as the.
That's better.
Yes.
So, but also <unk> and <unk>.
Messages.
For the for the EV technology.
Is that.
I will be behind us.
The joint venture.
To attract.
The difference that you would expect.
<unk>.
In the joint venture.
Okay. Thanks.
Thank you. The next question comes from the line of.
Romain Cm CIC securities.
Hey, good afternoon. Thank you for taking my question relates to the.
When you ramp up production.
I was wondering why.
It was stable compared to the second while U K.
Okay.
Actually increased.
First question.
What is.
Martina.
Charging points in lots of ways.
Yes, It was your plan to invest.
Next time, which is quite impressive charging points that it represents.
Ah.
So the question regarding the revenue were capacity so the change between the.
Q3 and Q2.
Uh huh.
But the main.
The main driver is <unk>.
The fact that as I mentioned in my speech.
<unk>.
So.
I have to you have to.
So in January this year, so we acquired 20% of LNG.
So it's a loop.
One of the biggest.
Worldwide.
And in it.
In.
In Q3.
And any gain decline additional portfolio of five gigawatts.
So given that where 50% of the LNG. So each contribute to one to an additional one gigawatt globally now in your workforce.
As far as the developed a particular concern is less than that because of losses.
Do you get with additional capacity that are not fully developed.
Or is.
The whole point of the <unk> five gigawatt of additional installed capacity to increase acquisition and the balance is coming from over for mobile assets.
Uh huh.
David the total of the Roku.
Hi.
Do you like.
Yes.
Yeah.
Charging points.
<unk>.
You and also further really understood your questions.
Actually you had that it was best to address.
Next year 450.
50 stations this year.
Yes.
Charging points, whereas it's much more than one point.
Plus station factory.
Yeah.
Each served more than one.
Two to three depending depending on the stations.
Part of the global strategy to to having no no no.
Operation, So 150000 charging points by 2025.
Lee.
In the.
We will won't.
Paris and London.
Now in Shanghai as well.
With a Chinese partner.
It's like a poor so it's part of the strategy and so forth.
We are by visa announcement.
We tend to support.
The ROE for the year.
Mobility.
And.
In Europe, we believe by 2025.
We will have something like.
1000 <unk>.
500, HPT charging points. Please.
It's part of this strategy.
Thank you very much.
Thank you your.
Your next question comes from the line of Paul Cheng from Scotiabank.
Right.
Alright, Thank you that's it.
Alright.
Two quick questions one.
With the rise in the natural gas in Europe.
Somehow sensitivity.
But I think one dollar per Mcf change how would that impact on the opex.
Lending portfolio per barrel and also that how good are you.
Impact on the refining margin capture.
Given that natural gas will be used to generate hydrogen for the hydro treating and hydro cracking operation.
And also that part yeah, Chesapeake empower I suppose taking into Opex. So that's that.
First question.
The second question.
Wanted to see if there's any additional.
News on certain names.
For wine.
I think the last.
Last year the whole.
What could come on stream in 2025.
In September I think Patrick was saying that that's a bit of the complication.
<unk> nine <unk>.
You guys have in mind right now thank you.
But let us see we do not give the GTT reality.
The increase in in vitro.
But we gave you the sensitivity.
Looking into our production facility.
The two entities.
Millions of sensitivity we get.
Yeah.
Sales for an increase.
Okay.
Wendell.
So we do that.
The CTO for signing.
Dining margins.
Then.
Sure enough.
What we have.
A lot of exploration targets to be drilled.
The next future.
We'll have to continue to upgrade.
The discoveries we by the way two weeks integration and so we will communicate that.
So that's when the results of the campaign has had been before.
Okay can I ask a final question on the <unk>.
Right.
To meet your full year Capex fourth.
Quarter, it's going to see a pretty substantial increase in the capex comparing to the third quarter.
With the incremental capex in the fourth quarter going to be applied to.
Obviously process.
End of September.
It's $9 billion, so that mean it.
Given that I gave you.
He'll.
Give you indications.
For 2021, the Capex would be close to 13 to begin <unk>.
Before we have something like two 4 billion.
Capex spend overall in Q4, but.
Traditionally Q4 is.
It's more of an impact in terms of Capex will be I think not in particular in Q4.
Is that.
Anticipate.
In this 14 million thereafter.
And that means deepened.
We seek to do the guidance we gave for Capex.
Keep in mind, 50% of the Capex.
And those activities.
The balance sheet each were going into the EU.
LNG and renewables.
Yes.
Something like 3 million globally.
As far as Capex levels.
Alright, thank you.
Thank you.
Final question comes from the line of Jason <unk>.
Cowen.
Hey, Thanks for squeezing me in.
Wanted to ask two questions first.
Going back.
Two <unk>.
<unk> trading and I actually wanted to ask about the renewables and electricity business I know.
The big energy companies that are investing in renewables suggest that there is a.
Integration value from that renewables business being in the larger entity and it seems like during <unk> during a period of volatile power and gas prices you could have seen some of that integration value of merge. So I'm wondering if you could give any details on if you generate any excess earnings and that.
Paul empowered business.
As a result of the volatile commodity environment and if not.
Do you need to kind of get that business to a minimum capacity level or add some different assets in order in order to realize that integration value and I have a follow up thanks.
Ah well clear the additional value of thoughtful available parts of the venue.
Okay.
First on the integration front.
So what we have in mind.
With clear DSD.
September.
That is to be able to do.
To fully benefit from.
Yes.
The blockade of course, you have you're.
You are entirely with BT as well.
You have to have.
The SKU.
Uh huh.
<unk> traders.
Lastly, the model, we want to demand so with Delaware law.
Great.
<unk> <unk> <unk>.
The next would you have to benefit from the front.
Got it.
The integration.
Got it.
Able to capture.
The reality.
<unk> already has a team of course.
<unk> EBITDA to develop and to develop the team taking into account. The fact that this business is very local.
Different from.
From the oil and gas with Linzess as more and more global and more.
So we have to develop local teams as well to benefit from.
For the <unk>.
Electricity.
Buckets.
Yes.
Any other questions.
Hi, Yes, I have one follow up just on the $1 billion.
Increase in short cycle Capex can you discuss.
How much production that will bring on when that production will come online and then the cash flow benefits from.
At your at your kind of planning commodity prices.
As a as I already mentioned is the leader.
We are doing it as a science.
Some more detail in February or March but of course, it will contribute.
For the change because when you when you put a C.
The decision of essentially short cycle.
And the first two.
But it sure is between one one.
12 18 months.
So for sure you will start seeing the impact of the decision.
In the in the coming quarters.
Okay. Thanks, a lot.
Thank you.
So I think it was the last question.
That was the final question Sir Thank you.
So thank you very much.
I Hope you will have.
Thank you, ladies and gentlemen that does conclude your call for today. Thank you for participating and you may now disconnect.
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Okay.
Great.
Yes.
Okay.
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Okay.
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Yes.
Yes.
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Okay.
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