Q2 2023 TotalEnergies SE Earnings Call

July 27, 2023

Yeah.

Ladies and gentlemen, welcome to Tata Energy's second quarter, and first half 'twenty two 'twenty three results conference call.

I now hand over to Patrick who Yummy, chairman and CEO and jumped yeah.

If you have four who will lead you through these calls Sir Please go ahead.

Yeah.

Well good morning, good afternoon.

Patrick Pouyanné: Well, good morning, good afternoon, everybody, wherever you are. Patrick Pouyanné speaking. Before Jean-Pierre will go through the details of what I would characterize as a solid set of numbers, I would like to come back to the conclusion on the major investments that we have announced in this last quarter, which are good illustration of our oil and gas and electricity strategy, which in fact are based on these two fundamental growth pillars. On one side, growing our hydrocarbon base, mainly driven by LNG, but oil of course, is our cash engine of today, and secondly, developing a profitable and integrated power business, which is key for future cash engine of the company. The results, I should characterize them as good cash flows, good ROACE, and good distribution, a strong distribution to buybacks.

With you wherever you are.

Speaking.

Before we jump to the golf course, the details so far.

I would characterize as a solid set of numbers I would like to come back.

And then this works in a number of major investments so that we have announced.

I think the soft pool, two which are a good illustration overall.

And then maybe switching to the strategy.

Which in fact, it's all based on two fundamental belongs on one side the window I woke up one day, mainly driven by LNG, but of course, he's all questions lined up today and take on difficult finger pulse is it more of an integrated power business, which is key for our future cash and John overcome for me.

Everything else I should go back to right now.

Josh rules would support and good distribution a strong distributions through buybacks.

Patrick Pouyanné: Continuity and strong and solid set of numbers, but Jean-Pierre will come back on it. First, on the first pillar, I would like to highlight a few important projects. The first one, of course, is our projects in Iraq called GGIP. You know that the company is born in Iraq 100 years ago, but it's not a matter of emotion, it's a matter of creating value. Let's be clear. The GGIP, in fact, providing for us access to exactly the type of hydrocarbons we are looking for, low cost, low emission, oil and gas because both projects is targeting both.

So it's continued to do so.

So you can set that number jumped yeah, we'll come back on so first on the <unk> I would like to highlight some Q.

And bolt on projects. The first one of course is our project in Iraq for Judy I D.

The company is doing in Iraq tier one of them is a ghoul, but there's nothing that tells me Moshe so much else creating value they see clear.

And did you guys.

By providing access to exactly the type of hydrocarbons. We are looking for little girls toys, we Shouldnt board and gas because both probation targeting both.

Patrick Pouyanné: Gas being, of course, a source of gas for—that's like work plan, but also as water reinjection will have to increase position of water reinjection. The other second objective, which I would say a breakthrough innovative contractual conditions compared to previous service contracts which were signed by others in the past. This contract offers an attractive reward, well balancing of course the Iraqi risks, we are fully aware of that. Second, of course example, a very major example of the strategy in motion is our new project in LNG projects in the US, the Rio Grande LNG projects, which we have announced in June and which now is FID. You know that we are very committed to LNG.

That's being done.

It's closer tools both for gasoline.

That's why for credit or is it not that we'd theater, we love to Pitney Bowes is kind of what they really do take under the good food I would say, it's very cool contractual or wait till we know there is some structural conditions compare.

There are just service contracts, which were signed by others in the past.

He has done to try to go through that and that's actually a reward where the balancing of course, the Iraqi reads yeah.

What are you aware of that.

This example of a major example of this strategy in motion.

All new projects in LNG projects in the U S. The Rio Grande LNG project.

Which we announced in June and we should always had five days you know what yeah.

Yeah. So let me take two LNG tankers is a growing demand and of course with physicians is very important because you have to Louis schools are very little costs through some gas there.

Patrick Pouyanné: I would think that it's a growing demand and that, of course, the US position is very important because you have lowest cost, a very low cost source of gas there. I would say this is a project on which is attractive because it's one of the most competitive LNG plant with $860 per ton. Rio Grande project benefits from a very good location outside, I would say, of the Louisiana crowded area, and more importantly, access to skilled forces with no competitions, limited site preparation. Again, it's a CapEx competitive project. I know it's a matter to deliver it. More importantly, of course, for us, we are deciding to integrate right project by different angles. Why do we integrate it by different angles?

And I would say this is a project which is.

It is attractive because each one of the most countries even energy plan for me the 850 that up or down you kind of a perfect benefits from a very good location outside of that we still have the Louisiana Colgate area and more importantly access to skilled forces with no competition.

Site preparation so against it.

Capex compared to get projects and I know, it's a not just a bit and really more importantly of course for us.

Are we all decided to integrate the bride approaches by different angles are and why we integrate teams by different categories, becoming like with the audio shareholder of mixed became a company well most of the project, but also.

Patrick Pouyanné: Becoming equity holder, shareholder of NextDecade, the company will promote the of the project, but also direct investor in the project with 16%. Also, of course, a large stake. We've done that because in fact we are leveraging this integration in order to have access to the most competitive pricing for US LNG, and this will give us a clear competitive advantage on the market. It's not only a matter of staking, but the integration gave us the capacity to negotiate better price than others. That of course is a source of value. We might also enhance further the value of the project by further integrating the upstream in order to protect our gas feedstock cost in the future. Other upsides will come also for expanding the plan from 3 to 5 trains.

Valuation investor in the project 60.

And also Oh.

Of course, I won't speak we'd done that because in fact, we are literally gene integration.

You know those who have access to their most competitive pricing for any wasted energy and this would give us a competitive advantage on the market. So.

So that's already a myself speaking, but the integration gave us the capacity to negotiate this surprised on oldest and that's of course as Ah.

Supervalu.

Mike's also and serve as a value of the project probably felt really exceed what you think the upstream and that's across fixed gas.

Gas feedstock across the future.

And other other sides, where he's got them also for expanding the plan from three to five clients. So that's why we can say that as I said, not only being a mistake, but more importantly also to countries go directly to reinvestments.

Patrick Pouyanné: That's why we consider that, not only being a stakeholder, but more importantly also to contribute directly to the investments is a way to leverage and to create different sources of value from this project. Last project, of course, emblematic of oil and gas is the final award of the contract for the Amiral project in Saudi Arabia in petrochemicals. In fact, it's very, I would say, leveraging the SATORP platform, an integrated platform, a world-class petrochemical facility, well supported by the Kingdom of Saudi Arabia in order to get advantaged feedstock and a very competitive project. We have also during the quarter continued to deploy, I would say, the second growth pillar of the company, which is building a profitable integrated model in electricity, so integrated power.

Ways to leverage <unk> to create a dividend.

He is a value from each project.

Large project.

Would that be from oil and gas is all the final order to award the contract falls on the <unk> project in Saudi Arabia.

In petrochemicals in fact, it's really.

I would say leveraging as a central platform and integrated platform and world class petrochemical facilities with as reported by the Kingdom of Saudi Arabia, and others to get advantage feedstocks and a very competitive projects.

We have also during the quarter continued to deploy I would say is if segun dwarf dissolve the company, which is building the Pacific Bora integrated model in electricity. So integrated power. So explore Josh on the one side and integrated program on the other side some of which we focus I would say.

Patrick Pouyanné: It's oil, gas on one side, integrated power on the other side, on which we focus, I would say, our transition strategy. Two events, two projects happened during this past quarter, very recently, by the way. One is the full acquisition of Total Eren, which has been announced for quite a long time. You have seen through the figures that it's $400 million EBITDA. It's a company, so and cash flow for additional cash flow next year for TotalEnergies. The multiple is quite attractive. It was negotiated five years ago. It's 3.5GW, and mainly, by the way, to further them being in what I call the unregulated countries, so feeding our integrated power business model.

Our transition strategy.

I went through.

Yeah, So two projects Ive been doing these passports.

By the way one is he's put acquisition lets put that Iran, which has been announced for quite a long time.

You have seen from the figures that are it's 400 million that I did die.

It's a it's a company so in cash flow for additional cash flow next year for just energy. The Murphy Board is why it's attractive to a negotiated five years ago, three five gigawatts and mainly by the way too further than being in a what I call the unregulated country. So feeding.

Particularly people or business model. So it's also a lot of competencies in who joined the company in order to be efficient and more efficient.

Patrick Pouyanné: It's also a lot of competencies which will join the company in order to be efficient and more efficient. With this integration and all the, now the next step, and I think we'll come back to you on that in September, is to, we have all these assets around the world. Now it's a matter of industrializing the way we operate them in order to deliver more value for the integrated power business. We also won some maritime leases in Germany, 3GW offshore. Some people think it's too expensive. It's not because I think it's exactly what we are looking for in integrated power. It's fitting, it's a perfect illustration of our business model. Why? Because, it's the first FID on the market, the German market, which will offer the best price for electricity in the future.

What have you integration and all of the no or the next step and I think we'll come back to you on that in September .

We have all these assets are under well known myself industrializing the way we operate them in order to deliver more value for the integrated polar business. We also want to live.

It is in Germany, where you can go with offshore some people are saying, it's too expensive. This market because I think it's exactly I think what we are looking for an integrated board.

<unk> got a perfect illustration of our business model why because it's.

The first is on the market the German market, which we don't think that's the best thoughtful it efficiency in the future of Germany has decided not to go through nuclear absolutely you know at the end.

Patrick Pouyanné: Germany has decided not to go to nuclear. You know at the end the price of electricity in Germany will be supported. Secondly, it's like an oil and gas concession. You know, we pay only when amounts are important, but in fact it's an upfront payment, like we pay a bonus on an oil and gas concession because the royalty, in fact, we fixed it. We fixed exactly our fiscal terms to those by what we pay upfront, 10%. For all these 3 gigawatts, it's something around EUR 500 million. Then we will pay a royalty over 20 years. The royalty, by the way, avoids us paying any connection fee to the grid.

The price of electricity in Germany will be supported.

It's like an oil and gas transition no retail need and most are important but in fact, it's a excellent Dana that we pay are bullish on the oil and gas concessions because oil can be fixed.

Exactly of esports are those five what do we pay up for 10%. So for all these three gigawatts if there's something there on the side of booking at zero and then we would pay a royalty.

20 years in Italy, he buys a week a voice first to pay any connection fee. Due this week. So when you look to the math I can tell you.

Patrick Pouyanné: When you look to the math, I can tell you, I'm very happy that we have managed to get access to the 3GW of offshore wind because it's exactly the model we want to put in place. The price is not controlled, up to us to decide which part we will sell to PPAs, to German manufacturing industries, and which part we'll keep merchant in order to trade around and to asset integration. My answer to the ones who have criticized us is that in fact we are exactly in the model, not in infrastructure model, but an integrated power merchant model, exactly what we do in oil and gas. You will hear us continuing to deploy this strategy.

Very happy that we have managed to get access to the fleet and get the rest of her with because it is exactly the model we want to put in place.

Price is not so important to us to decide which parts of the research project.

The agenda for manufacturing industries in which Bob will keep motion and the vessel to trade around them to assay consideration. So my answer is are the ones who are $55 is that in fact, we are exactly in the model nothing foster modal verb and integrate these for a merchant model of exactly what we do in oil and gas.

And you will see us continuing to deploy the strategy advisory I might be because it's easy for me to explain that because I'll get really spaniel, but are these reserves into like the boiler <unk>.

Patrick Pouyanné: By the way, I'm happy because Jean-Pierre, it's easy for me to explain that because Jean-Pierre will explain to you, but these results in Integrated Power are surprising you quarter after quarter, and they will continue to surprise you in a positive way. That's what we want to build. That's my introduction, I would say. My last comment, of course, is that the board is very comfortable with the cash generation of the company, so yesterday reiterated its trust in the future by increasing the interim dividend by 7.25% year on year, and maintaining the $2 billion buyback program for Q3. It's the fifth quarter in a row that we stay at $2 billion despite the softening environment.

And we will continue to surprise you with a positive way.

That's the way we would answer bill.

So my introduction I have my last comment of course is that the board is very comfortable with the cash.

Generation of the company saw it yesterday.

It's for us in the future by increasing the interim dividend by 725% year on year and maintain reaches 2 billion.

On buybacks hold off what was a good quarter.

Is it we're doing what.

But can we say 2 billion. Despite the softening that we augment but they always close the first part was more of a 42% in line with the company's business.

Patrick Pouyanné: The payout for the H1 is more than 42% in line with the commitment of the board to distribute more than 40% for 2023. I can only reiterate that commitment. All the transactions and projects which of course will be the highlights of our presentation to you on 27 September in New York. Then I will leave the floor to Jean-Pierre Sbraire for digging into the results.

It's even more than 40% for 2020 free and so I can only reiterate that the covenant.

All of these transactions and projects.

We have the highlights of our overall presentation for you on September 27 in New York.

And then our lives the flow through.

Getting into the reserves.

Jean-Pierre Sbraire: Thank you, Patrick. Let's move to the financials. The commodity environment softened in Q2, but still at high levels. Quarter over quarter, Brent was down 4% to $78 per barrel, and European gas dropped by around 35% to $10.5 per million BTU. In this context, TotalEnergies reported Q2 2023 adjusted net income of $5 billion, a decrease of only 24% quarter over quarter, and was able to generate a strong $8.5 billion of cash flow. Over H1 2023, adjusted net income was $11.5 billion and cash flow was $18 billion. We continue to deliver excellent profitability, reporting 22% ROACE for the twelve months ending June 2023. We continue to share our success with our shareholders, as explained by Patrick.

Thank you Patrick so let's move to the financials.

With so much timberland sustain in the second quarter, but still at high levels.

Quarter over quarter, Brent was down 4% to 78 stood up although it.

European gas dropped by around 35% to $10 5 million Btu.

Can you just go back.

Thank you and of course definitely a decrease in net income of 5 million without a decrease of only 24% quarter over quarter.

And was able to generate those time points.

Hi.

Okay.

Although the first half of 'twenty three.

Net income was $11 5 billion and cash ROE was 18 billion.

We continue to deliver excellent profitability.

<unk> took a central hub for the 12 months ended June 2000 trees.

And we continue to share our success, we'd all shareholders as explained.

