Q3 2022 TotalEnergies SE Earnings Call
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Ladies and gentlemen, welcome to the third quarter of 2022 results conference call at.
It's anytime during the presentation, you May press star and one to enter the queue for the question answer session I now hand over to jump Yeah, Freda CFO , who will lead you through this cold Sir. Please go ahead.
Thank you Hello, everyone.
You'll be speaking we reported solid first quarter results continued to demonstrate totally new visibility to <unk>.
Then we swung a little Italian 11 minutes.
The success was to.
To further strengthen the.
Our balance sheet and to share the benefits with our employees and our shareholders.
Yes.
The third quarter was marked by volatility.
The high level.
Brand remains strong.
Reaching more than 100.
The fourth quarter.
And we do the decline late in the quarter as OPEC plus unnoticed.
There's two media in February you put that Richard Shannon.
Which demonstrates that our base wants to remain in control.
The risks are slower world economic growth.
European gas prices were pushed to the roof by increasing geopolitical tensions and the receipt of <unk> doing winter.
Even if discrete is limited as gas storage in Europe food.
As a consequence MBP nearly doubled in the first quarter to more than 42 communities.
A strong driver for the Oes.
Yes.
H LNG price of course.
It was lifted but despite natural gas prices and reached a record $21 five build up I mean with you in the third quarter, but.
The increase of more than 50% quarter to quarter.
We capture the full benefit of these LNG price thanks to our integrated strategy.
European refining margins MTV.
Despite the increase in energy costs reached one and we did also have done in the third.
Steve is among the highest we have ever seen.
Probably a record setting second quarter levels.
Close to 150 directly.
Yeah.
In this context the company generated first quarter adjusted net income.
$9 9 billion.
All three points 83 Dora Garcia.
The fourth quarter.
With the previous quarter.
These strong results were achieved despite the increase in taxes I will tell you more on the UK tax seem to in a minute and the decrease in production and oil prices.
But mitigated by higher integrated LNG results.
Dennis address key cash flow.
I mean at 12 billion for the third quarter.
<unk> <unk> from the second quarter, mainly due to the lag effect in <unk> received I think we tee.
Year to date year to date, the FCS is 38 billion, an increase of 80% compared to last year.
Cash flow generation of diesel Doyle magnitudes marks the start of a new area for the company.
The area that would be modest in the quarter by zero net debt balance sheets, but necessary to Alicia for the <unk> see any of the future and in a great need for cycle cash flow pellets for shareholders, well, 35% to 40% from 2022.
These were the main miss it as part of the strategy and outlook presentation last month and the <unk>.
Third quarter results confirm these messages.
That's about the environment the effective tax rate for the company increased to 44% in the first quarter up from 79% in the second quarter.
This is largely due to a higher tax rate for E&P activities. As a result of the UK E press it clearly does it.
Dominion dialing back on the <unk>.
Quarter, four the foremost or expectation.
Despite increased taxes 20 $26 billion.
By the end of September mostly in producing countries of.
Okay.
In any case faster.
Than we had predicted a year ago.
Thanks to the federal able price environments.
We estimate the impact of the EU Daiichi tax that's around 1 billion.
Well there are certainly.
The company's hydrocarbons production was $2 7 million.
Cleveland today, so to say has decreased from the previous quarter mainly.
Mainly due to planned maintenance, notably at the keys and unplanned downtime at cash again.
Fully offsets Davey entry into prediction of safety and Thats helpful.
And third.
One all these field being in Brexit.
Yes.
Opex.
Trended up to $5 6 billion.
Darrin on that rich. These include say, how you're of course, the affinia representing available in 'twenty five the ramp up of it.
Expect these higher energy cost, we do not observed any cost inflation at the opex level.
DCP is a constant priority we are in a commodity business and maintaining a low breakeven additional fuel to weathering the cycle.
Looking at the results segment by segment.
Integrated gas renewable and Taiwan AGP.
Busted record adjusted net operating income of $3 6 billion the largest quarter.
One 1 billion from the second quarter.
Cash flow was $2 7 billion driven by higher LNG prices and strong trading activities in line with the previous quarter.
The federal they bottomed Iron Mountain West.
Quarter after quarter, a 10% decrease in and he says that resulted mainly from the Freeport LNG with age and planned maintenance Spt's LNG.
We expect fourth quarter LNG prices to be about 17 drafting amendments you still at high level I remind you that 70% is linked to blend from Utah and 30% to get spot index.
The company continued to execute on its LNG growth strategy.
Acquiring a stake in north field, South LNG project in Qatar after all the North Sea East LNG last June .
N V and extra heating business gross enable probably wasn't enrichment capacity.
Reached 16 gigawatt.
And the third quartile.
$4 four D O S well, they'll Dakota, including <unk> <unk> from the <unk> acquisition.
And this asset.
<unk> offshore wind farm in Scotland.
We just closed the acquisition of 50% of Clearway energy in the U S and announced another key acquisition in the thing your mood in Brazil yesterday towards yesterday.
<unk> electricity production was $8 eight yeah.
In the softwood.