Jean-Pierre Sbraire: During Q2, we paid $1.8 billion in ordinary interim dividends and executed $2 billion in buybacks, which is consistent with the Q1 distribution, despite the softening commodity environment I described. As a result, payout to shareholders, as mentioned by Patrick, was more than 42% over the H1 2023. Our balance sheet remains strong, with gearing at 11.1% in Q2. Moving now on to the segments results. Operationally, our oil and gas production was 2.47 million barrels of oil equivalent per day, that's 2% year on year, thanks to new project starts: Johan Sverdrup Phase Two in Norway, Ikike in Nigeria, Mero 1 in Brazil, and Block 10 in Oman. The production also benefited from the integration of SARB and Umm Lulu fields in the United Arab Emirates.

During the second quarter, we paid $1 8 billion in target areas.

Dividends.

To begin in late August which is consistent with this.

With that distribution declines, especially in commodity environment. These flights.

As a result.

I've mentioned in my position was more than 2%, although the first quarter the first half of <unk>.

Our balance sheet remained strong with gearing at 11, 1% in the second quarter.

Moving now.

Through the six months results.

Oh, yes, yes prediction was two points.

Median batteries supporting equivalent per day.

Year on year.

Thanks to new projects metals USA.

No way.

He gave an idea yes Neil.

One in Brazil, and <unk> in Nevada.

Perfect.

So they need to keep on the integration of some communities in the United Arab Emirates.

Jean-Pierre Sbraire: Note that our oil production was at 12% year-on-year, reaching above 1.4 billion barrels of oil per day. Production for Q3 is expected at around 2.5 billion barrels of oil equivalent per day, notably supported by a startup of the Absheron fields in Azerbaijan. Exploration and Production reported adjusted net operating income of $2.3 billion, down 11% quarter-over-quarter, primarily due to the lower oil and gas prices. Similarly, cash flow of $4.4 billion was also down 11% quarter-over-quarter. These are quite resilient set of results compared to the lower environment. I already mentioned the -4% for Brent and around 35% drop for European gas prices. As previously announced, we are now reporting Integrated LNG and Integrated Power as independent segments.

That's helpful utilization was up 12% year on year.

<unk> below one.

Points for baseball.

But insurance for the first quarter, you would expect to see that their own 245.

There is a fairly competitive.

Looking at each both E Bay just to help.

Actually I want to use.

I don't have it yet.

Exploration and project trials remotely.

Net operating income of $2 3 billion drop down and it until second quarter or the wholesale probably only due to the lower gas prices.

Cash flow.

$4 4 billion rollout was also down 11% quarter on quarter.

These are quite resilient set of results compared to the lower documents I already mentioned the maintenance for central banks.

Around 35% drop for European gas prices.

As previously announced as well that we're reporting in takeaway to Jamie and integrity.

And the balloon segments. So let's move on your take rate and then take litigation.

Jean-Pierre Sbraire: Let's move on to integrated LNG. In Q2 2023, LNG sales were stable at 11 million tons quarter on quarter, benefiting from the restart of Freeport LNG, but decreased year over year due to lower demand in Europe because of mild weather and high inventories. Integrated LNG generated adjusted net operating income of $1.3 billion, down 36% quarter on quarter, reflecting lower LNG price, averaging $10 per million BTU in the second quarter, and softer trading results compared to the exceptional ones we benefited in Q1 in less volatile markets. However, operating cash flow was down only 13% quarter on quarter, also due to lower LNG prices, but partially offset by higher margins secured in 2022 on LNG cargos to be delivered in 2023.

In the second quarter up 23, LNG sales were stable.

And it will just be in third quarter on quarter benefiting from the restart of people with LNG, but decreased year over year due to lower demand in Europe , because of the amount of mild weather and high inventories.

Integrate to get N E.

Net operating income of $1 3 billion of it out.

70% plus.

Reflecting the lower LNG price I believe he ended up I mean, the second quarter and softer trading results compare to VX 600 watts.

In the first quarter unless the Italian markets.

Operating cash flow was down only 7% quarter on quarter.

Also due to lower LNG prices.

Partially offset by higher marine secured in 'twenty two.

I mean, if he got he wants to be data inputs Tracy.

Jean-Pierre Sbraire: Given the evolution of oil and gas prices in recent months and the lag effect on pricing formula, TotalEnergies anticipates that its average LNG selling price should be between $9 and $10 per million BTU in Q1 2023. For integrated power. In Q2, we met our target of double-digit returns, building a platform as an integrated and profitable player in the electricity business. For the 12 months ending June 2023, we achieved ROCE at 10.1%. The proof is in the results. Our integrated approach to the business is working, which combines renewable projects, flexible power generation, energy storage, asset optimization, trading, and B2B, B2C supply.

Yeah.

Oh, yes, yes, why ease in recent months and the lag effect on prices on them yet.

Do you anticipate that its average LNG selling price should be between nine and things are up in either to you in the first quarter 'twenty three.

For hitting earnings power in the second quarter.

Next I'll targets of double each be Joe's beginning of practical as anything risky and private people would pay you.

So for the 12 months ended June 23, we achieved all itchy at 10, 1%.

The proof is in the results I don't think we can approach to the business is working which combines renewables 60 board annually.

So as I said, the theme of deferred training and used to be between supply.

Jean-Pierre Sbraire: Integrated Power Q2 adjusted net operating income is $450 million, and cash flow is $491 million, up 22% and 12% respectively, quarter-on-quarter, due to the good performance of our integrated electricity portfolio. Integrated Power generated $930 million of cash flow in H1 2023, versus only $340 million in H1 2022. The different segments have performed well and contributed to this robust H1 2023 results. Gas-fired power plants, wind and solar, trading and supply, demonstrating the strength of our integrated power strategy. Net power generation was 8.2 TWh in Q2 2023, up 8% year-on-year.

Our second quarter adjusted net income.

Finally, <unk> EBITDA and cash flow is currently 91 million.

2022% and 12% respectively quarter of cross border.

The good that almost both I always think of it as you keep up with it.

You can keep our opinion ASC $930 million of cash flow in the first half 'twenty three 'twenty four CB and the loss in the first half a point.

The defense segment that performed well and contributed to the sluggish default top 23 with those gas fired power plants. When you move three and supply demonstrating the strength of our integrated <unk> 'twenty.

Net debt ratio was eight two terawatt hour in the second quarter, a decrease of 8% year over year.

As growing electricity generation from when you both sweat, partly offset by lower Finian O'shea from 50 people get that in the context of.

Jean-Pierre Sbraire: As growing electricity generation from renewables was partly offset by lower generation from flexible capacity in the context of lower European demand. Growth in solar renewable power generation capacity is now at 19GW at the end of Q2, up by more than 1GW quarter on quarter, including 0.5GW installed in the US and the connection of 0.3GW from our Seagreen offshore wind project in the UK. Let's move to downstream. Downstream contributed $1.5 billion of adjusted net operating income, down 23% quarter over quarter, reflecting lower refining margins, particularly in Europe, partially compensated by higher marketing and services results quarter over quarter due to the seasonality of this business.

European demand.

Grocery store when you move a lot of innovation capacity you know what 19 DIY at the end of the second quarter.

More than once again.

Including the one five gigawatt installed in the U S and the connection with 0.3 gigawatt.

Housekeeping offshore wind project in the UK.

Second multi screen, so that was being contributed $1 5 billion, but off of adjusted net income down 23%.

Water technology, lower refining margins, Australia, and Europe , partially compensated by higher marketing and services with us wholesales up water utilities.

Yes.

The refining margins were impacted at the stars of the value of the Chinese exports and the quicker than anticipated reorganization of fruition pillows.

Jean-Pierre Sbraire: The refining margins were impacted at the start of the period by Chinese exports and the quicker than anticipated reorganization of Russian flows following the European embargo. They were also supported at the end of the quarter by higher gasoline exports to the US and lower diesel imports in Europe from China. Our refinery utilization rates on processed crudes improved to 82% in the Q2, which is a good performance, compared to 78% in the Q1. We expect the same operational performance above 80% in Q3. Since the beginning of July, the average refining margin is higher, above EUR 70 per ton. On the company's working capital requirement, last quarter, we had an exceptionally high build of $4.5 billion, mainly related to higher crude and petroleum product inventories quarter-on-quarter and to the seasonality of our power and gas marketing business.

Following the European number.

They were on placebo at the end of the quarter by either gives them in exports to the U S and lower diesel imports in Europe from China.

Our refinery utilization rates unprocessed schools in close to 82% in the second quarter, which is a good four months compared to 78% in the first quarter.

Seven.

Okay, No that's almost 80% in Q3 and since the beginning of July we estimate the refining margin even higher.

Europe with them.

And company working capital requirement last quarter, that's indicative for the Lehigh business of $4 5 billion.

Mainly due to higher crude and petroleum products designed to meet with them until the season any.

Both our power and gas marketing businesses.

Jean-Pierre Sbraire: I said last quarter that we are expecting $1.4 billion would reverse, and indeed, we have a $1.5 billion working capital release, mainly to the effects of lower inventories, seasonality of payments of the gas and power marketing business. Of course, we continue to monitor closely and take action to minimize the working capital requirements, while expecting in the next quarter some working cap release coming from exploration and production tax payment schedules. On net investment, Q2 amounted to $8.6 billion, and our guidance for 2023 net investment is unchanged in the range $16 to 18 billion. The board of directors, as mentioned by Patrick, confirmed for 2023 is the shareholder distribution of more than 30% of cash flow, supported by our Canada divestments as expressed earlier.

I think I suppose that's like taking $1 4 billion without with reserves.

The $1 5 billion, but I wasn't capital release, mainly due to the effects of blue willing them to read seasonality of payments, but the gas and power marketing business.

Of course, we continue to monitor closely and take actions to minimize the working capital requirement right.

Well I think in the next one to ask him what he's got released stemming from exploration budgets and tax payments.

Our next investment second quarter amounted to $8 <unk> and update guidance for 2020 net investment is unchanged in the range 16 to aid Indiana.

The board of director I just mentioned.

423 is the shareholder distribution of more than 50% of cash flow supersede the.

The divestments and.

Express and that particular.

Cool.

Jean-Pierre Sbraire: The board decided the distribution of a second interim dividend for the 2023 financial year in the amount of EUR 0.74 per share, up 7.25% year on year, and authorize the company to buy back shares for an additional $2 billion in the $3 billion in Q1 2023. With that, let's move to the Q&A. Thank you, Jean-Pierre Sbraire.

Distribution.

Is there going to be done there.

'twenty three financial Europe , India loans.

Hey, Nigel.

For Europe , Russia, Poland further point, 25% year on Europe , and authorized the company to buy back shares for an additional 2 million in the third being built up in the third quarter.

And with that let's move to the Q&A.

Operator: Thank you, Jean-Pierre Sbraire.

And she was on plan.

Thank you, ladies and gentlemen, we will now begin.

Operator: Thank you, ladies and gentlemen. We will now begin the question and answer session. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Please kindly mute any audio sources while asking a question. If you wish to cancel your request, please press star two. Once again, please press star one if you wish to ask a question. The first question is from Christyan Malek of JP Morgan. Please go ahead.

<unk> and answer session.

As a reminder, if you wish to ask a question. Please press star one on your telephone.

Wait for your name to be announced please.

Please kindly mute any audio sources, what is asking a question if you wish to cancel your request. Please press star two once again. Please press star one if you wish to ask a question.

The first question is from Chris <unk> Malek of Jpmorgan. Please go ahead.

Hi, good morning.

Christyan Malek: Hi, good morning, Patrick, Jean-Pierre. Thank you for taking my question, and well done on the last quarter. I want to ask you about the two pillars which you've simplified very well. I know you have framed a compelling case of wind and renewables through optimizing across the value chain. What I'm trying to rationalize is how you generate a return competitive with the oil and gas pillar, when you're looking at overall terms for the portfolio, and if you're essentially trying to maximize every dollar you place into your fuels generation, if you will, it just doesn't make sense to me why you don't double down on your oil reserves while oil is getting firmer over the next few years. My question is basically, can we expect a higher growth oil target from you over the coming years?

Thank you for taking my question.

So.

I wanted to ask you about the two pillars, which.

Simplify it very well.

Our friends at <unk>.

Pending case, a woman in renewables through optimizing across the value chain, what I'm trying to rationalize how you generally I would tell him two patents at the oil and gas pillar when you're looking at overall trends for the fourth.

Oh, yes.

If you are essentially trying to maximize every dollar you places you will choose generation. If you will it just doesn't make sense to me why you don't double down in the oil reserves, while oil is getting.

Over the next few years.

My question is simply can we expect a high price.

Ballpark it for me.

And if so will that takes capex Paul.

Christyan Malek: If so, will that take CapEx higher? Thank you.

Yeah.

Thank you Chris as you know we have a and you will come back on your question of course is a good presentation in September it's weird to all of you on drilling versus is true, but we have quite a large portfolio of oil and gas projects oil and LNG projects and we'll come back on it on or even though we have a again.

Patrick Pouyanné: Thank you, Christyan. You know, we have a and we'll come back on your big question, of course, at the core of our presentation in September to all of you and to our investors. It's true that we have quite a large portfolio of oil and gas projects, oil and energy projects, and we'll come back on it. On oil, you know, we have Ghana, Angola, we have Iraq. We should have probably a Suriname project coming. You know, we are just testing the last wells. To be clear, at the end, the guidance we gave you for $16 to 18 billion in an environment, I would say like today, it will be maintained. To be clear.

And Golar, we have Iraq, we should probably assuring a project come in or we all just it seems the last wells and so oh.

Again the guidance, we gave you for 16 8 billion in the Niobrara.

Right.

Today are you it wouldn't be it wouldn't be a will be maintained.

Patrick Pouyanné: If we have more oil, we'll have to arbitrate the project. We have room to maneuver in our portfolio. To be clear. Don't expect the CapEx increase, but again, we will not arbitrate against oil and gas profitable projects. It's a question of balance. We have two pillars in our strategy. One is our three pillars, the oil. If we have more oil, I'm happy to deliver oil. We have gas, and we have a blue board as low carbon growth, like oil and gas growth. You can do the math. I mean, some of you have done it. We find 2 to 3%, I think, and that's good. We are happy with that. We are also a company in transition or integrated power pillar.

And are you free up.

Or are we like to obviously, it's a project where we have room to maneuver.

So don't expect some capex increased but together with note arbitrators gap against oil and gas is a profitable project. It's a question of finance we are stupid stride.

If you are resolved.

And if we got more I'm happy to give you. The order we have a gas and we have a room for hydrocarbons like oil and gas rules are you kind of make the malware can someone dropdown each refinery to complete their staff I think that's good.

So for a company in transition integrated pillar I. Just said we are appropriate in history. We are looking to the designers Oh Gee you energies M. B, a swollen going to reconsider that Oh can we start to build this integrated for weapons of results is growing is really cool or more competition.

Patrick Pouyanné: As you said, we are totally simplify, and we are looking to the various new energies, and we are strong, and we consider that our commitment to build this integrated power and the results we are delivering is a core of our transition strategy. Okay? We say simplify the rest of the molecules, which, by the way, we see a demand later than 2030. That will be, we come back on this topic, of course, in the strategy presentation in September. You should describe TotalEnergies as oil and gas and electricity as a core of our strategy, more like the sort of the energy supermarket, you know? Let's simplify and then deliver the value.

Yeah.

And a reminder.

I'd say a.

It simplifies the rest of the molecule speech by the way we see the demand later 'twenty for you so <unk>.

We come back on the topic of course in the strategy presentation and.

In September , but shouldn't described that as yet.

Oil and gas and energy.

Please go.

So all of those partners.

More of a social issue.

This is bill Hartmann.

So it simplifies and then it goes to the value.

Christyan Malek: Okay. Thank you.

Okay. Thank you.

The next question is from Oswald Clint of Bernstein. Please go ahead.

Operator: The next question is from Oswald Clint of Bernstein. Please go ahead.

Okay.

Good afternoon, and thank you Jim.

Oswald Clint: Good afternoon. Thank you. Just on LNG and specifically United States, TotalEnergies, I think, is the largest offtaker of US LNG. It's just you've got bigger now with Rio Grande LNG, but I wanted to ask about that exposure to US gas feedstock. You, I think, touched on potentially integrating further upstream. Is there a number here, a percentage, something we should think about in terms of feedstock coverage for these terminals, for these offtakes that you would think about looking forward, is the first question, please. Thank you. Then secondly, I noticed it looks like you may be planning to drill a well in the South African portion of the Orange Basin, perhaps next year.

Just on LNG.

Specifically United States.

Total energies are I think as the largest off taker of U S. LNG. It's just you've got bigger now with Rio Grande and then I wanted to ask about that exposure to U S gas feedstock. He I think he touched on potentially integrating further upstream is there a number here a percentage something we should think about in terms of.

Feedstock coverage for these terminals for these off takes that you would think about looking forward is the first question. Please. Thank you and then secondly, I noticed it looks like you may be planning to drill a well in the South African portion of the Orange space and perhaps next year. So.

Oswald Clint: I was curious if you've completed any further analysis over the last quarter around the Venus discovery that gives you the confidence to really extend the exploration campaign further south. Thank you.

Curious if you've completed any further analysis over the last quarter around the Venus discovery that gives you the confidence to really extend the exploration campaign for yourself. Thank you.

Patrick Pouyanné: The second one, I think we will focus on Namibia. My priority is Namibia. We are drilling an appraisal well of Venus, which is very positive. Of course, we still are expecting the dynamic data. The first test will start beginning of August, and I think when we will meet, I'm sure in September, we'll have the results of the first test, which of course is important because productivity per well, of course, if it's 16,000 barrels per day, it's fine. If it's 5,000, it's not fine. You know, because the oil column is very big. Our focus will be Namibia first. We have a lot of it in the play. Of course, we have some license in South Africa, and our geologists are working on it.

The second one I think we will focus on non media by far.

These manager.

We are not.

And upgrades on our railroad business, which is very positive.

Of course, we still are expecting through dynamic that's out there for us to start the beginning of August and I think when we get them through in September we launched the results of the first test which of course is important because once you go where of course the speed is important but it's fine it's fine to subprime and overcome.

I can tell you is the old Columbia.

So my focus would be that these efforts we have a lot of the place because we have some license in South Africa.

We work on the sureties are working on it.

Patrick Pouyanné: I feel comfortable again. My priority will be to give value to Namibia if it's confirmed, and then we'll see what are the expansion in the Orange Basin on the other side. US LNG exposure, yeah, it's true. We have 10 million tons. We move to 15 million tons. It's quite a big exposure. Again, but you have noticed that we each project we try since I am CEO, not only to upstate, but to integrate the project Cameron LNG, ECA in Mexico, Rio Grande. Why? Because it's when you contribute to the investment, you have a leverage on the pricing, you know? Of course, yes, because I believe in integration. It's not new.

It's again.

Furthermore, by priority would be two blocks will be probably due to the benefits coming through and then we'll see what kind of your expansion enduring spacing of yoga side.

U S. LNG exports really true we are sending out renewals I'm, sorry, that's like a big exposure.

And again in Europe .

No. Please.

Each project, we try yeah simply MCU and according to a simpler to integrate to purchase 700 LNG.

In Mexico, or you Randy why because it's we'll see when you contribute to disburse much of a leverage on the on.

On the pricing you know in the eye.

And of course, just because liability information as you know we have already produced production net production of 500 pounds per day.

Patrick Pouyanné: You know, we have already produced a net production more or less of 500 million cubic feet per day in the US on the Barnett Shale that we maintain. We can expand and double that exposure. No area. There is no specific area. Just for me takes time, so we'll have opportunities one day. It's part of course, because I think controlling the cost of the feedstock is a smart way in order to control the full integration value. It's part of the, I would say, our strategic agenda and integration in the US.

U S. A on the balance sheet, and keeping things and we can extend and Billboard.

But this quarter nor area there.

There is no specific just for the.

It takes time so reliable.

But it didn't bother conclusive because I'd be on swings as possible the Pittsburgh.

With that.

Who controls the full integration of our U and so it's part of our I would say Oh.

Our strategic agenda.

The integration of the U S.

Understood. Thank you.

Oswald Clint: Understood. Thank you.

Okay.

The next question is from Irene <unk> of Societe Generale. Please go ahead.

Operator: The next question is from Irene Himona of Société Générale. Please go ahead.

Operator: The next question is from Irene Himona of Societe Generale. Please go ahead.

Irene Himona: Thank you. Good morning. Congratulations on a very busy quarter in terms of the four new projects you launched in different areas. You referred to the competitive advantage of low cost in all of those. Can you perhaps help us with how we should think about the return on capital in these very different projects, please? Secondly, you pre-announced the Q3 buyback. Obviously you are generating based on cash flow. Why would you not pre-announce the Q4 buyback at this point? Thank you.

Thank you good morning, and congratulations on a very basic core change I'm sure.

The four new projects he launched them in.

In different areas and you referred to the competitive.

The advantage of low cost.

And can you, perhaps help us with how we should think.

About the return on capital indeed different.

Projects. Please.

And then secondly.

You pre announced the.

Third quarter buyback and obviously you are generating very strong cash flow.

Why would you not.

You announced a buyback at this point.

<unk>.

Okay, because it's basically both pools adobe or is there something in September .

Patrick Pouyanné: Okay. It was a debate with the board. The board, you know, we have an investment meeting in September. At the board meeting in September, we decided to review the full distribution policy for the last, the end of the year. As I told you, we had the fifth quarter in a row of $2 billion of the buyback. To give perspective to you in New York about all these elements. We maintain the $2 billion per quarter. Again, you know, the environment is opening, so we want to keep that flexibility. The main commitment the board has taken to all our investors is more than 40% of distribution this year. We are 42% or

September has decided to reduce the distribution policy for last year.

Off the handle Brazil.

Yeah.

Just coincidently the almost $2 billion.

They supply.

Thank.

Easter you are in New York.

So we decided that it was.

Remain safe to be unpopular.

And again those are there.

There are many suffering so we want to keep that flexibility.

The main committee focused both as they go through already versus more than 40% for distribution. This year, we are 42% so.

Patrick Pouyanné: It will not be 40.1, it will be more than 42. With this, that, you can make the math, I think. Then again, the board is working. Remember that the commitment was also linked to the closing of the Canada sales. We are moving forward on these elements positively. The SPA with ConocoPhillips has been executed. We think we close by end of Q3. The discussion with Suncor are also progressing, also to the board wants to have a complete view in order to make the right decision for our investors in terms of distribution. On the projects themselves, I cannot go over figures, you know, there are contracts. In particular, I commented positive.

$340 wants to be remote workforces.

So.

Is that you can't make the market.

But again the board room and.

And remember that approached us with a little survey.

So it's a broadening of the Canada sales. So we operate four of these are.

Elements of positivity.

And of course, the SBA with kind of where it is.

So we don't think we scored by end of the third quarter.

Attrition with some girl are also progressing.

Also to the.

Boardwalk stumpage jewelry.

That's what makes the right decision for our investors in terms of distribution.

All the projects themselves.

Canada, which cohort figures you know that our phone Fox and prosecute all I commented positively towards failure.

Patrick Pouyanné: I tried to explain to you that on the Iraqi projects, yes, that's true. We created a new category of contracts purely fitting with our standard way to work, to be honest. I mean, I commented that the reward was commensurate to the risk, you know. You can imagine that it's positive, it's a good return. The low cost of producing oil in onshore Iraq is probably the best way to maintain our record in terms of CapEx reserve system, like $7 per barrel, you know. $7 per barrel expressed CapEx, it gave you a good base to make competitive returns, you know, rather than other areas of the world. That's first. We commented on which other projects I commented.

The Iraqi projects being just a truly.

Crazy the immune system.

Five <unk>.

Legal spend is with you on that.

And.

Yes.

Rewards was commensurate with the risk so we can imagine.

Positively to supervise the rule goes up as you know we received Florida.

Contrary Rockies.

Where is the best way to maintain our referrals as well.

In terms of Capex in something like seven blah blah blah blah.

A lot of our replacement Capex.

I gave you a good base to remain competitive.

Radovan Olga.

So that's first we'd come in and see which of our projects that come in and you run through again.

Patrick Pouyanné: Rio Grande LNG. Again, we have good leverage. Again, for us, I'm looking to that as integrated way, because not only we invest in the project, but thanks to the investments, we negotiated, of course, I told you a very good off-take contract. The price is very competitive. We make money from the. But we make more money than somebody who do not invest in the project, thanks to our downstream exposure, the off-take contract. And also because it's in fact we want to capture the infrastructure margin somewhere, leveraging it through, of course, the off-take contract that we have. Globally speaking, the integrated IRR is more than 15% on these LNG projects, you know. 15, next to 20, in fact. Just to give you an idea.

Leverage and again alluding to better integrate.

But simply reinvesting the proceeds preferring to reinvestments, we negotiate these of course.

I'll do a very good uptake there.

Contracts the pricing is very competitive and we can make money.

If we make more money when somebody will not be the best in the project. Thank you all upstream exposure of the benchmark.

And and also because of incentive fees.

In fact, we want to capture you transferred some margin somewhere <unk>.

Two of those deals.

You seem to be.

Integrated or are these more than 15% of these LNG projects.

Just maybe some thoughts of physical video AD items so globally.

Patrick Pouyanné: Globally, it's a strong project for us. Which other did I comment? I think, sorry, two. I think, Germany, to be clear, the German projects, I think from figures, we are perfectly in line with our double-digit objective in Germany. Even more because I'm absolutely convinced that the German electricity project price will be meeting when it will come. We have flexibility to deliver this double-digit project result. Okay.

Tolling project for us.

Which of those studies commence a same story.

I think.

And Germany was actually up because of.

How many projects are I think those videos, we are perfectly in line with double digit objective to Germany, and even more because I'm absolutely convinced that the German.

Perfect.

This would be that it would be when we go and.

Fix their ability to deliver double digit projects.

Okay.

Irene Himona: Thank you very much.

Okay.

Patrick Pouyanné: Thank you for the question.

Okay.

Operator: The next question is from Christopher Kuplent of Bank of America. Please go ahead.

The next question is from Christopher <unk> of Bank of America. Please go ahead.

Thank you very much and just two quick ones hopefully Patrick I Wonder as you are highlighting the more than 40% our CFO pounds ambition.

Christopher Kuplent: Thank you very much. Just two quick ones, hopefully. Patrick, I wonder, as you are highlighting the more than 40% CSFO payout ambition, whether you've learned anything from last year's special dividend. Is it a fair assumption to assume that the continuation of the EUR 2 billion buyback runway into Q3 is by now your preferred way of redistributing these, let's call them, extra proceeds from your expected oil sands closing? Just wanted to see whether you have a view on what the market prefers buybacks over a special dividend. My second question is going back to the LNG portfolio, which is growing nicely.

Whether you've learnt anything from last year's special dividend.

Is it a fair assumption to assume that the continuation of the 2 billion buyback run rate into Q3.

By now your precise way of redistributing. These let's call them extra proceeds from your expected oil sands closing them. So I just wanted to see whether you have a view on what the market precise buybacks over a special dividend.

And my my second question is going back to the LNG portfolio, which is growing nicely and I wonder whether if you consider all your options that are still pre F. E. M. I would I would count Mozambique into that to whether you think by the end of this decade all of these options will add.

Christopher Kuplent: I wonder whether if you consider all your options that are still pre-FID, and I would count Mozambique into that too, whether you think by the end of this decade, all these options will actually be in development and will be operating, or whether. To your point on CapEx, whether you're answering. Actually, it might be a good thing to have more portfolio options because then you can be tougher on the returns you can squeeze out of them from a project-on-project competition. Talking about PNG, Mozambique, of course, Arctic Two is no longer in your consolidated numbers, and you're very busy in the US too. I'm not even mentioning some of the smaller assets. Sorry, it's a long-winded question, but hopefully a relatively short answer.

Actually be in development and will be operating or whether to your point on capex, whether you are answering actually it might be a good thing to have more portfolio options. Because then you can be tougher on them. The returns you can squeeze out to them.

From a from a project on project competition talking about PNG, Mozambique of course, Arctic two is no longer an in your consolidated numbers and you're very busy in the U S to them and I'm not even mentioning some of the smaller assets I'm sorry, it's.

It's a long winded question, but hopefully a relatively short answer alright. Thank you know it's always a case of another question I'm thinking of that device you might be thinking as they got a lot of energy, it's clear but to do it.

Patrick Pouyanné: No, no worries.

Christopher Kuplent: Thank you.

Patrick Pouyanné: It always raises a relevant question. I'm thinking exactly like you. I'm taking the second one first. On energy, it's clear that today with this portfolio, we are in a position to arbitrage these costs up to an extent. To be clear, I think we make an arbitrage in the US and because $860 a ton on Rio Grande is better than the cost we obtain today from the additional train on Cameron. I mean, I have the option, and clearly I'm very comfortable. If the CapEx on Cameron would not be tweaked compared to the first feedback we got from contractors, it will be easy for us to postpone it and that will come later. The option is there. It's not just one. We can keep it in the portfolio.