10% from the second quarter, thanks to the high <unk> utilization rates and growth in <unk>.
All power generation.
EBITDA from electricity and renewable business was one of at least 16 million in the third quarter stable compared to the previous quarter.
Operating cash flow for <unk> was $4 4 billion, but out in the third quarter included a positive impact on working capital due to reduced margin goals and seasonality in the gas, but where supply business.
The E&P segment.
Just see net operating.
A $4 2 billion and cash flow of $6 4 billion down in the fourth quarter.
About zillow points, Fabienne, Lola and one <unk>, respectively from the second quarter because of lower prediction.
Quarter to quarter, our average realized liquid price.
By almost stand it up.
Hey, Julien I guess price increased by around six good afternoon.
Okay.
Well ramping up activities in E&P, notably the startup of production at the <unk>.
<unk> field in Nigeria.
But the big when you have projects in Angola, and the Phoenix project in Argentina.
A significant gas discovery in seafood.
The combined downstream segment generated $2 4 billion of adjusted net income.
And $2 9 billion of cash flow in the fourth quarter.
Outstanding performance, even if decreased compared to the local safety second quarter. Thanks.
Thanks to strong distillate Marlin and a good trading desk almost comparable to previous quarter.
To put this into perspective.
First nine months the downstream journey.
Four.
Hey, sorry, $8 4 billion of cash flow twice the level of the same period last year and more than enough to cover the entire our regular dividend for the year.
Our expectation is that the refining margin should remain strong.
Particularly for distillates, even the ban on imports of friction between you and predict into Europe .
February 23.
At the company level, although the first nine months of 2002, we generated operating cash flows before working capital changes.
But around 77 million an increase of 85% over the same period last year.
Year to date net investments of $12 5 billion in line with our guidance.
16 billion for the year, including $4 billion in Decarbonize energy.
We bought back 5 billion shares although the first nine months and plan to buybacks I know there are 2 billion EBITDA in the first quarter.
Our gearing ratio is down two 5% at the end of the third quarter.
Even though <unk> financial position and the strong cash flow generation.
The company is expecting a balanced value sharing policy that includes an exceptional values of one month's salary to older Oh worldwide.
Please.
And the new shareholder return policy announced in September that targets 35.
Coffee percent gastro payouts.
In addition to the regular filled in theory dividend <unk> zero point 69 euro per share, which represents a 5% increase from a year ago. The board decided to set for the ex dividend and payment dates for the <unk> special dividend of one euro per share.
In December of 'twenty two.
That concludes my comments my remarks, and now we can go to the Q&A.
Ladies and gentlemen.
If you wish to ask a question. Please press star one on your telephone keypad that's star one.
The first question is from Irene <unk> with Societe Generale. Please go ahead.
Thank you very much good afternoon jump, yet and I had two questions. Please firstly.
That's quite a substantial 7 billion dollar working capital release in the third quarter I Wonder if you can talk about the main components and then.
What could we easily could anticipate something for Q4 any any any guidance would be very useful and secondly on the.
The Russian impairment you took this quarter can you. Please remind us what remains is the net book value. After these impairments and since the start that you presented last month.
Left out.
Everything to do with Russia, and will you over time, just write off whatever remains on the balance sheet. Please. Thank you.
Thank you Ed and good afternoon, yes. So the first question regarding our working cap so.
Therefore, we reported a $6 7 million or a working cap release in the first quarter and they are either for I would say all three main factors behind this performance. So the software 12 just reason.
Working capital release in relation with the tight effects on stocks.
So around <unk>, representing a press <unk>.
We have $2 4 billion.
Working capital is as well.
Thanks to evaluation mountain released floor, all gas and electricity business.
Thanks to set all optimization and exposure.
Makes sense.
We have as well a 2.1 billion the working cap believes in relation with our E&P tax payable. It is mainly the case in the north.
North Sea country, Sweden, Norway, and UK, Germany.
And.
On the other side, we have a minus 0.8 billion, although you see effects on payables and receivable balance.
That was the main the main the main driver behind this performance.
So for the first quarter.
Of course, it will be better things will really be dependent on the on the evolution of the PISCES.
The valuation of stocks and for the gathering <unk> that you Shouldnt buggy Marines beds.
I have in mind that most of the tax will be paid in 2022, it will be paid rather.
During the first quarter 2020 fee, so I, even though to anticipate.
Cash outs are stronger cashflow, it's always a vessel of the visa performance.
In the fourth quarter.
According to the two two the cocoa into vitamins.
So now perhaps your question on impairments, yes. So we will go out and you know it goes.
The new and additional write offs on the value Oh, no that the shares for $3 1 billion.
In the fourth quarter.
Because of course, we have to to review the cash flow long term scenarios.
We do include in fact greater uncertainty.
Cash transfer from Russia. So that was the main the main driver behind the servicing dominance.
So we are very transparent so we published in the research and a few months.
Specific to FX on Russia, and so at the time, we gave the capital employed in Yorkshire.
Close to 14 at the end of the end of last year.
And now given all the different impairments, we made so we made the.
I remind you a $4 billion $4 1 million impairment in the subsequent Dominion energy to remain.
Three or $3 5 million billion impairment in Q2, mainly when do they take it and then they take share value in this semester vis vis the quarter sorry.
And then you should notice three lines. So all in all it represent modest.
Impairments of.
And even so.
So D. So now two two to answer to your question.
In our in our in our accounts, we have the capital employed total Asia around 6 billion.
So all these are environments that has been done.
Thank you. Thank you very much [laughter] champion.
The next question is Tom Mackinnon, the Levy with Goldman Sachs. Please go ahead.
Thank you very much ash MPA, Florida at four and all of the presentation and the strong set of results two questions from me. The first one on the LNG side. There were exceptional results. This quarter. Despite the fact that they'll go out quite a few shutdowns and I was wondering if perhaps you could give us in beauty electronics when you expect some.
This production to come back, especially Freeport's, Nigeria, LNG and <unk> returning back from scheduled maintenance and then my second question is on your G. H G emissions always very helpful to have it on a quarterly basis and ongoing strong delivery, especially in the reduction of scope three but.
There was a 10% increase in scope one and two emissions. My understanding is most of it comes from Europe , and the ramp up of <unk> and <unk> and the donor refine it but I was wondering if you could give would be more be CBD till date. Thank you.
So perhaps I will start with the second question.
So the increase regarding scope, one and two in Europe .
And these are some things to the CCT. So I remind I remind you that in 2015, we do not have any security in our portfolio.
So now we have a difference of CVT so in the interim.
<unk> in Spain in Belgium.
We start we left off.
And you will see enhancing and retaining non EU.
Beginning of this year, so and given that for this reason the TCE performed particularly well during the first quarter. That's the driver behind this this increase or you can get a scope one and two in Europe .
Your second question regarding <unk> regarding our.
Our strong results. Despite your Dallas call me. The demonstrations that are are that the success of our integrated strategy.
Because we were able to ATK is very very.
Very high performance.
For.
The segments on the LNG business decides to shut down so despite the loss.
Oh for People's cargoes in particular in the first quarter.
So ER. According to information I have people it is supposed to come back to a 100% capacity.
Before November of 2020.
Yeah.
Sure.
And.
In December .
Sure.
Nigeria, Yeah, it will be probably.
Thanks, Joe and E T. So they shut down when there has been a has been a has been completed and so you're supposed to come back to to normal prediction in the fourth quarter.
Thank you.
The next question is from Martijn rats with Morgan Stanley . Please go ahead.
Yes, Hi, Hello, I've got two questions if I may.
First of all I wanted to ask if you could say if you're worried about the impact of the refinery strikes in France during the quarter and say a few words on how that might impact our fourth quarter results.
And then also I heard you comment on adjusted yields I'm sorry.
Sorry, distillate cracks.
And that they may continue to be supported as a result of the EU import embargo a Russian oil and this remains a very hard to navigate a issue and I was wondering if you could set out more broadly what you think the impact will be of the EU embargo on Russian oil both for crude and for product.
Over the next couple of months.
Okay. So the impact on our on the refinery strikes and Clos.
We're very pleased with.
Retail recorded a.
Daily call calculation because of course on one side we lost.
Production and costs.
Stemming from these two refineries, but we benefited for increased margin.
In our in our refineries in there John in particular or in Germany.
I will not give you a very precise figure out so very very limited the impact of the slides.
Although the although the.
Several months.
Do you see that.
Yes.
They are strong we think that of course, but then on the Russian petroleum product that would be effective in February 2000 vehicles will contribute of course to maintain this distillate cracks at very high level. It was between that would be so easy for.
Europe to compensate the loss of these volumes.
So we saw.
So we that's why.
We think that once again the margin could remain.
Uh huh.
<unk>, it's probably a bit easier to compensate the loss of the off the bat.
So I'm sure that will be effective in December .
Because you are getting of course.
Quotes from over a mover.
Some of our countries, but we.
We are very clear.
All of these that will contribute to.
To support the crises.
Because of course, we're a regime, where do we need to finance. Thank you Lucas demo so it will be.
Maybe it will be glad to China mobile the BD in Asia. So this country benefits from the <unk> the <unk>.
European refiners will have to pay premium to attract.
New groups. So that's that's the Lucado service Oh, she served as bad and I think implemented that in the neighborhood.
Okay wonderful thank you.
The next question is from Christopher Copeland with Bank of America. Please go ahead.
Oh, Thank you very much most of my questions have been answered already so maybe just a quick one.
Yeah, if you wouldn't mind, giving us a bit more detail about what you're seeing in terms of demand destruction in your chemicals business and perhaps in your overall sales figures and how you are looking into next year, considering the recession, that's coming out.
Early stage two leads to pretty much range, it's too early I think to give either.
So and.
In chemicals.
We stopped seeing but not nearly as impactful as a possible resolution that it could happen next year.
I will now says that presents I'm honestly, even given.
Even with the discounts we have no utilization we can achieve.
Any drops in volume so.
So we'll see.
Outlook for next year.