Christopher Kuplent: Thank you.

You spoke a little bit of a position through August Tracy spoke software expense event for Victoria, I think we'd make that arbitration either U S because of ethanol.

Rio Grande.

The cost we have introduced.

The additional claim pattern. So I mean, that's the option and clearly.

Clearly I'm very comfortable at the border.

So it kind of takes on a camera decreased compared to the first.

Feedback.

Some contractors easy for brands to postpone its investment company.

Why don't we kind of keep it in the portfolio.

Patrick Pouyanné: We are delivering ECA phase 1 in Mexico. We have also the possibility to expand, but again, it's a matter of arbitrage. We like the specific position, but we can arbitrate it. The key for me is really what is the position of the project in terms of quarter CapEx. That is very important to keep that discipline because at the end, long-term projects, that's the key. On the wind side, PNG, we'll see what will be the cost. Mozambique, you know, we have a public debate with some contractors. We are keen to deliver them. That's part of the plan. Again, as you said, we have a leveraged large portfolio, and we work on all of them.

In it related ECA phase one shortly in Mexico. We are also reported to be too expensive to.

I built arbitration resign competitive position that we can answer it.

So most of them to keep them regionally.

But you shouldn't supposedly in terms of Capex.

Capex, but it was really important to keep that discipline, because it's young lump sum projects.

On a refund guarantee when she wants to be the crossover between these you know.

They're going to basically subcontracting.

So we are keen to video that awful agenda. As you said it would be a logical for you wind up with a lot of them.

Patrick Pouyanné: At the end of the day, if the CapEx are not meeting our expectations because there is a heating market, we will arbitrate. Again, it's for me, I mentioned first the North American projects because this is where we see many projects coming together, you know? I think on the international arena, we'll find a way to make this project going through. Again, we are in that, I would say, comfortable position to be able to select the ones in which we consider we have better returns. On the cash flow, we're clear. We are not exactly in the same position last year. Last year, remember, the special dividend came from super revenues we generated last year, $45 billion of cash flows.

Again as it is.

If you.

Is there a capex out of that meeting our expectations because space.

In August we know obviously, but again this is what we.

Sure.

North American projects, because it's with keeping your projects coming together.

So I'm more of them.

I don't see that we'll find a way to make this project yet.

And it's again getting better.

I would be comfortable position to reduce the negative losses, which pseudo anyhow.

Oh.

True.

Okay. Thanks.

I can simply shouldn't last year last year, but remember the special dividend Gamble supervision.

We generated last year.

It was a busy and sort of cash flows you know we are more.

Patrick Pouyanné: This year we are more, and we don't think it's that bad. It's 18 billion for half of the year, so 33, 35, 36 billion. Again, it's not 45. The board is making a difference between 45 and 36. Even if we see 4 billion from Canada, it will make 40 and not 45 for the year. We keep the option, the debate there. We also know that today the market is keen on buyback because we consider that the share of TotalEnergies is undervalued compared to some of our peers. There is a certain logic, I think, from the board, which shows the trust in the share, and the share will be reevaluated. That's my argument. With all these elements, I think you can make a conclusion yourself, or we'll see.

Got it.

It can be absorbed I parse it out for you.

50 556 billion.

Again, there's no 45, so when we use the pool is making the difference between 45 and 50 seat you're probably familiar if will be useful from Canada can make 40 about 45, so when you take it over.

We also know that it's a decent market even buyback because when it comes to learn about the shelf sometime in at least is undervalued.

So.

I think from the board as supposed to trust industry.

With these deals.

So weizmann are we talking about.

We've already.

Independencia between yourselves.

What do you see many of you know we signed by Viacom, 10% on our September investors into the market very.

Patrick Pouyanné: Let me be clear, we'll try to buy back on 27 September to the investors and to the markets.

Christopher Kuplent: Very good. Thank you.

Very good thank you.

The next question is from Lydia rainforests of Barclays. Please go ahead.

Operator: The next question is from Lydia Rainforth of Barclays. Please go ahead.

Lydia Rainforth: Thank you, and good afternoon. Two questions, if I could. On the renewables business, clearly the capacity and development has gone up again this quarter to 50 GW. Can you talk about what you're seeing in terms of the costs of this? I think this was related a little bit to the German wind farm as well, that effectively people are worried about costs going up, and I think sometimes the idea of the grid connection costs and the integration with the rest of the business gets missed. Just, are you worried about the cost base in renewables at this point on the CapEx side? Then secondly, Patrick, probably you. We've seen oil prices rally in recent weeks, and we've seen refining margins rally more.

Thank you and good afternoon.

Two questions if I could.

The chemicals business I think the capacity and development has gone up again this quarter to that 50 gigawatt.

Can you talk about what you're saying in terms of the cost. So that's what I think makes sense.

They came in.

And then finally for all of that type of thing I think I worry about costs going up and I think sometimes I get the grid connection call Sunday into question.

That's nice, but just are you worried about the cost base in Minneapolis, I guess, probably on the Capex side, and then secondly, Patrick for me.

We see how oil prices rally it makes them like and we've seen refining margins not even more can you just talk through what you're seeing in the market, sometimes it's not but at this point. Thank you.

Lydia Rainforth: Can you just talk through what you're seeing in the market in terms of demand at this point? Thank you.

Okay.

Patrick Pouyanné: Okay. The first one, let me be clear. It's like exactly at the end, it's like an energy answer. We will invest in projects if we obtain the returns we get. You know, there is no. That's why, by the way, the German options were interesting because in fact, we have committed a bonus to get the option in our portfolio, paying 10% of the global, I would say, bid. Which is for me, I'm putting my option, like when I'm buying an exploration license in Brazil, I could pay a bonus of $300 million. I know there is gold there. In this one, I'm sure there is wind, but the cost has to be there. You have the cost. So of course we see that there is.

Besides exactly yeah.

And then she answer we will invest in project b or things of interest as we get the world and that's why by the way the German.

Sure. It's very interesting because in fact, we have to reach the Buda is to get people critical portfolio incentives incentives grew more of them.

Would you just told me I wouldn't think might've hurt like when I'm buying.

Licensing revenue.

Loomis offended, but what are you doing.

Just wanted to explain that.

So stupid that you have two cost so of course, we see that again.

Patrick Pouyanné: Again, but it's a question of, honestly, offshore wind. I've often been told you, I'm not surprised at the end that the four major companies are coming into that business, because it's clearly exactly the type of projects that we are able to manage project management. We can leverage the skills of the company, relations with contractors. It's exactly what we do in any offshore oil and gas project. For me, that's a right way to look at this. I'm not worried. You know, I don't like CapEx increase neither in energy, nor in oil offshore, nor in offshore wind. It's up to us to leverage our purchasing power. I think this is where we have an advantage. I think TotalEnergies is big business.

Sure.

Honestly true width.

<unk> been surprised at the end, but the board major companies are coming into that business because excuse me exactly the type of projects that we are able to manage project management agenda versus skills as a company relationships with contractors, it's exactly what we do in any Oh.

The oil and gas projects so for investors in a right way to look at it so I'm not worried [laughter].

I noticed that Capex increase either in energy you know in order to go through or no.

Or is it less.

To leverage appropriately.

Where we have an advantage I think sometimes in this business I think the scale.

Patrick Pouyanné: I think the scale adds a value and the purchasing power of TotalEnergies, capacity to grow efficiently. We have approved a very large solar module contract to cover part of our future needs, leveraging our purchasing power. That's where we need to work in order to be more efficient than others. I think this is what the stakeholders are expecting from us, to be efficient. Again, the other point for us is that we consider that European electricity price, because of all what happened in Europe, no Russian gas, more renewables, nuclear, it becomes more expensive nuclear. Price will go in the right direction. That's what we think fundamentally. We pay a reasonable price, of course, but price is up.

The purchasing program.

Okay.

Efficiently we are approved for very long.

So lot more dual cone flocks to cover possible future.

We're all pushing for it so that's where we need to where I know this will be more efficient, but over the next one or two states of Vegas is expecting for us to be efficient and again deals are boring, but I suspect reconsider durable goods energy price.

Because of or what happens in Europe .

No Russian gas more renewables nuclear I already discussed.

Comes more expense with no.

So prices go otherwise no action.

So that's one machine fundamentally and we've been very selective.

But the prices up so we had this past dues.

Patrick Pouyanné: We understand the concept that we have, and it's up to us, you know, exactly same answer than on omega, we have to manage this CapEx side. Refining margin. Where do we see the refining margin? I will say today on the 2 point, so the first margin today, as I said, like Chantier said that, $70 per ton, which is more the average for the last 4 months. They are supported as well on the gasoline by the driving season, I would say, which is quite, you have more consumption in Europe and the U.S. on both sides. In the U.S., the inventories are quite low, which means that today we export gasoline from Europe to the U.S., which is good for my European refineries.

Yeah.

Whereas you know exactly the same in southern Illinois maintenance, we have to manage these epic side the refining margin.

Yeah.

This is Michael.

So in refining.

Ah, Okay wherever we see the refining margin.

Okay.

I would say today.

Clearly the margins today like I said that somebody else is I thought so.

No.

All right.

Four months, they don't support it as well on the on the gasoline.

But he says I always say, which is quite the right.

More consumption during the year.

And both sides. So in the U S inventories are quite low.

Pennsylvania, the exports from Europe to the U S, which is good for you all.

Due to refinery.

Patrick Pouyanné: It feels good that they work. I have a good performance availability today at more than 80%. That's what we think on the gasoline. We are positive on the gasoline. On the diesel, the demand is lower. It's true because it's more linked to, I would say, the global macroeconomic environment. We can benefit also, you know, an effect in Europe when the Rhine is low level or low water, then you have some problem of supplying Germany, and then it creates some upside in our downstream business. It's another part of it. I would say, I mean, this time I'm trying to get some timing to say, but we are more positive on the refining margin for Q3, as opposed to than the

And with that they will play out to boost the performance availability visibility more than 80%. So that's what we see comes with gasoline. So we are positive on together.

Well this is all of the demand.

Because in the morning to ever be the global leader Microeconomic environment, Brazil.

Catherine if you don't so you know already in effect in Europe .

Right.

Draw therefore lower.

They do have some.

Provenance of blinding, Germany is that it creates some concern.

Our downstream business.

So I would say.

I'm just trying to get some feedback.

We are more bullish on the refining margin for the third quarter.

Okay.

Patrick Pouyanné: I will be surprised to go down to the $40 per ton, which we experienced as an average on Q2. I think Q3 will be higher. That's my view on this market.

I would be surprised to $2 41 up with.

So the differential and so you know I think for the quarter would be either.

But my view all these pockets.

Thanks.

Operator: Thank you.

Lydia Rainforth: Thank you.

By the way when as you know and finally and I find the reasons, we don't lack for forever.

Patrick Pouyanné: By the way, when it's hot, you know, refining and refineries do not like hot weather. So running a refinery is not so good, in particular in US when the weather is too hot. So it's good for margin as well. Next question, maybe.

We're running our refineries.

Hopefully provide you with the best window, we'd always tools.

So it's been four months.

Next question maybe.

Operator: The next question is from Alastair Syme of Citi. Please go ahead.

The next question is from Alastair Syme of Citi. Please go ahead.

Alastair Syme: Thanks, Patrick and Pierre. On Iraq, you know, I understand it's confidential, but are you able to say maybe what your maximum capital employed exposure will be in the country? I mean, you know, we all see the $27 billion headlines, so I just want to give it some context. I'm just interested and fascinated in your comments about Germany having the highest power prices in the future. That's quite a statement about one of the industrial powerhouses in Europe. You know, how do you think about the issue of industrial competitiveness and affordability for consumers? Thank you.

Okay.

Patrick Olympia.

On Iraq.

The storm that's confidential, but are you able to say maybe what your maximum capital employed exposure would be in the country.

What you'll see with $27 billion had loved it so I just wanted to get some context.

And then I'm just interested in the best way I think in your comments about Germany, having.

Having the highest power prices in the future and that's quite a statement about one of your industrial powerhouses in Europe .

How do you think about the issue of industrial competitiveness.

People can see this.

Thank you.

Okay.

Patrick Pouyanné: Iraq, 3 billion maximum capital employed, $3 billion. You know, we have 45% of CapEx, which are around $10-11 billion, but we have also oil production coming progressively. You know, the beauty of the contract is that right now we feel it producing, we'll stabilize very quickly the production to fifty to sixty thousand barrels per day very quickly. Our teams are already will work therefore the year end. Then we have a phase of increase of the improvement of the oil production up to ninety, 120 dollars per barrel per day, and then going to 210. So we have some cash coming in, so it's a way to generate lower our exposure. It's part of the scheme to win we have in Iraq.

Iraq provision actually won't get you to them for free beautiful and opening up 45% of Capex with shop around and it has been busier, but we all go sort of on order position and put them on stream.

The good deals are.

But the fact that we're producing with sometimes very quickly to position.

She is 60000 barrels per day.

Hakim salaries, we work are there for the year.

Maybe we have in place.

First of all the predictions.

91, other countries a lot of laboratory, because theyre willing to 12%. So we have some cash coming in.

It's underway.

Two men and a range of overall exposure as possible.

So with the revenue Iraq, so keep in mind and for dividends from inside a very acceptable with the reserve.

Patrick Pouyanné: Keep that in mind. Three billion for me, it's very acceptable with the return we have. That's the clear answer to you. German industrial competitiveness. I mean, it's a more global question. The question will be more for the state, which is what will be the support of states to energy intensive industries. In fact, that's the question mark. You know, I think in Europe, thinking that price of electricity might be around 70 to 80 EUR per MWh is not a bad bet, in fact. That might work. It's a matter of course. I will tell you if we go to some ministry. It's long-term commitment.

To be honest with you.

Uh huh.

And just to get a company to do that okay.

I mean, there's just no.

No more question, so what should we be more for the state which is awesome.

I want to repeat.

And we see that what.

What do we need to support those face to energy intensive industries.

A question Mark, but you know I think are in Europe .

Europe seeking better price of entry should be might be around 77, Europe when they go with us.

That in fact, there so both sides of my Blue chip.

As a matter of course, because you have a reversal of some industry is long term commitment.