A partial realization through this would have any impact on the.
Technical issue that has an impact on the.
Again demand as well, but.
Too early I think to give a precise figures.
Fair enough. Thank you very much.
The next question is from Oswald Clint with Bernstein. Please go ahead.
Yes, John P. I think you just just back on the LNG side. Please.
I Wonder if you could help us just understand a little bit more about how you're doing so well I mean, I'll just say some huge gas price differentials in the quarter, especially around quarter end, which needs to be marked to market, but you're also buying your I think your active buying spot.
LNG cargoes in the quarter. So it was it is it the case that you are having some losses on the hedge deliveries, but offsetting it with a new spot cargoes have been able to offset that through the profit on those is that something that's going on and then secondly.
I mean, I understand the confidentiality around assets in an encounter but is there anything you can say around.
What we might expect perhaps proportional EBITDA uplift from starting up what is I think one of the largest solar plants in the world that you've started up this month. So as we look into next year is this going to be something.
Material. Thank you.
Okay.
Also regarding A&D.
I think 2021 definitive.
The start of January outperform all sluggish Ah NL.
And electricity trading.
And so we said you know sigma quarter after fourth quarter exit rate very strong to very strong performance. So of course, we do not give the full details absolute are there you are for all trading trading business.
But I can tell you that we in the first quarter.
Teekay LNG.
LNG gas and power trading basically makes it into performance of the Q2 2022.
Q2, 2020, we replicated the high performance we have.
In the fourth quarter, what do you want to and perhaps you remember that in the first quarter of 2022, we announced that we have a very very high.
Trading deaf I'm also.
Quantifying Bcf almost.
Also more than.
500 million to up so how do you see that.
That's cool.
We had we have to.
To record in the Q3 results show the impact of the people with outage and so we have and the loss of cargos and the fact that of course, we have to work to offset hedging losses, but being able to replicate.
A question just with a very very good level of depth almost demonstrate that we are able given the global portfolio. We have to offset in fact these are these hedging losses.
And so what we.
The worldwide results. So we are we have this year.
Our prediction in almost all of the main hubs.
In the U S. We can get.
In Australia, just mentioned and of course, we have to.
Again, if you're coming from.
Jim.
From Russia as well.
And so we add even if its portfolio and given that the Osage we have so we manage between the difference between <unk> and <unk>.
Alex It's all in the way of trading is able to deliver once again put to us.
Very good performance.
Okay.
Uh Huh, yes. So we so those are some of the solar farm was inaugurated a it was last week I think so we got all suites globally one of the.
Most.
Secondly border solar farm worldwide I think.
Equally that ends of <unk>, representing a <unk>, maybe at what I do know that to be honest.
The EBITDA.
Asked my team and so we begin they can come to you with that.
Very clear thank you.
Okay.
Okay.
The next question is from really javelin, Florida, where with Barclays. Please go ahead.
Thank you Joey and good luck.
Yes.
Yeah.
The first one with discussion presentation I think.
Yeah.
5%.
Thank you.
Okay. I appreciate that my next question capsule and the write downs that they sign up.
Thank you.
No.
Then secondly, just bigger picture question.
Minneapolis and glycol provider.
Higher interest rates no difficulty accessing finance, Greg it's Alex.
Did you think that starts to change this.
Sure.
Sure.
Thanks.
Yes, so thats, who that Oh.
He's already below 5%.
We've been at day five.
Thank you Angela.
Ah is.
Difficult.
We do not have any magic figure in terms of the cost I guess until we see where it will be more than happy to continue to Franklin bank balance sheets, and two and to continue to decrease as well having said that in the in the first quarter.
Yeah.
And assuming that we will continue to junior high ball is the same level of cash flow from our Perry from from ups.
Given the targets, we have for Capex that $60 million of at all.
Globally.
For the full year, taking into account that we will continue our buyback program.
Billions at all that we will be.
As a special dividend, representing more or less $2 5 billion.
I would say that we should remain more or less in the same in the assembled box.
Iran for below.
Of course, it will depend on the once again.
Working capital.
I already mentioned that they do not anticipate as well.
Full valuation.
Looking get underway. So I would say are more or less at the same level as <unk>.
The level, we had end of September .
So for renewable in facts for sure.
In that sector.
This is already the same in the upstream sector.
We have to face inflation.
Inflation and to face higher interest rates.
That in fact.
These additional costs.
Inflation.
And how you're going to replace will be passed in fact to the final customers when we negotiate the.
The PPA when we negotiated the contract to sell or to sell vehicles, because as you know we target for this type of project to double digit profitability for Wayne.
When we sanctioned the project we had.
We had.
Yes.
The Capex and so we're looking at the Capex.
Yeah.
The to be expose anymore to the future and tissue. So yes.
<unk> on the label age and of course, the final <unk> and so we adjust in fact the level of PPA. We are really designed to data to be to be in a position to deliver the targets to double digit profitability. So.
Yeah.
There is no no no nuomi recorded.
We generally say it's increased all this inflation, we know change the sexual though we changed the methodology, we used to have to sanction the project.
And do you believe they would say that so you could have somebody even effect or any heavy goes of course, it will clean I would say the competition.
We have less companies Abel.
Able to enter or to continue.
The development in that.
Is that a net of fees.
Alright, Thank you very much glad this whole benji less competition.
So it should be it should be profitable for us.
The key for us.
Yeah.
The next question is from desktop Oh did with Kepler. Please go ahead.
Yes, I have a just a one question that's coming back on your.
LNG trading performance.
Yeah, you often refer to your integrated model.
What in your view is is making the difference is it because you have.
He is a very large practices.
Dewey gas capacity that you execute.
You are able in fact to maximize your LNG.
Spark setting price or is there or is there a reason for that outstanding performance.
Yes.
For sure are having made the acquisition of <unk> portfolio I think it was three or four years ago.
You get us give us access.
218 million ton capacity in Europe .
More than 50% of the well bore.
So it's a huge advantage.
Two.
So all figures.
To play between the the arbitrage between the U S and Europe for sure.
Keith.
The LNG.
Trading performance once again being a project.
Sure.
Under the main hubs.
I remind you that we are number one.
LNG exports to the U S as well.
So we have a strong presence in the U S.
That says.
USB is more within EMEA.
Synergy coming from the U S.
These are the capacity.
Through our ships to deliver.
Two our European system. Thanks to these guys.
Yes capacity and of course, we have on top of that.
Other sources of LNG in Asia, and the middle East and customers.
So all in all so that was a tradeoff to arbitrate between the different markets and now given the price of LNG each category represents a cumulative.
Either one of them.
For example, when you're able to do.
The awards are too long.
So let me take between the different markets of course, it's very.
A very efficient way to maximize.
Maximize the value coming from the business.
Many things jumped yeah.
The next question is from Alastair Syme with Citi. Please go ahead.
Hi, Joe and Paul.
If you sell a royalty tax.
You mentioned, the 1 billion your cigarette butt.
Is this still a maximum.
Clarity do you have I mean, you're clearly having some.
Negotiations with different government. So I just wanted to understand.
Those negotiations split.
And then secondly.
The last few weeks, we've seen a pretty big collapse in spot gas prices in Europe .
You know I noticed Ford markets haven't changed as much but do you have any perspective on why you think export gas for instance in clubs.
Okay.
So the EU solidarity.
So as you know will be impacted by these users.
He was really tax.
In six countries.
In Europe , which will be France, Germany, Belgium listen war.
So mainly in our recycling activities that mark and I didn't answer the E&P activities. So I'd say the time there is a lot of uncertainty.
Keith regarding the implementation of the tax because as you know you gave a frame.
Framework for this forty-three IC tax in each countries is suppose to adjust software that betrayed to local is today.
We are on our request.
Having said that we made because they offer the highest regarding grade.
As it relates to that with you because you just gave a minimum tax rates.
Regarding the use of a.
Calculus.
So yeah, and so by the way.
Regarding the fact that the.
The babies.
It will be 2022 or 2023, because the tax do you have the 2022 and 2020, so having said that we made.
We're engineering, so we made a lot of different calculation with different scenarios and all in all we are.
The conclusion on that.
This.
He was really truly represents something like your win when the median.
For the full year of 2022.
And the EU gas price willingness for sure at present time, we see in BP.
Around 2020, I'm going with you.
Both year on year on Btu, which was the end of August I think.
It's a huge drop in fact that 2021 you're doing stuff in acres.
When you compare the level we had.
Before the before the disposal prices.
<unk> results.
The main factor of Athene is a drug that you know <unk>. So of course, the world ammonia in Europe due to the Trump Johnson right from picture of it.
For some time and so the literal units of course, Indonesia, Russia.
Can you share with that with the gas.
That's all.
Almost.
<unk> and Sylvia.
Refinished, although the tester announce.
And there is strong competition between the EU and U S companies and Chinese company to attract LNG cargoes to Europe .
That's that's crazy condition.
On top of that you had the <unk> disorder.
To reach capacity in there.
Okay. That's it.
It creates an over another.
Subject effects.
The gas coming from the coming through you get two of our European countries.
You can see that.
The price will be highly dependent on the weather the temperature I suppose.
The final cost inkjet intra Europe .
So it's a whole so we anticipate that.
The winter of 2022.
B B.
Okay.
Sure.
You bet.
We'll have to leave their homes.
The winter of 2023, and so given given.
The large once they gave us just give us a few up completely compensates the placebo.
Yeah.
Core.
Richard I guess coming in from pipelines it should be.
Hydrogen costs.
Gas prices in Europe .
So that's why we.
I don't know so much.
Once again, each one patriarchal Samsung.
But yeah.
You go down to two <unk>.
Even in Europe .
Q.
Whether it presents as well.
We are very supportive, particularly for gas in Europe for these terrific.
Our SEC reserves.
The need to go up to attract LNG cargoes, that's a good answer.
Good luck.
I guess Mike.
Yes.
Can I just clarify some of the architects the 1 billion Euro estimate does that include the tax loss carryforwards.