Patrick Pouyanné: The only thing for me when I'm answering to the government, to the customers, if you are in a state of long-term commitment, we can reduce the price. It's like, you know, like it's just a question of if you want to stay put, the competitiveness will be tough. I can tell you, I don't recommend to anybody to invest in Europe based on spot prices, you know, because then you could be in trouble. We see what we discovered last year, I would say. I think the question for me is, yes, there is room for industrial competitiveness in Europe and in Germany if we are able to put together some long-term contracts.

And unrelated to the government to the buyer.

Bye bye.

You can already see some homes.

What's happened with the prices that got it.

Our submission or did you want to say sports events can be tough I can tell you I don't see permanent where anybody who invests in Europe based on spot prices. Because then you could be in trouble. So originally when we discovered last year.

So I think the question for me is yes, there is room for your company and the investment in Europe and in Germany. If we are able to put together some long term contracts at IGT.

Patrick Pouyanné: I think this is part of our intent with this offshore wind development will be to commit some of the capacities to this type of long-term contracts and to keep out of it as merchants. We have the famous 70-30. We know that this is the type of price we can obtain today in Europe, in Central Europe, and people are ready to commit on this level of pricing.

But the whole intent.

Sure.

But we'll be probably.

Some of them.

Through these type of loans down from approximately.

As most of them. So we have these bankers.

But we are we.

We know there is a type of product, we kind of think today.

In Europe , and Central Europe , and people are ready to compete.

Yes.

Jean-Pierre Sbraire: Patrick, can I ask when, you know, when you speak to politicians, are they surprised about EUR 70 to 80/MWh sort of number? I mean, that's twice what it used to be, right?

Alastair Syme: Patrick, can I ask when, you know, when you speak to politicians, are they surprised about EUR 70 to 80/MWh sort of number? I mean, that's twice what it used to be, right?

Patrick can I can I ask would you speak to the politicians are very surprised about 17 18 euro.

Megawatt out so remember maybe I missed twice what it used to be right.

Patrick Pouyanné: Yeah, the thing is the world has changed, you know. The world has changed. No, I mean, we have to be clear, for everybody, by the way, that energy transition has an impact on the energy prices, and there is no way to make the transition in Europe without having higher prices. I think they understand, you know, the new nuclear is not under the prices that just gave you know, I can tell you. You can ask the UK investors or the French government, you know, I will tell you. I think it's part of the transition, and again, it will have to adapt towards this time, including at the end, the customer will have to accept to pay somewhere the cost of the energy, the cost of the transition.

Yeah, but to keep it to one of that change.

Brothers chance.

To be clear.

40 pretty regularly but it did actually transition and the new Fox something every month and they do we can make some sluggish in Europe with both of them.

Isn't that expensive.

And is that you know.

Yeah, there's nothing under the prices that Joseph just forget it.

And so we can absolutely the U K as soon as well so it was a fraction of the government.

So I think it's part of the transition.

But afterwards.

I think at the end of December .

So page somewhere.

Or is it actually depends on replenishment, but you know I hope so.

Patrick Pouyanné: You know, I observe as well in the US that today the PPA for the contracts, even the solar contracts in Texas, begin to increase a little, you know, and to recover. It's part of the. We have to keep that in mind. The energy transition will happen if we have access to the existing grid. We have a super efficient system, which is the oil and gas system, and we want to move to a system which is not as efficient in terms of energy efficiency. That has a cost, that has a price. It's a real question for all of us, at which phase do we make that transition in order for the customers to accept it? It's what we call the just transition. We have to manage the transition. If it's just a jungle, they will be rejected.

The fourth quarter as the contract has a solar power plants in Texas begin to increasingly talking with all of them to recover.

It's part of our we have to keep in mind and that's the transition will happen if we accept some cost increases and.

We have a super efficient system should.

Should be a pretty good system and we also hope you'll see that.

Sure It does.

But as it applies and they said they would be able to push it for all of us.

When we make that transition.

The first of those two accepted it's watching of course, there's just sponsorships we have to manage the transition, it's just showing Norway would be detecting some of that stuff.

Patrick Pouyanné: That's, I'm not sure they are so afraid. They are just a matter of accepting the reality, and we have to be consistent. It's a question for industry or competitive for European manufacturers to be competitive and for me to have like the US, by the way, to take actions in order. As we are accepting this price of CO2 somewhere, we have to protect this industry. Otherwise, if only Europe is integrating price of CO2 in products and not the other countries, we'll have an issue for sure.

So I'm not sure, but you're absolutely right. They are just a bunch of accessing some yet.

But we have to be consistent.

Uh huh.

Rental industry or the competitive part of European manufacturers to be prepared.

Okay.

Like the U S by the way some things actually.

Yeah, actually I think I'd be surprised if she would do somewhere yup.

These companies are industry wide.

The resin prices.

Alex It must yoga.

Athletes will have an issue for sure.

Great. Thanks for the couple of months.

Jean-Pierre Sbraire: Great. Thanks for the clarity, Patrick.

Alastair Syme: Great. Thanks for the clarity, Patrick.

Okay.

The next question is from <unk> <unk>.

Operator: The next question is from Biraj Borkhataria of RBC. Please go ahead.

<unk> of RBC. Please go ahead.

Hi, Thanks for taking my questions, especially on your LNG business again.

Biraj Borkhataria: Hi. Thanks for taking my questions. First one's on your LNG business again. In the past, I think you used project financing to deliver some projects, but obviously your balance sheet is extremely healthy at this point, and you probably have some capacity to take on some more CapEx. Could you just talk about your plans and whether it's Rio Grande, Mozambique or otherwise, and your intentions on financing and how you're thinking about that split between balance sheet and off balance sheet? And then the second question is just following up on Al's point on competitiveness. Obviously you have a, you know, a refinery in Germany and chemicals operations.

In the past the things in these project financings and they live in some projects, but obviously your balance sheet is extremely.

Extremely healthy at this point and you probably have seen capacity to take on some more.

Capex could you just talk about your plans in Rio Grande M. S N b or otherwise and your intentions on financing and how youre thinking about that state between balance sheet and off balance sheet.

And then second question is just following up on on Al's point on competitiveness I'm, obviously, you have a refined.

Refinery in Germany and in chemicals operations.

Biraj Borkhataria: You know, with your view on higher power prices, obviously that will feed into gas prices and then, you know, you've just said you won't take Russian crude. How do you think about what more you can do in your operations to remain competitive in a global context? Thank you.

With your view on higher power prices are obviously feed into gas prices and then you've just you've said you want to take a Russian crude how do you think about what more you can do in your operations too.

Our main competitive in a global context. Thank you.

Okay.

Patrick Pouyanné: Okay. The project financing in LNG is part. We know by the way, Rio Grande has been announced with a project financing. I think it's, globally speaking, a $15 billion CapEx with, and I think it has been announced as a 70/30% project with a package of low or blending. Project financing has been announced as well. We believe we help them. We contributed to that. GIP has strongly contributed to that and becoming a shareholder. I think it's easy to finance. It's competitive in terms of interest rates. We are working hard on it and between GIP and TotalEnergies in order to get good commercial terms, and this is the case. In Mozambique, the package was already there, you know, and has been preserved, I would say.

British financing an energy policy that has been announced we have a project financing I think its a globally speaking is the 15th because without Capex, we've and I think it has been an announcement as soon as he 50% projects. We do have expectation of lower ore blending of project financing has been announced as well.

Maybe an event we contributed to that she ics fully contributing to that they'll be giving your children. So I think it's easy to finance, we didn't it's competitive but he does have a.

Right. So because we are working hard on it and with the JP independent countries in order to get good commercial ourselves that this is a case and it is indeed breakage was already there you know and that's being conservative I would say because if you remember when we stopped the project stuff. We maintained all of the project finance.

Patrick Pouyanné: Because if you remember, when we stopped the project, we maintained all the project financing.

Jean-Pierre Sbraire: We closed the financing, the project financing, but it will, we're discussing with the lenders, of course, with the status of when the Mozambique project will restart, of course, to unfreeze the project financing.

As English.

I'm just guessing we don't handle of course, we just have to.

When the liquidity stocks of course.

He is the perfect claims so the conditions are good so I assume that's a condition for the financing of our case and could be used to speak with you all.

Patrick Pouyanné: The conditions are good. I assume that conditions for project financing are okay and competitive to our equity, I would say. I think we'll maintain that stance. PNG, I don't know, and we are not yet there, I think, as of today on this project, but we are working. Japanese banks are very adamant to finance PNG, you know, and you could have good conditions with Japanese banks in that part of the world. From us, I think we are fine with that, and it's part of the way to globally have the returns I mentioned to you on Rio Grande LNG, for example, 15% to 20% are taking that into account.

With that I think we've always maintained.

Pounds.

Uh huh.

PNG I don't know I'd, rather get balancing against all of these projects that we are working with Jeff.

In respect of any of them to finance or when you put up good conditions, which I understand that part of the world.

So from us it's a.

I think we are fine with that and it's part of the year as a way to.

Moving to a hybrid.

Got it.

So it sounds like nature to you on the Rio Grande before is about 50% to 20% after taking into account.

Patrick Pouyanné: On the view on IPO, it's true that what you said. It's perfectly true, you know. Yes, I can tell you when we look to refining the breakeven in Europe today, 2023 compared to 2021. No more Russian gas, no more plus CO2 pricing, less quota. At the end, there is an impact. I think the breakeven went probably up from $25 per ton to $30 to $35 per ton. At the end, the question is we have to work in order to find the efficient ways to compensate it. This is why, by the way, you know my position on refining in Europe. It's a good base to transform to bio-refineries, you know. The question is the pace of it.

Uh huh.

On the view on that half of it is true what you said it perfectly.

Yes.

I can't tell you when we look at two low refining breakeven in Europe today, 23% to 21.

No more we should get more pursue pricing risk was up at the end.

But Andrew thinks of breakeven went from 75 to about the top two or three probably put up with them. So at the end of the question is we have to work in.

So those declines if you shouldnt see ways to compensate.

And this is why friends away there.

Our position on the refining in Europe .

It's a good basic concept to bio refineries.

The question is the pace of it so.

Patrick Pouyanné: I mean, we are managing that. Already, we have transformed two refineries. Next one will come, as I told you before, because we understand that the question of competitiveness, and we take it into account in our industrial decisions. That's obvious, so I cannot hide it. I think, but again, the question will be then, on this type of, and it's probably more complex for plants or refineries in Europe because they are fossil fuels, you know, they don't like that too much. At the end, it's a question of security of supply for the government, and this is the debate we have today.

So we are managing basketball and Ricky we have transformed through refineries. Our next one will come as I told you before because we had to stop that.

Question of competitiveness and we take into account in all of them.

Our decisions.

So I kind of like I think.

But again the question will be done.

On this type of furniture property, both compete for Chris or refineries in Europe , because we of course like fusion will be the fact that so much but again, it's a question of security of supply for the government.

You bet, you bet, which wants to maintain its activity in Europe , because we still need to desert mean, and you know and you don't give us conditions and others who are in attractive we'd.

Patrick Pouyanné: If you want to maintain this activity in Europe, because you still need your gasoline and diesel, and you don't give us conditions in order to have an attractive, I would say, returns, we might take decisions which might be detrimental. But again, there are also positive ways to look at it. We are working today to see how we can leverage all the three directives in order to get the green hydrogen, and it could create additional revenues, in fact, when you look carefully to the new scheme, which has been published by Europe. You can see the cost, CO2 as a cost, but CO2 might be a source of revenue as well when you combine green hydrogen with fuel products.

I would say.

We get us nicely decisions, which might be detrimental.

But again no so positive ways to look at it.

We are working today.

Are we kind of leverage or the Oh.

Directv now just to get to green hydrogen and raise additional revenues in fact, when you look carefully who's a new scheme, which has been published by Europe . So you can see it's of course, she was who is of course with tier two might be a source of what is your what's revenue combined green hydrogen.

Products and we are working on two projects one in France, one in Germany, which will lead to additional revenues, which might compensate part of the company is there a lack of competitiveness I think it's.

Patrick Pouyanné: We are working on two projects, one in France, one in Germany, which will bring additional revenues, which might compensate parts of the lack of competitiveness. I think it's two ways to look to the energy transition. If I look at the cost of an opportunity, it's a price framework that put into place. It seems to be the case for hydro green hydrogen. There is a strong push. Then that might become a new source of competitiveness for refineries in Europe. We are working on it, and I think in September, we'll be able to come back to you and to give you two good examples where we created value from, I would say, these energy transition frameworks. That also I will see as a very negative and a positive way to think about.

Two ways to look to the energy transition I got a little piece of color.

So for the opportunity.

The framework at 42.

It seems to be the case for our dream, we've retrofitted base, a strong push rents that might be published new shoes.

Therefore, we find new eastern Europe , and we are working on it.

I think it's like then there will be able to come back to her into two good examples where we've created value from I would say it is a industry transition frivolous.

And so that's also I wouldn't be as Asia.

The places where you're going to do it right.

Patrick Pouyanné: By the way, I'm convinced that the transition will work only if we create opportunities and not just increasing cost and prices, you know.

Vince is trying to show and we were only if we create.

Even though interest in drilling costs and pricing.

Yeah.

Giacomo Romeo: Great. Thanks for the color.

Biraj Borkhataria: Great. Thanks for the color.

Alright, thanks for the kind of.

Operator: The next question is from Kim Fustier of HSBC. Please go ahead.

The next question is from Kim <unk> of HSBC. Please go ahead.

Hi, good afternoon, Thanks for taking my question.

Kim Fustier: Hi. Good afternoon. Thanks for taking my question. Firstly, just on your existing targets on renewable capacity, I was just wondering, what is the acquisition of the 71% stake in Total Eren, and then other deals as well that you've announced? What do those do to your targets, particularly the 2025 target of 35GW? If I recall, you'd already reached a pipeline of over 35GW more than a year ago. Does that mean there's upside to that 35GW target, or do you have the opportunity now to pick and choose the best projects, as you'd already talked about with respect to LNG and high-grade your project portfolio?

Firstly, just on your existing targets on renewable capacity.

I was just wondering what is the acquisition of 371% taken to tell everyone and then other deals with what you've announced so what does that do to your targets, particularly the 2025 target.

Target is 10, five gigawatts, if I recall, you need or do you think just the pipeline.

Over I think tried to talks more than a year ago.

Upsides that thing talking about target or do you have the opportunity now to thank you for that project.

You'd like to talk about with respect to LNG and high credit quality portfolio.

Kim Fustier: My second question is around reports a few months ago that Total was looking at a major gas development in Saudi Arabia together with Saudi Aramco. I just wondered what the angle is here. Is this about the domestic market or more about exports in the form of either LNG, blue hydrogen, or ammonia? Thank you.

My second question is and it's around.

<unk> reports a few months ago.

Looking at a major gas development in Saudi Arabia, together takes us that'd be Aramco I just wondering what the angle is here, it's about the domestic market and more about exports and form of either LNG or hydrogen or not yet. Thank you.

Patrick Pouyanné: You don't have a good information on the single line. I don't think you should believe all what press agencies are writing in the paper. Second one, because as long as I know, Saudi Arabia has a monopoly on stream gas. Second one, first one, now to be clear, it was very clear in our mind that the acquisition of Total Eren will be part of our roadmap. When we said the 35 GW, the acquisition of Total Eren was already there. Be careful. There is not an additional element. We knew that Total Eren was working well. We knew as well our conditions to leverage our option. With the figure I gave you, EUR 400 million, you think the EV, you understand that we can easily, as an attractive multiple, we use that.

We don't have good information.

I know, Steve you shouldn't believe one person he was he's off pricing in the paper.

Are they going to want.

Uh huh.

I just know that renewal surgery done if it wasn't for reviewing a trend yet.

So.

On the one first one.

Notably.

But it doesn't mean, you don't mind, but the equity shelf that theoretically be both of them are all about so when we said the first decided to go with equity shouldn't because that was something temporary until the next day issue an order and.

When you buy something and it wasn't really redo it.

The shifts when it went to auction.

And we've.

Figure I gave you are going on in each of the euro.

He said he visits and this weekend.

And that's why it's very difficult.

So what are we going to see additional oh.

Patrick Pouyanné: For me, there is nothing additional. By the way, now you know we are also working more on value and volumes. All these points for me, of course, there are some symbols, the 35GW, and we are working. There are optionalities. By the way, the offshore wind Germany is not there. It will be in 2030, not 2025. There's no way to build 50GW offshore in three years. Now, what, the more I'm thinking to that, again, is more if we have more opportunities, we can arbitrate different projects, right? Prefer to have in my portfolio more opportunities to reach a target by moving the target up and developing all the volumes. Not volumes over value. We know that we are behind that when you do that. It's value over volume.

So we are we're still where it would be more valuable in a heartbeat.

Our school sell some symbols of 25, you go with and we are ramping nicely.

And.

And by the way the ultra in Germany, It would be 2025.

So it's going to go with them through two years.

One more I'm thinking provided again and hope we have more what you should use.

Because obviously, if you're trying to project. So I think that's right in my portfolio with multiple countries to reach a target, but women movies with Nokia.

And you go all the way to the avoidance of a virtual we talked about this when you do that is very well globally.

Patrick Pouyanné: I'm happy that the teams are able to generate opportunities, and then we might reselect the ones which are the best for us. And more importantly, but the gigawatts, by the way, again, for me, what is important is, because it's clear we're focused on it, what, how much terawatt-hour we will produce, like for oil and gas. In oil and gas, you love my 2.5 billion barrel oil per day. You will have to learn that we work, we speak more in terawatt hour per year rather than in gigawatts. You know, terawatt hour per year, that's what create the revenues, the results, and the profit, and the cash flow. I think we should move in that field as well because for me, it's improving.

Have you been able to generate.

And then.

Right.

Retail assets and the loss of a shopping list.

Yes.

And more importantly, if you go as far as demand for me with is important.

Because it's really focused on is we're almost at all with I don't where inputs in the cycle, where you guys did or didn't go through rose by 2.5, you know how to work with it.

You will have to learn but we'd really be more.

For the year right.

So that's what creates the.

So what I'm gonna juice.

And the office and so on so I think we should move into that field.

Because of all these programs you know.

Patrick Pouyanné: You know, we reach quickly 50TWh per year. 50TWh per year are looking like the 50 largest utility. It's not small. Let's think in TWh per year rather than just in capacities. At the end, what is important is delivering revenues, cash, and results.

Really quickly.

Or are you just.

<unk> teleconference.

50 largest cities.

That's more or less with us.

I'm joking.

Got it.

Again, what does equal justice they didn't really go live with us.

Josh.

Yeah.

Okay.

Kim Fustier: Thank you.

The next question is from Lucas Herrmann of Exxon BNP Paribas. Please go ahead.

Operator: The next question is from Lucas Herrmann of Exane BNP Paribas. Please go ahead.

Yeah, Thanks, very much and I'll clean up.

Speaker 14: Yeah. Thanks very much. That's been answered, but a couple, if I might. The first, Patrick, asked it too. Do you have any interest remaining in that project? I'm just conscious of, you know, Novatek comments around, you know, certain startups on and so forth, and, you know, the original position, even though you obviously have not been funding anything. The second kind of question was just around going back to balance sheet and how you think about, you know, gearing debt levels, you know, absolute at this time. Is the range still 10% to 20% something you're comfortable with? Just a reiteration, really. What was this?

Lucas Herrmann: Yeah. Thanks very much. That's been answered, but a couple, if I might. The first, Patrick, asked it too. Do you have any interest remaining in that project? I'm just conscious of, you know, Novatek comments around, you know, certain startups on and so forth, and, you know, the original position, even though you obviously have not been funding anything. The second kind of question was just around going back to balance sheet and how you think about, you know, gearing debt levels, you know, absolute at this time. Is the range still 10% to 20% something you're comfortable with? Just a reiteration, really. What was this?

Couple upon launch.

So that trade.

Oh <unk>.

Do you have any insurance remaining approaches.

Conscience.

Comments around as you know, it's not in small shops on the site for the original position, even though you obviously don't think something anything.

And the second one.

Seamless was just around getting back to balance sheet.

How do you think about.

You know when your debt levels, yeah, absolutely. So this time is the range still 10% to 20% something you're comfortable with.

It's a reiteration.

Oh, yes, so that's already the duration, we Thorne, who before whether it's at 15 Realogy.

Patrick Pouyanné: No, it's not a reiteration. We told you before that it was less than 15. We are even, and I told you already that if I was positive treasury, I'm happy, you know? I think the best way to protect another engaged company is to have the strongest possible balance sheet. It's a question of arbitration. You remember the scheme we gave you is very clear. Dividends, CapEx and then strong balance sheet, and even targeting potentially an AA rating if we can. I'm still there. It's a question of, then we have the buyback. We are the board is looking to all of that. Recently, by the way, Jean-Pierre Sbraire has bought back EUR 1 billion of hybrid debt. Yeah.

You remember that George already but do you have I suppose with the treasury.

I think the best way to think there's other I guess sufficient revenues homegoods supposed to more fashion.

It's a question of arbitration in the remainder of the scheme. We gave you a very clear dividends Capex and then swinging back sheets and events, obviously input administered either converted or anything like that so.

Relative ratios of.

We are in the buyback. So we all know it was a board looking toward a month.

It should be by the way are resolved here goes back one thing you do if I read that yet.

Patrick Pouyanné: You know, we have decided to lower the hybrid debt because we thought it was a good way to maneuver. No balance sheet is important. No, it's still 10, not 20, it's less than 15 and lower, as low as possible. That's my thinking on the subject.

I think the lower language.

Because before it was as we work with them in New York. So it's all a balance sheet has improved absorptions.

10 25.

And that's what we're supposed to go.

My thinking on these Uh huh.

Jean-Pierre Sbraire: I think my CEO will agree.

I agree.

Patrick Pouyanné: I agree.

Jean-Pierre Sbraire: I am.

[laughter] at ice clear Uh huh.

Patrick Pouyanné: It's clear. Arctic two, as we have said in March 2022, we don't bring any capital from TotalEnergies SE to this project. You know, the project when we left was, in fact, the equity was already injected and it was more project financing, in fact. Of course, the project is moving on. We didn't put a single more equity from TotalEnergies SE from Paris. Today, yes, we still are around, but honestly, I have zero information because as you know, governance, we decided to leave all the Russian assets. I cannot tell you what is really happening there. I'm reading the newspaper like you.

Please do ask me upset and Mercedes masked when you do those rigs busy.

And as you listen to.

These projects and those are appropriate when we left was in fact, the with you guys already injected that was more project financing for the project is moving on when he doesn't want to go to the mall.

I didn't know she received from partners and then so then it gets we get off around this initiative.

Information because as you know the government decided to rebuild it.

Or should I say it so as Carlos said you or what.

You bet.

I'm reading the newspaper writer.

Okay.

Speaker 14: Okay.

Lucas Herrmann: Okay.

Patrick Pouyanné: There was no representative of TotalEnergies of this last agreement.

But as I said to you about the study that is lost.

Hum.

Speaker 14: Remind me, did you have any legal liability to offtake volume? Remember, you were 2 million tons of heads of agreement.

And could you remind me.

Lucas Herrmann: Remind me, did you have any legal liability to offtake volume? Remember, you were 2 million tons of heads of agreement.

You said you wanted the legal liability to offtake.

Well I mean.

The amendment you at 2 million tonnes of Cleveland.

Patrick Pouyanné: Yeah, yeah. We have a commitment. If the plant produce, we have some offtake volume. Yeah. I don't remember exactly how much is it, but the contract. It's like Yamal. You know, Yamal, we have a long-term contract, 25 years. It's a take or pay contract, and we have one on Yamal. Today, we only offtake the long-term contract on Yamal. There is absolutely nothing else than the long-term contracts. No spot, no additional volumes. We have reduced our Russian activity to the only long-term contract, and that's the reality of what we do. If Arctic LNG 2 came on stream, we have a commitment, so I don't remember exactly. I should read that. To be honest, I didn't spend much time on Arctic LNG 2 for the last year. But I will.

Ease of use are.

Produce the us I must say I don't remember exactly overseas.

It's not good.

Yeah.

Term contracts 25 years.

So they feel very comfortable I'm going to be out in one of your main because they'd be ordinary.

You don't get a contract on that Mark I, absolutely no fee.

The long term contracts no sport Nordstrom Onboarding, we are reduced or shouldn't activity.

During the corn flour.

So getting to you of what we do and if these two came on stream without a convening notice of our multi vendor like vaccines should we got to be honest I mean, just psychologically for the last year.

And I, just I realize I think we'd be able to tell you exactly what it means the video we are in.

Patrick Pouyanné: My team will be able to tell you exactly what is the volume. We have a lower share in Arctic LNG 2. We have 10% and not 20% on Yamal, so I think it was probably proportionate. By the way, we'll see. We can come back to you. Again, the same policy will apply. If we have a contract, we have a contract. We have to execute and do the contract. As long as sanctions do not prevent to do it, but will be the same policy. We can come back to you on exactly what is the offtake volume with the 10%. Independently of our shareholding, what happens with our equity, the contract, the offtake contract is there.

Louisiana into FY 'twenty.

20% of the body. So I think it's worth probably proportionately and by doing.

So we see because we tend to go back to you, but again at the same or do you see real crisis.

We are about flat with Q2 as a country like that longer functions the months.

For them to do it but we did the same policy Oh, we got to come back to you on exactly where we were.

So independent of all show opening what that says about equity, it's a bump up you'll see some flux.

Is that.

Speaker 14: Okay. No, thanks very much. Good summer.

Lucas Herrmann: Okay. No, thanks very much. Good summer.

Okay.

Thanks, very much good summer.

The next question is from Jason gave them an off T. D. Cohen. Please go ahead.

Operator: The next question is from Jason Gabelman of TD Cowen. Please go ahead.

Oh, Yeah, Hey, thanks for taking my questions first.

Operator: Hey, thanks for taking my questions. First, just on the Novatek dividend, I believe historically you guys got it in Q2 and Q4. So wondering if you received the Novatek dividend this quarter, and if not, what the certainty is you'll receive them moving forward. My second question is on Global Gas. You know, there's a lot of concerns around European gas storage actually filling over the coming months out of winter draw season. Given your unique position in operating European gas assets, just wondering what your outlook is for the European gas market in the fall.

Jason Gabelman: Hey, thanks for taking my questions. First, just on the Novatek dividend, I believe historically you guys got it in Q2 and Q4. So wondering if you received the Novatek dividend this quarter, and if not, what the certainty is you'll receive them moving forward. My second question is on Global Gas. You know, there's a lot of concerns around European gas storage actually filling over the coming months out of winter draw season. Given your unique position in operating European gas assets, just wondering what your outlook is for the European gas market in the fall.

First just on the dividend I believe historically you guys got hurt in Q2 and for Q. So I'm wondering if you received job, giving them this quarter and if not.

What the uncertainty and as you know well see them moving forward.

Second question is on global gas, there's a lot of concerns around European gas storage actually selling over the coming months out of winter draw off season and.

Given your unique position.

And operating European gas assets, just wondering what your outlook is for the European gas market in the fall and I'm kind of an extension of that how these tighter gasoline spread have.

Operator: Kind of an extension of that, how these tighter gas oil spreads have impacted your outlook for trading, given last year integrated LNG trading was particularly strong, in part because of the wide gas oil spreads. Thank you.

Jason Gabelman: Kind of an extension of that, how these tighter gas oil spreads have impacted your outlook for trading, given last year integrated LNG trading was particularly strong, in part because of the wide gas oil spreads. Thank you.

Impacted your outlook.

For for trading given last year integrated LNG trading most particularly strong in part because of the wide gosh, a little stretch. Thank you.

No we did not receive any dividend this quarter.

Patrick Pouyanné: No, we did not receive any dividend this quarter. That's the first answer. Second one, EU gas storage filling, it's clear that the storage will be full by October. Today that's why you have a soft gas price, $10 per million BTU. We don't anticipate difficulties because we exited the winter at high, with high inventory, so it's easy to replenish it and it will be down. That's why today.

But the first answer.

One.

And you've got stores in Japan.

It's already from before.

Okay.

So so if the baby's wardrobe to solve the gas price then build up I can guarantee you we don't participate.

Difficulties because.

We exited the windows.

So it's easy to initiate them close would it be done.

So that's why we're there for them.

Patrick Pouyanné: As I always explain, if the winter is cold, if the Ukrainian pipeline, the gas from Russia going through Ukraine stops, the situation will be pretty quickly in tension, you know. Cold weather, if on top of it China is recovering its activity and is buying more LNG, which it seems to be the case today, we have another additional factor of tension. The situation in Europe will be like this, you know. We are relying on the meteorological conditions, plus external elements, including the ones I mentioned about the transit for Ukraine. That's the reality. That's why, by the way, the forward price of European gas is at $15.

I believe we've explained or zooming, so it's called the <unk>.

If you do premium in the pipeline.

More struggling quaint and stops.