Gross number before before you had all day balance we made some confusion defending your anticipation both of that.
Let the low could be depending on the countries.
Okay.
Okay.
Please.
It is really starting to impact.
Depends on the country depends institution.
Okay. Thank you.
The next question is from Lucas Herrmann with Exxon. Please go ahead.
Yes, thanks, very much and good afternoon J P.
A couple as well.
Maybe some some points of clarification on windfall taxes as well.
I just wanted to go back to LNG and get some better sense of what the hedging policy is now in the extent to which the lengthen the portfolio is exposed.
One of the things I think Patrick made quite clear when New York was the.
There is uncertainty as to the longevity of a contract with them or whether the sanctioning of the Russian contracts, which he was not taken I think a plot million tonnes per annum.
And those are the consequent does seem to be a reluctance to actually hedge those volumes. So can you give us some idea as to the extent to which.
But late in your portfolio the unpublished portion of the the LNG trading portfolio.
Has increased over the course of the last few months will will increase going into the fourth quarter and therefore, you are more exposed to volatility in spot pricing.
That was the first question.
The second just just staying with that can you give us any indication of the cash flows that you derive from trading Russian LNG or is that just seen as being.
You know too difficult to predict.
As we've said previously on that wouldn't be disclosed.
Part of your disclosed in the cash flow from Russia, but you've clearly taken those cash flows out when you presented your strategic view going forward is five years, but they very clearly remaining when you present place. It today and then sorry, just getting back to Alastair I'm sorry for the long list just to be clear the windfall tax that you are acquiring two or the estimate of one <unk>.
Is that.
Is that or is that pro racing.
When those taxes become applicable.
Okay.
Because it's considerably more modest than the number that you indicated.
And at the strategy day, we're including no K component, you talked to something new which I don't know I.
Okay.
Okay. So perhaps that we satisfied this distributed first so we have two different subject so.
Windfall tax profit in the U K, it's already implemented.
So we the votes in presentation in July it looks like you need to end of May and so we mentioned in New York.
Assuming a 30 <unk> five <unk>.
The fourth quarter, which would represent for 2022, so from that end.
End of May to the end of December more or less one.
<unk> put out.
The 1 billion, okay. So each one.
We can put expertise U K, so it's simply a keto values no doubts in fact yearly.
Yes, yes, it's particularly in the <unk> and the projection on which this tax.
Will be applicable to 1 billion noise for this for these subjects that cool.
End of September .
We have to record or the other.
The third quarter in fact more than four months of which with expertise in the U K the impact is something like six.
So in the mid 40 million below the.
The second subject either you solidarity tax at the time.
We have nothing in our markets because it's again, there's lots of uncertainty regarding the way you should actually be implemented and the figure I mentioned 12 lease tax so 1 billion euro of 1 million Euro.
Exactly the same if you go to New York I remember when I.
I gave that figure.
Okay, and so then of course, they often some some discussions or uncertainty regarding when.
The tax will be you will be piggy board once again, the metallurgy and it's supposed to be a one off that is the main difference compared to Q U K windfall tax that is supposed to be applicable since the 2000 22025.
Okay, great. Thank you.
Rick as he LNG in Kentucky.
So the key is to hedge the.
In 12 months. So that's what we would that we mentioned already.
To you many times that we some exceptions and so what has been mentioned.
Regarding our risk assets is that.
We do no longer edge Russian volumes since February 2022.
To take into account you have certainty you mentioned rig Audi the access to the deliveries. So that's that's helpful. This is a global policy, but we have an exception on the ratio.
Okay, and just to be clear on those volumes.
Millions is the contractual element that was just the other million tons that you said you're committed to take in 2022, So I would like to take that 6 million tonnes of LNG coming from your mall at the present time.
Is unhedged.
It's not because we added the two or the two first months of 2022. So the calculation is correct and in 2023 it will be a continued.
5 million tons of sense.
Coming from Russia.
Okay, which will stay unhedged.
Can you give us any indication.
Sorry to ask in terms of the comm no weapon.
Gave a very transparently since once again the communication of the registration documents.
Is the cash that we just did a Russian upstream activity able to generate and so you will see that in the Q2 or Q3, which represents more or less.
$550 million.
So for the for the second quarter, therefore, the saltwater and it will present with dividends, we are wherever I go to APAC.
In our accounts. So in Q2 it was not I think the Johnson <unk> speech was the yard.
Okay.
Alright, I won't push for the thank you very much. Thank you.
Our next question is from Brad spoke Qatari out with RBC. Please go ahead.
Hi, there I actually I'm gonna, especially about further lucas's question I'm, sorry for the <unk>.
Now I'll stake can you just confirm whether there's any restrictions.
On the difference between earnings and cash flow received from from that side of the the Russian portfolio I get that but then the equity interest of Yamal as the project level there might be some issues on getting the cash out but for the offtake side should we assume the earnings flow straight to the group cash flow.
And then the second question is just on the LNG portfolio. Overall are you able to disclose what the level of spot sales as well as spot sales was in Q3, and what you would expect to have in Q4 as a proportion of the portfolio. Thank you.