The situation with the intention and also of course deliver equals a double hit China is recovering.

And buy more LNG, which is seems to be the case today.

First off in terms of the strength in Europe .

We are relying on the on the on those.

I see all those people are the foundation lesser extend on into non club, including the onetime nature of the budget funding for your claim so that sets us. So that's why by the way the full price of European geographies.

Patrick Pouyanné: The pricing at $15 next week, next January, next first quarter, H1 2023, is higher because markets see more risk than more, I would say, bullish factors than bearish ones. I think that's the reality. What will happen, we'll see. We'll see what will happen. But that's an element of tension. By the way, it's also why today you don't see manufacturing industry in Europe shifting from fuel to gas. Last year we've seen a little because the price was very high in 2022, manufacturing industries are shifting from gas to fuel. We could have expected that at $10 per million BTU, the price is lower than the fuel price today in Europe, but they stay, they stick on fuel because they are afraid what could happen next winter.

So the pricing consistent.

Next week next steps that need to be an extra sports list for first half 'twenty three inspire bus market see more waste.

More we should it should be.

Yeah, I think that's what we have.

So what how does how much we'd adrenalin.

But Boston.

And and social was today, you don't see manufacturing suite in Europe shifting from Q2 gas stations last year.

Because if the price was very high in 'twenty, two and manufacturing industries are shifting from just a few we put unexpected but the thing to wrap up.

Some final ruling on the fuel prices, where they are in Europe , but at least he computer because I was afraid with food.

Our next winter. So it's an interesting video that's why people were saying as demand with guests in Europe is doing and things because they should make that shift towards a shorter process.

Patrick Pouyanné: It's an interesting behavior. It's why people say the demand of gas in Europe is lower and stays low because in fact, they should make that shift on the short term price. They don't do it because they are still afraid that there is no stability, I would say, in the gas price in Europe, the volatility. That's why, by the way, our traders, you know, traders in TotalEnergies, they love volatility. They make more money. But this quarter was less volatile, so lower results, but you could expect wintertime generally, so volatility is higher. That's what I can tell you.

Cause this.

No.

Yeah, everything the gas prices in Europe , and that's why by the way.

Or trade does illustrate is the same as.

The logo.

More money at the beach.

Once it was lower or to die So lower result.

But we've decided to totally so whatever you see volume.

What I can say.

Operator: Sorry, just, thanks for that color. Just to clarify on the first point on the Novatek dividend, should we assume that you stopped receiving it moving forward?

Jason Gabelman: Sorry, just, thanks for that color. Just to clarify on the first point on the Novatek dividend, should we assume that you stopped receiving it moving forward?

Alright, thanks for that color just to clarify on the first part on the level of dividend shall we assume that you stopped for speeding up moving forward.

Patrick Pouyanné: I don't know. That does depend on Yamal, you know? It depends on others. I think I just answered you, but honestly, the fact that I have decided, the board and the CEO of TotalEnergies, the chairman and CEO have decided that Russia is not no more in my account, not and we do not plan any distribution or any shareholder returns linked to any cash flow coming from Russia, to be honest. The way we think is we think without Russia, the board and the figures I'm showing to the board are without Russia. That's all. Because anything could happen, I prefer to show the case. If something is coming, it's coming, but we are not changing it. It's more about the way we think in TotalEnergies.

I don't know.

It does depend on the types of levels. So I think I just answered.

Well honestly I have decided that the board and the CEO of such that it doesn't show up on a few of them, but for sure not no more balanced.

And we do the planning.

Distributions.

Sure were very good leading to be cash flow coming from Russia.

It means you should.

We've seen with other fresh off the board at the figures I'm truly into the booth.

We've always pressure vessel code.

You can put out there so I prefer to show the case, if something your stomach stomach, but no. We are not changing it's more like what we see because I didn't actually say the consolidation whether theyre very clear that she does baidu core business. It looks like they do do incentives.

Patrick Pouyanné: The deconsolidation was a very clear decision by the board in December 2022, and this is the way we manage the company.

Thanks.

Operator: Thanks.

Jason Gabelman: Thanks.

Okay.

The next question is from Henry Tarr of them back. Please go ahead.

Operator: The next question is from Henry Tarr of Berenberg. Please go ahead.

Speaker 15: Hi and thanks for taking my questions. I had two. One, just coming back on the hybrid debt. Why did you choose to buy back some of the debt, and would you think about buying back more in the future? Then kind of, you know, what did you have to pay for it? Then the second question is on the downstream. You're talking about changing refineries into biofuels platforms. How do you see profitability for the biofuels platforms in Europe? How are you getting on sort of securing feedstock for those platforms? Are you seeing increasing government support for sustainable aviation fuel and, you know, renewable diesel and other biofuels within Europe at the moment? Thank you.

Henry Tarr: Hi and thanks for taking my questions. I had two. One, just coming back on the hybrid debt. Why did you choose to buy back some of the debt, and would you think about buying back more in the future? Then kind of, you know, what did you have to pay for it? Then the second question is on the downstream. You're talking about changing refineries into biofuels platforms. How do you see profitability for the biofuels platforms in Europe? How are you getting on sort of securing feedstock for those platforms? Are you seeing increasing government support for sustainable aviation fuel and, you know, renewable diesel and other biofuels within Europe at the moment? Thank you.

Hi, and thanks for taking my questions.

T O.

One just coming back on the hybrid debt.

Why did you choose to buy back some of the debts and would you think about buying back more in the future.

And then kind of what did you eat what did you have to pay for it.

And then the second question is on the downstream.

Talking about.

Changing refineries into Biofuels biofuels platforms.

How do you see profitability for the for the Biofuels platforms in Europe .

How are you getting on the sort of securing feedstock for those platforms.

Are you seeing increasing government support for sustainable aviation fuel and renewable diesel and another biofuels within Europe at the moment.

Thank you.

Patrick Pouyanné: Yes. First question regarding hybrid. At present time, our hybrid portfolio has very low costs, below 3%. It's 2.4%, if I remember well. We have the flexibility offered by S&P to diminish the global level of hybrid, -10% on a yearly basis. In May, we have a tranche maturing, and we decided to use this flexibility; otherwise, in the market at present time, the hybrid cost increased compared to the 2.4% I mentioned to you. It's around 5%. Given the cash we are able to generate at present time, with Patrick, with the board, we think we do not need to renew this hybrid tranche. That's the main driver behind the decision not to renew this tranche.

The first question.

So at present time.

This portfolio of assets.

Very little dust needlessly to.

So you say Union del Webb so.

The 60 minute films like S&P.

Diminish the level.

Level of IV minus 10% on a yearly basis.

In EMEA, we had a tranche mezzanine and so we decided to use a shaky BD, although I might ask Suzanne.

Leaves us in.

Compared with $2 four 6% that you mentioned.

These are long cycle sensitive data.

I want to get out in time, so we see the world. We think you might need to be decided.

Besides we tranche.

That remains right around the end of the decision not to renew dysfunction.

Patrick Pouyanné: We decided to get rid of this EUR 1 billion. Yes. At present time, yes, the cost of the hybrid in euro, it's more than 5%. It makes no sense to

It is too.

$3 1 billion euros Benoit, yes.

Yes, I play those targets because that's a nice lead in you're really smart.

That's what makes no sense to.

Operator: That means that the deal this year could be renewed the next year.

Jean-Pierre Sbraire: That means that the deal this year could be renewed the next year.

It shouldn't be here for the next year, just because we don't want to over to researchers designs. So let's face. It. It's just the management of the <unk>.

Patrick Pouyanné: Yeah.

Operator: Just to, because we don't want to incur charges or high interest rates, you know? It's just a management of the-

Henry Tarr: Just to, because we don't want to incur charges or high interest rates, you know? It's just a management of the-

Patrick Pouyanné: Of the cash.

Operator: Of the cash and the balance sheet of the company, so I think it's an obvious decision. It makes sense.

Patrick Pouyanné: Of the cash and the balance sheet of the company, so I think it's an obvious decision. It makes sense.

Cash on their balance sheet as a company. So I think it's set up your decisions it makes sense.

Patrick Pouyanné: On the downstream, you know, we have changed some refineries into biofuels. We've changed La Mède, we are changing Antwerpen. I told you there will be others. In fact, there is a clear framework in Europe. That's why I'm comfortable in Europe, because you have some mandates in Europe, and in particular, the sustainable aviation fuel in Europe is a mandate. It's not just a target, you know. It's a mandate. When you have a mandate, immediately you create a market and a pricing which will integrate the CO2 cost, so I'm comfortable to invest because I think that really, Europe is very serious about the. We have a 6% mandate by 2030, which is increasing to 15% mandate in 2035. It creates a market, positive market.

On the downstream.

I know we have changed some refinery can do biofuels always Tien tsin that led to the sharp checking all three of our Georgia, but there'll be others.

And talk to you.

There's a clear framework in Europe , that's why I'm comfortable in Europe , because you have some mandates in Europe in particular I was assistant need whatever you should too.

And Europe is a mandate its not just a dog eats it hurts on Monday when yes.

Immediately you're creating.

And the pricing, which we didn't see ways.

Golf, so uncomfortable to invest because I think that India Europe is very serious about the six.

6% Monday by telephony food thing, which is increasing to 15% mandate in 2045, so let's create the market positive market than just people shouldn't you Gotta do you produce it. So you are so reliant forward refinery because we have the <unk>.

Patrick Pouyanné: The big question is how do you produce it? We like old refineries because we have a CapEx per ton, which is lower when we make a green field. You will not see TotalEnergies investing in green field refineries to make that, to be clear. I prefer to convert the old refinery. By the way, as part of the transition, we are realizing the demand for gasoline and diesel will diminish in Europe. We have more EVs in 2035, so you need to prepare the transition. We can reuse some units to make a bio-refinery. The CapEx per ton is around $500 to $600 per ton. A green field one is around $1,000 per ton. Let's convert rather than creating new green field refinery.

Our capex to a dog, which is real work with me to make a greenfield. So you will notice of sending and receiving pittsfield refineries to make stop to pick that up.

We focus on really the only refinery if I can make both of the transition we are really that the demand for gasoline and diesel will diminish in Europe , we are multi region.

So you need to prepare for the transition and transforming.

He used some units to make their biorefineries and the Capex breakdown is around 500.

Got it.

One is around one four.

Let's go a little farther than <unk> did.

We did see a refinery, but fundamentally our view that we need to find the feedstock yeah, Gerard and assist us in Europe is an issue because they want to they don't want the <unk> based <unk>.

Patrick Pouyanné: Fundamentally our view, we need to find a feedstock, yeah, you're right, and the feedstock in Europe is an issue because they won't, they don't want 1G. There is no 1G, vegetable oil in south. So we need to secure it. We don't want to import used cook oil from far away and being trapped into I don't know which story about waste imports, you know, think it's not good, not good approach. There are ways, you know, we have secured feedstock on country by a JV with a German company who produce animal fats, so we are looking to that segment. We are also beginning to look to another technology, which is alcohol-to-jet, which might be the next one.

Did you see more over the top.

So we used to security.

We don't want to impose new scoop oil from.

Probably and being trapped into a I don't know, which story about waste imports into a piece of it.

This approach, Brazil always Adobe of Securities Telecom country by <unk> with a German company will produce anymore fast, but we are looking to that segment.

We.

Also beginning to move to another technology, which is a <unk>, which.

Which is outdoor project, which might be the next one because when you look to in fact be a ballot.

Patrick Pouyanné: Because when you look at the balance of the European market by 2035 to reach a 15% mandate, it will be difficult to be done only with lipid feedstock. I mean, with used cooking oil or animal fats. We could have to be obliged. It opens the room to additional next technology. We try to select the ones which don't need the most expensive. We don't need e-fuels, but we might have technologies in between providing the SAF in a, how we say, a little more expensive, but not the most expensive one. This is the way we approach this issue. But again, for me, it's for us, the focus will be in Europe again, because we have the assets. We know we have to make the transition.

Yes.

European markets, where it might be 55 to reach a 15% mandate.

It will be difficult to be done on the weaver lipid feedstocks that are going to be the scorecard of antibodies that we could have to be overnight. So we feel first.

In addition, mixed securities. So we try to select the ones who as you know these are most expensive we notice that we don't need you chose to do it myself.

Between providing the source you know I.

I would say a reasonable expense it but not the most expensive one. So this is the way we approach approach at issue, but again for me, it's less of a focus within Europe again, because yes, yes. That's we know we have to make that transition, it's a new <unk> machine.

Patrick Pouyanné: It's an opportunity which is in fact given to us by this transition and all these famous European Green Deal frameworks. Let's seize the opportunity. It's like I said, green hydrogen, the other way to compensate, let me say, the cost of CO2 and the cost of energy in a positive way to create new markets and to decarbonize the airlines. That's the way we look at it. We work, and we are going to project. We are working on the third one.

In fact, given to us by these transition newbies the famous European Green deal frameworks. So, let's see who is reading exactly I say green hydrogen yoga away to come from say some of it is cost of Q2 as the cost of energy in a positive way to create new markets and to Decarbonize The airlines.

Yeah. So that's the way we look at it.

So we work and we are going to produce and we are working on a third well.

Okay.

Great. Thanks.

Speaker 16: Great. Thanks.

Henry Tarr: Great. Thanks.

The next question is from Betsy <unk> of UBS. Please go ahead.

Operator: The next question is from Henri Patricot of UBS. Please go ahead.

Yes, that's perfect.

Speaker 16: Yes, Henri Patricot. Thank you for the update. Two questions, please. The first one, I wanted to come back to integrated power and the strong performance in Q2 with the earnings up sequentially. I was hoping you can give us, you know, some details on the driver of the sequential improvement, because for instance, I see that net power production is down quarter-on-quarter. So I'm curious to hear what was driving the improvement here sequentially. And then secondly, on Mozambique LNG, if you have an update to provide on the timeline next milestone for the project before we can fully restart. Thank you.

Henri Patricot: Yes, Henri Patricot. Thank you for the update. Two questions, please. The first one, I wanted to come back to integrated power and the strong performance in Q2 with the earnings up sequentially. I was hoping you can give us, you know, some details on the driver of the sequential improvement, because for instance, I see that net power production is down quarter-on-quarter. So I'm curious to hear what was driving the improvement here sequentially. And then secondly, on Mozambique LNG, if you have an update to provide on the timeline next milestone for the project before we can fully restart. Thank you.

Yeah, I think I have two questions. Please the first one.

I want to come back to you for another strong performance in the second quarter.