So yeah, Matt uptake I'm not sure to have the <unk>.
Just to your question.
That's we gave so the cash we received.
Russia.
So it's cash received from AMETEK of cash receipts and once again.
You had this year for the Q2, you have the figure for the free and so.
I gave the indication that Q2 to represent Nevada have you done and complete for Nokia in either.
Essentially.
Family 50 million there are Q.
Q2 is the leader in the field of <unk> mortgages can figure for Q jumped yeah, I was thinking more of the offtake side. So you as a total trading business are buying oil linked volumes and selling unhedged LNG is it fair to assume that that cash flow that you generate from that part of the business.
Is there is no restriction on the on where the cash resides in terms of Oh go straight to the group cash flow statement.
Thanks, Sharon Thanks, Shannon, Okay, and that's great.
Our duty to predict due to the complex.
So the complexity.
To.
You said the bulk of the Yamana AG volumes to Europe to Asia with the European authorities.
We are waiting for us.
No. There is no no restrictions okay, perfect, that's very clear and I'll start with a global portfolio. The global Division I already mentioned.
No that's very clear and then they spot LNG sales.
Oh, I see I do not have the figure for the Q3.
My colleagues will come back to you.
Should represent something like two or 3 million tons.
They will come back to you with the precise to you. Thank you very much. Thank you.
Yeah.
Okay.
The next question is from Paul Cheng with Scotiabank. Please go ahead.
Thank you.
Good morning, John to you.
Two questions. One can you talk about the language right I think I think Justin.
Oh I'm sorry.
Uh huh.
Funds can you confirm what the third.
Thanks.
I know you said burn.
Got you.
One Oh, that's the first question.
Oh Im sorry Board line is very bad and I.
I was unable to.
To understand your question sorry could you could you repeat.
Sure.
I'm referring to.
When suddenly finding it's Brian .
Good fun.
I think.
Nathan Union that we.
It's Brian on Monday trying to confirm that.
Apparently one thing or a bad.
Totally shut down those two pardon me.
Okay.
What I can tell you is that we had the refinery normal niche.
That was shut down.
The almost or all of the month.
And we have two refineries.
You can also sell for Q2 was impacted as well by this right so more or less for October two.
Two refineries in halls that we're.
If I can maybe stripes.
Yes.
Okay.
<unk>.
And can you also tell us what it does.
Hum.
Uh huh.
Contract any meaningful.
For 2020.
2024.
Yeah.
So really haven't understood.
So badly.
The upstream contracts, but what is your question.
These contracts and Andy.
And the meaningful upstream production contract.
Will expire in 2023 or 2020.
I mean are your arm into the development contract.
Hum and contract like you had a couple of one contract type of debt one contract expired.
I just want to know yet that any other meaningful.
I pulled up some contracts.
Audio.
Spine, what do you I mean, the only operation contracts.
T Rowe.
Operating contract.
Okay.
Oh, no I have nothing in mind, because we have.
No no when you what are the kits Agua guess gets out again when contact each was end of last year. So we had the same unbilled Cook in Thailand.
So we withdraw from Myanmar as to which is just to remind you. The main the main contact.
That's where R&D recently, but.
On top of that.
Alright, and our Mt.
I do not think between E.
Nothing in line are knocking a sizable.
In mind.
Uh huh.
No.
Okay. Thank you.
And by the way are the pod you finish it goes to the group, although the weather over the next couple of years.
Thank you.
The next question is from Amy Wong with Credit Suisse. Please go ahead.
Hi, Good afternoon couple of questions from me. Please the first one is on your capital spend plus acquisition in Brazil announced yesterday.
Kind of Buffalo's assets and C D at the moment and what kind of Capex per megawatt.
We be expecting for that development.
Development pipeline.
And then my second question relates to just your capital return policy I think at the capital markets day, as Patrick said that the 35% to 40% cash flow to shareholders had a soft ceiling on what you know like what kind of conditions would we have to see to see you guys gone beyond that ceiling.
Yes, so on the capital return policies.
Thank you.
The guidance give like the blues.
That's it.
The information of the guidance, we gave to the market.
End of <unk>.
End of September .
There is a common shares.
How do you say that you are.
Right.
I think we mentioned it before the 40%.
So the 45, 40% guidance.
The limiting factor and with 40% is not.
Sydney, So what could go alert us to go beyond that of course is the edr lateral nineties.
Very very very very high level. So you have at the same time.
Alright, guys are priced E refining margins.
People again.
All of our business at age trading are performing particularly well.
That's.
That's what I can I can tell you.
And the brand new acquisition so we.
Yesterday, so it's a it's the fact that we would create a joint venture.
We'd.
Okay.
So anybody suites are the largest renewable energy the Brazilian biodiesel.
We will have the stage of 34, 34%.
In that are in the JV, but having an option to acquire additional noted a 50% to be modest.
And he couldn't euros.
The index.
The capex for them to get what I think is not very relevant given the fact that we acquired.
50% of the portfolio already in production or early stage, but also a 50%.
With portfolio.
That's the <unk> that will be developed.
Okay.
In the coming years.
Well he knows so we pay a zip codes.
Cash payment of five.
<unk> minions.
So I think it's probably pretty high.
The key is to have assets are able to deliver or return on equity above 10%.
But once again the competitive zone.
Overall portfolio I think indications.
Yeah.
Okay.
Squeeze in a quick one it's nice to see that you guys are putting into one month's salary bonus for all employees could you just comment I mean give me an idea of what size, but not the total amount of that isn't that's been accrued in north requeue numbers.
Well I can do represent more or less 7% what.
It was available.
Sorry.
Yes.
But it will be capped so there will be an email message you'd be kept as well too.
Six.
So I wasn't sure.
So that's.
Tomorrow is 7%.
Ah the silicosis.
What do I.
Great. Thank you very much.
Nothing makes you a three year numbers.
It will be in may or in Q4 numbers.
Okay.
Great.
The next question is from holiday, particularly with UBS. Please go ahead.
Yes, that's something I think it's good data just a quick question left which is around.
Around like effect on dividends from equity affiliates that you mentioned.
Something about that.
And you should expect a catch up in the fourth quarter, maybe beginning of next year any details on that would be helpful.
Well it is.
Yeah that's.
We just got Hoss.
The Q3.
Three is particularly linked to.
Almost in the LNG sector and so the the LNG business ease.
In our the majority of the cases the continued on an equity basis. So that means that of course you have.
On your net operating income the immediate effects of the depo months. That's in the cash flow generated from operations of course, you have to wait for the dividends at all gossip voice, depending on the country, depending on the partnerships and so you said you would have had an immediate effect on your on your I guess rule.
Cool.
Until you get that uses Dino you think between the increase of impact on the on the disability income and the impact it has on the cash flow from them. So I couldn't tell if you defense it depends.
The the geography it depends on the business.
So it's a dynamic between I B C.
Around six months something like that is it depends because in some geographies you are able to put in place interim dividends to accelerate in fact.
The.
The cash the cash outs from the sort of from the Middle East.
Some of our go to market you have to wait.
Can I just when do you didn't go yet so it's a mix between the different two different situations.
That's it thank you.
The last question is from Kim for Yeah with HSBC. Please go ahead.
Hi, Good afternoon I had two questions. Please the first one is that I was intrigued by your comments that you're not seeing cost inflation in upstream.
That's coming from higher energy costs.
We're hearing.
Some other companies that are going through and coming out like the cost of I think so.
Wondering if you could offer any more color on upstream costs and the broader operating in sanctioning environments in the upstream.
My second question is on is on refining and specifically if you could give an update on the low end a refinery in Germany that used to be supplied exclusively by Russian pipeline crude now that we're a little more than a month away from just talking to you embargo to Sunday is still only a refinery now able to fully run our non Russian seaborne crude.
Yeah.
Oh No question question. So, yes, so I can tell Mike Amanda. Please on time, given that we're not very present in the U S share.
Even though he really inflation in our costs.
And of course team was any securities I have in my.
Mine project.
This was presented I think it was six months or at least for just after the at the beginning of the war between Ukraine, and Russia and at that time.
The teams came to the expense with it.
Asking us to sanction the projects.
The impact on those key price Rhonda plus 40% something like that so at that time, we said that we said no. We are not in your original sanction project and so is the way we mitigate in factories discussed completion.
In some contracts we have to face this situation well.
So we have to be patience.
We have time in fact, we sanction projects.
Uh huh.
That's <unk>.
Obviously, that's a long time given really the on the on the investment that has been done.
All of the Oh, yes, the companies.
Since 2000 22015, our 2016.
<unk>.
Do not see a stronger so when inflation.
And so we do not anticipate 20.
20th fishing in our in our <unk>.
In the coming months.
Russia, So really nah, yeah, surely not was a well designed you'd like to run a wireless would run.
Richard <unk> as you know until we were very clear it was very early in the.
In the U S, which was in March when we publish our.
All of conduct regarding regarding Russia that we no longer buy amis, but Russia to supply our refinery even of course Luna.
Catchable in Florida.
Before the crisis.
Almost 90% of the revenue.
It was a it was Richard I think the likelihood.
As the Nike 95, or 95% so we are fine.
And so <unk> will come from.
Uh huh.
I mean from but in fact, that's what we are.
So imports seaborne codes to compensate.
To compensate the lack of enough Susquehanna.
E.
We are keenly aware of of course, we have discussion with the German authorities.
To make them aware.
Of this country.
So we see that.
It was it was a it was born.
222, <unk> 800.
Nathan Luisa.
Okay.
Despite coming from <unk>.
In the next during the next future continue we'd be shutdown at T cells, So supply right now everything.
Yes.
Okay. So I think it was the last question.
Okay. So thank.
Thank you very much for your time.
And so I will give you a.
All right.
I think now it will be in February .
For the 2022 reserves.
Thank you again.
Alright.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation you may now disconnect.
Okay.
Okay.
Okay.
Yeah.
[music].
<unk>.
Okay.
[music].