So Krishna.

Can you give us some.

Details on the driver of the sequential improvement because for instance.

While production is down quarter on quarter was interesting to hear.

The improvement here sequentially and then secondly.

Most of them can achieve if you have that.

To provide the timeline next.

Most of them to put a pause.

Before we can.

Thank you.

Patrick Pouyanné: Mozambique LNG, we are working on both parts. One is with the contractors, and I expect that to be done in H2 of this year. We'll have the answers, and I hope it'll be positive for them. Then we are working also, like Jean-Pierre told you, on the relaunching, decreasing the financing. I think my objective for us is to come to you and to have before year ends, I would say, we should have clarity on the way forward. Again, we need to know, agree, cost before and then think let's do it, work step by step properly. That's, I would say, the objective we have. If we need to wait a little more, we wait. Integrated power.

Well, let me give a N G.

On the ball for us one or two different factors and I expect that to be done there.

The Hartford this year, so we love the answer could be positive for them and then we are with me most electric vehicle will do them.

We are re launching decreasing the financing so I think my objective the objective for us is to.

To come to you and through other before year end.

We should have a car T or to move forward, but again, we can.

No the cost before and 19 victory.

Goodbye spread opportunities.

I would say.

Sure.

We are if we need to wait and see.

I'm, telling people that I think they don't care, which gives you a sort of indications. So we are doing is coming from it really well.

Patrick Pouyanné: I think that Jean-Pierre in his pitch gave you some indications. I told you it's coming from everywhere, you know. I can give you, but you know why. In the market, for example, in supply business, the winter is always more tough in terms of results because we have an average cost of supply, more demand, so you have a sort of seasonal effect. I think when you look, if you are covering or following some utilities, you can see the seasonal effect. It's more positive in Q2 and Q3. Q2 and Q3 are more positive, but we have also good performance coming from our flexible generation capacities because of the, I would say, the spread between gas and electricity.

I can't give you a number do you know why.

In markets like Denver, and Supervisors that we do.

As always the more tougher in terms of reserves, because we have an average cost of supply more demand or would you rather a sort of a seasonal norm and things I think when you look at the local recruiting services as you can see seasonal effects of exporting more positivity that's begun to disappoint.

So of course, our hope it is but we have also.

For months coming far more tricky board generation capacities because of the I would say the gas too.

The spread between the gathering.

Kevin.

We have some good against over from creating as well and we are supposed to see reserves from renewables. So everybody is increasing I would say.

Patrick Pouyanné: We have some good results from trading as well, and we have positive results from renewables. Everything is increasing, I would say. There's not one, it's everybody contributed. By the way, it's why the more we look at it, the more we think our approach of integrating power, and this is why we report to you with results in this way, and I will report the results of refining and chemicals in an integrated way. I think, but no, nothing special, everything went positive, which is a good source of, I would say, confidence for the future on this one.

So they don't want.

Everybody.

And by the way is why did the more we looked at this we think our approach of integrating these.

This is wyman.

We posted movies reserves in this way the library the pools are results of refining and chemicals.

And so I think.

No nothing special.

Which is a good source of I would say.

Our confidence for the future on this.

Speaker 16: That's it. Thank you.

Henri Patricot: That's it. Thank you.

Okay.

The next question is from Paul Cheng of Scotiabank. Please go ahead.

Operator: The next question is from Paul Cheng of Scotiabank. Please go ahead.

Speaker 17: Thank you. Two questions, please. Patrick, any update you can provide on Suriname? With that, I know that you guys will not be ready yet, but any kind of preliminary capacity for the first FPSO, assuming that that's going to go forward, and also the timeline that you will expect for the first oil. Second, just want to see if you can share, over the past several months, what's your investor feedback, given the changing market condition about your pace of investment in the low carbon et cetera, from the wind and solar power business as well. Do the investors think that the pace is right, or do they think that the pace should be accelerated or decelerated? Thank you.

Alright, Thank you two questions.

Paul Cheng: Thank you. Two questions, please. Patrick, any update you can provide on Suriname? With that, I know that you guys will not be ready yet, but any kind of preliminary capacity for the first FPSO, assuming that that's going to go forward, and also the timeline that you will expect for the first oil. Second, just want to see if you can share, over the past several months, what's your investor feedback, given the changing market condition about your pace of investment in the low carbon et cetera, from the wind and solar power business as well. Do the investors think that the pace is right, or do they think that the pace should be accelerated or decelerated? Thank you.

Patrick any upgrades.

Why.

And Paul I don't know.

Thank you Randy.

Exactly.

Okay.

Thanks.

So assume that that's going to come.

Paul.

And most of the time.

Yeah.

Oh.

Secondly, just wanted to see that.

You can see here.

Couple of months.

What's wrong with that.

Given the changing market condition.

No problem.

Williams Sonoma.

Yes.

Nothing like that.

Okay.

One.

Things like that.

Thank you.

Boy I think captures the first squishing the language subsidiary. So he designed is not that it would be everybody sort of this one I cant because of physical should I think is about soon I'm sure and just sit down with that.

Patrick Pouyanné: I captured the first question. Sorry, the line is not very good here in Paris on this one. I captured the first question I think is about Suriname, I'm sure. The second-

Speaker 17: Yeah.

Paul Cheng: Yeah.

Patrick Pouyanné: This is about investor feedback on our integrated renewable power business, if I understood correctly. Is that right?

The feedback on a lengthy weighted on all their new ability to export business and this is different.

Speaker 17: Yeah.

Paul Cheng: Yeah.

Did I catch this two questions.

Patrick Pouyanné: Did I capture 2 questions? Yeah? Okay, good. Suriname, okay, I told you that we have, we are just finalizing the test of the last appraisal well. I will give you a meeting point in September because my teams are working. I gave you a positive indication that things we are moving forward with development. I want the teams working to take all these reserves together, to put that together to have a case. I think we'll have a case for development for sure. Exactly what will be decided, I instruct my team to take few holidays, and then you come back to me end of August, September. We'll answer to you with a clear.

Yeah, Okay, great. So sooner again I told you that we have a we are just finalizing the test of the laptop reasonable west. So I wouldn't give you a meeting bonds in September because my team. So we're seeing I gave you.

Positive indication, but it seems that the.

We are moving forward with development, but I wanted to Steve's working in the Taser weapons reserves to get her to put that together. That's the case I think without a placeholder for sure exactly whether it be decide.

I guess I interpreted by the issuers.

And then just going back to my end of August September So we're not supposed to do.

Yeah.

Patrick Pouyanné: I think we have a clear idea by 7 September 2027. Come to New York, and we'll have the answer to your question, if not before. Obviously we will submit. I can tell you we have a dedicated group of development. If it's positive, sanction might be validated by end of 2024, that's I would say. Then the question of execution. More or less what I have in mind, but again, I want to. There are still some debates about what could be decided exactly. The news that I read about the test seems to be quite good. That's on Suriname. Just a little patience, it will come.

I think whatever.

Bye bye.

So if we sit out and soak up to New York.

So to your question.

Before but.

Obviously, we will fill it I've done that you will be able to gauge your Bloomberg Department. So you can probably be sanctioned might be thought of anybody out of the 24 weeks.

It's a question of execution, but the board is what they remind us again, I wont do well I'll steal some debates about what could be decided exactly the bad news that I read about the systems to be quite good so I'm sorry.

So adjusted for the patients is what you got.

Patrick Pouyanné: Our investors, you know, normally, they are just investors, you know, they want to have the cash, you know, they want to have dividends and cash flow. If we demonstrate that this business is contributing, that's a question mark for us. I think it's why we decided to publish this result, to demonstrate that it is profitable, but we can generate cash flow. The question for us will be when does it become net cash flow positive? We are working hard on that because our objective is that this should be a cash positive generator. We invest more or less in these integrated power business EUR 4 billion per year. When do we add the threshold for EUR 4 billion?

On Oh.

Alex This is you know all are.

They are just investing as you know they want to have any cash.

But I've always tried to dividends and cash flow. So if we can demonstrate that it presents.

It's going to be busy.

So that's a question Mark for US I think that's why people buy into publicis results with their most.

Perfect.

Gotcha.

Is it pushing boss would be when does it become net cash.

So again, we are working off of that because our objective is that these two deals.

So we invest more they seem to be the.

I see what you alluded to this 4 billion per year. So when do we I guess, especially for business and that's again really comes back to you in September on but because it's also possible.

Patrick Pouyanné: That again, we'll come back to you in September on that because it's also part of the question. The question for me from investors is we understand you are in transition. I think the message is, okay, if you focus on one thing, let's focus on it. That's my message, let's simplify. Again, I think it's a matter for us. I guess, yeah, I think the last what we clarified in the last year, which is in fact we want for the domestic to apply to this integrated power business, the same way we think in oil and gas, the productivity capturing integration. I think it's a right answer to our investors, and that's where we are today. We'll keep on our strategy to be clear.

Okay. Good.

Question for me if I missed visits as we understand the Dragon transition I think.

The message is okay. If you focus on one thing Facebook, there's only about 5%.

And again, I think that they'll call us too, but I guess the last one for you to clarify the last year, which is in fact lots of alumina to reply.

People were business the same way that we see in the morning Josh.

You're capturing integration.

I think is.

Dry tons with doing this too and so that's sort of where we ought to be so we really like where.

With a simple strategy.

A reminder, simplify you talked some about one of your responses.

Patrick Pouyanné: We might simplify it on some molecule part, but we are clear on this one.

On this call.

Thank you.

Speaker 17: Thank you.

Paul Cheng: Thank you.

The last question is from Giacomo Romeo of Jefferies. Please go ahead.

Operator: The last question is from Giacomo Romeo of Jefferies. Please go ahead.

Yes. Thank you I have one last just the.

Giacomo Romeo: Yes, thank you. I have one last, just from cash flow this quarter and obviously showing the impact of your hedging position on integrated LNG. Just want to check if you can remind us sort of what sort of hedging level for the remaining quarters of the year and whether you are still continuing to enter into your rolling hedging program and given where the current gas prices are, the outlook for next year.

Some cash flow.

Quarter, and obviously show you the impact of hygiene.

Hygiene position I mean cause that can span. If you just want to check if you can remind us sort of what's sort of the hedging levels for a full day remaining quarters something he added whether you are still continuing.

So youre rolling hedging program.

I'm glad that gas prices are.

Looking forward for next year.

No, but you know it's a it's a it's just.

Patrick Pouyanné: No, but you know, it's a strong, clear policy. We are hedging more as 80% of the portfolio. What has been done in 2022 for 2023 is one, and we do the same for 2023 for 2024, and 2024 for 2025, and that's it. Even though we have a merchant exposure on our balance sheet in LNG, and we assume it, but we try to, I would say, cover part of it and to keep some of it hedged. By the way, you know that we have decided that all the Russian LNG should not be hedged because I'm not sure that that will continue. I mean, it's part of the answer.

Sure.

It's Tony so clear for D. C. We are edging north of 80% of the portfolio.

So what they've been nothing points to 423 wells and we do think will tend to creep up in Florida for 45, but I think there's.

No we havent merchant exposure on our balance sheet and the energy that we are sure that we try to cover a lot of intend to keep some of this marketplace, where you know that we have decided that the or the arithmetic each of those yet because I'm not sure of it though that's going to continue so I mean that so it's a comprehensive so it's going to you're reading in Cerro Verde.

Patrick Pouyanné: It's continuing, and that's why you should expect the next quarter in terms of cash would be to remain more or less positive, because if I remember well, the forwards for Q3 and Q4 2023 were higher than the one for Q2. The war begins in March, and you remember the peak of the prices were in Q3, Q4, not in Q2. We should have good cash flows. Otherwise, there is something I did not understand my business, but I think we understand it. No, I'm clear. I'm very clear.

Why are you so you should.

Expected the next zoom instead of cash would be.

We remain more or less busy because it's very member wells.

For Q3, and Q4 2003, where are you.

Wonderful.

We'll begin to March and don't read my notes the peak of the prices, whereas Q3 Q4 left in Q2. So we should have good cash flows.

Although longer it's something I misunderstood represents.

No that's clear.

I think you all know.

Christyan Malek: You are joking.

Patrick Pouyanné: No, I'm joking. Yeah, no. No, it's clear. The bulk of the CapEx will come in H2 2023 more than in H1. Okay. Giacomo. Thank you to all of you for your answers and all your participation. I know that you have a busy day because there are three companies, oil companies, delivering results the same day. I will not be long. Just again, the key, I think, on the results of Q2, we demonstrated that we are profitable, 22% ROACE. That we have a strong cash flow, including from LNG, $8.5 billion. Much stronger than, I would say, the deteriorating environment.

I just can't get enough of a nice deal.

Geez, we'll go I'll, just tick them off of 'twenty free more like the first time.

Forget check or more so thank you to all of you for your answers and then do you have a sufficient degree I.

I know that you are a busy busy first we are pre comfort European companies updated views on the same day, but I would not be longer just again those are key legal reserves in the system.

Second we'll do we demonstrated that we are hoping to boyfriends supersensible, let's see what we have is 'twenty cash flow, including <unk> eight 5 billion.

Mr Holger done ever since the decrease of the under armour and further of course, we are committed to the distribution for the robot.

Patrick Pouyanné: Third, of course, we are committed to distributing to shareholders by maintaining the buyback at EUR 2 billion for the 5th quarter in a row, despite the softening environment. With this message, have a good vacation, have a good summer, and I hope we meet all of you on 27 September in New York for our update of strategy. Just to remind you, we took your lesson, that you don't want to listen too much to us, so it will be only the 27th morning, and then we'll have lunch with you and answer questions. Thank you for your attention, and have, again, a good rest of your investment time. Like we will have. Thank you. Bye.

Buying back 2 billion four fifth quarterly neurologist five is slipping a little bit. So revisit message are we good decade shouldn't everybody. So now I'll hand, it over to Mr.

Mr over all of you in September .

2007 in New York for a data strategy.

And just to remind you we took a lesson, but you don't want to recent too much to us. So it's really the army glimpses of this morning, and we got right.

With you and answer any questions.

You might mention another again the grid.

During summer time.

Right.

Thank you.

[laughter].

Yes.

Ladies.

Operator: Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect. Thank you.

And gentlemen, this concludes the conference call. Thank you all for your participation you may now disconnect. Thank you.

Uh huh.

[noise] [noise].

Yeah.

[noise].

No.

Uh huh.

[noise].

Q2 2023 TotalEnergies SE Earnings Call

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