Half Year 2025 TotalEnergies SE Earnings Call
Operator: Open Quarter and First Half 2025 Results Conference Call I now hand over to Patrick Pouyanni, Chairman and CEO, and Jean-Pierre Zbraer, CFO, who will lead you through this call. Sir, please go ahead. Good afternoon or good morning, everyone.
Ladies and gentlemen, welcome to Total energies second quarter and first half 2025 results conference call.
Jean Pierre: I now hand over to Patrick panty chairman and CEO and Jean Jean Pierre s CFO who will lead you through this call sir, please go ahead.
Patrick Pouyann: Before Jean-Pierre goes through the details of the second quarter financials, I would like to make some few opening comments. We are facing an unstable geopolitical and macroeconomic environment which has been dominated by during the quarter by the Israel-Iran conflict. 12 Days War and also the tariff war between the US and some commercial partners. In this context, oil markets have been volatile during the second quarter, with price broadly fluctuating between $60-$70 per barrel, an average of $68 per barrel, with a short and ultimately modest increase during the Iran crisis, with crude prices reaching $81 per barrel at the highest We could consider, in our view, that this is quite a limited price response to this major crisis and somewhere it is a signal that the oil market is well supplied, in particular fueled by OPEC Plus' decision to unwind some voluntary production cuts and also facing a weaker demand linked to the global slowdown of economic growth.
Speaker Change: Good afternoon or good morning everyone.
Speaker Change: Uh, before Janiyah goes through the details of the second quarter financials. I would like to make some few opening comments.
Speaker Change: Uh, we are facing an unstable geopolitical and macroeconomic environment, which has been dominated by doing the quarter by we say you run.
Speaker Change: 12 Days War. And also the two between the US and some uh, its commercial partners.
Speaker Change: Average of 68 per barrel with a short and ultimately modest increase during the Iran crisis with good prices. Reaching 81 per bar at the highest point.
Patrick Pouyann: In such a context, and Jean-Pierre will detail that in a few moments, this quarter TotalEnergies once again demonstrating the company's robustness. Thanks to its balanced and consistent strategy, but also thanks, and it's more important, to its The differentiated and unique energy production growth profile both in oil and gas and in electricity and that drives cash flow growth as well as attractive and is a basis for attractive shareholder returns through cycles.
We could consider in our view that this is quite a limited price response to this major crisis and somewhere, it is a signal that the Old Market is well, supplied in particular, fuel by OPEC plus decision to unwind some voluntary, production cuts and and also facing a weaker demand linked to the global flow, slow down economic of economic growth.
Speaker Change: in such a context and around here will detail back in a few moments this quarter total energies once again demonstrating the company's robustness
Speaker Change: Thanks to its balanced and consistent strategy. It ALS thanks and it's more important to its
Patrick Pouyann: So starting first with our first pillar, our lean gas. The first half of 2025 production was up more than 3% year-on-year, demonstrating that we are well on track to achieve our 2025 Upstream Production Growth Guidance of more than 3% vs. 24%, and as you know, it will be even longer up to the end of the decade, this 3% growth. And it has been supported, and it's also very important, by the start-up of high-return projects such as the Balimo Film in the US, or Meru 4 in Brazil, which, by the way, was one quarter ahead of schedule.
Speaker Change: Uh, the differentiated and unique energy pollution growth profile, both in orang gas and in the electricity. And that drive cash through growth, as well as attractive, and is the basis for attractive, shareholder returns through Cycles.
So, starting first with our first pillar or Ling gas,
Patrick Pouyann: And now, Begonia and Clove 3 in Angola just came on stream to further fit the Q3 and H2 growth. As I said, importantly, this production is coming from this new project is accredited, increasing the upstream cash flow, CFFO per barrel by around $1 per barrel as an average during the quarter, which is, in fact, quite impressive given our large production. We are also continuing to manage this portfolio, focusing on our projects on which we meet our low-cost, low-emission criteria, and divesting some non-core, higher-cost projects. And during Q2, we consistently with this strategy, we divested non-productive interests in non-core, higher-cost projects in Nigeria, Bonga, and Brazil, Gatot do Mato.
Speaker Change: The first time for 2025 production was up more than 3% year on year, demonstrating that we are well on track to achieve our 2025 Upstream production growth, guidance of more than 3% versus 24. And as you know it will be the longer up to the end of the decade is 3% growth and it has been supported and it's also very important by startup of high return projects such as the body move field in the US, or Meo 4 in Brazil. Which provide, by the way, was 1 quarter ahead of schedule and no ponja in clo. 3 in Angola, just came on stream to fit the Q3 and H2 roof.
As I said, importantly, please production is coming from this new project is a creative increasing the Upstream cash CFO by around $1 per barrel. As an average to in the quarter, which is in fact, quite impressive, given our large production base.
Speaker Change: We are also continuing to manage the portfolio focusing on our our projects on who we are. We meet or low cost through Omission criteria and divesting
Patrick Pouyann: During the second quarter, we have also reloaded the exploration portfolio by acquiring exploration permits in the U.S. in the Gulf in the US Gulf, in Malaysia, in Indonesia and Algeria. On the LNG front, the big news of the second quarter, that we continue to strengthen the portfolio by signing a 1.5 million tonne LNG offtake agreement from Rio Grande LNG 24. We will become shareholder of this train as well. And we have also taken, I would say, an option, potentially, on the future projects located on the Pacific coast of Canada, which give access to Asian markets and will benefit, by the way, some very cheap gas in Canada, in Alberta, Canada.
Speaker Change: Some non-core I higher course projects and during Q2 we consistently with this strategy, we diverted more productive interests in non-core higher course projects in Nigeria banga and Brazil get to do em during the second quarter. We have also Reloaded The exploration portfolio by requiring exploration and permits in the US in the Gulf.
Speaker Change: The US girls in Malaysia in Indonesia and Algeria.
Speaker Change: On the LG front. Uh, the big news of the second quarter that we continue to strengthen the post for you by signing a 1.5 million on energy of take agreement from Rio Grande LNG, train 4. We will become shareholder of this train as well. Uh, and we have also taken, I would say an option potentially on the future projects located on the Pacific coast of Canada, which give access to Asian markets and will benefit, by the way, some very cheap gas. Uh in in now it's in Canada. In Alberta Canada.
Patrick Pouyann: On the second pillar, as you can observe, the integrated power continues to deliver. Solid Results and Solid Cash Flows to close to $600 million and is on track to achieve also its annual guidance. In line with our strategy, we also continue to unlock value in our power business by progressing farm downs. We have sold, during the quarter, 50% of our 600MW portfolio of renewable assets in Portugal, and there is more to come in the second half. The Q downstream results benefited from a positive seasonal effect of marketing and services activities, which has done very well, which in fact are stronger, with stronger results year on year.
Speaker Change: On the second P. Now, as you can have observed, the integrated power continue to deliver.
Speaker Change: Solid results and solid cash flows to close to 600 million dollars.
Speaker Change: And is in, in on track to achieve also its annual guidance.
In line with our strategy, we also continue to unlock value in our power business. By progressing Farm downs. We have sold during a quarter. 50% of our 600 megawatt portfolio, renewable access in Portugal, and there is more to come in the second half.
Patrick Pouyann: Despite near-term improvements in refining margins, to be honest it's a small improvement in the second quarter, refining in KV Sol, chemicals are still facing some headwinds, either on the operational side, The two refineries were not at the optimum, I would say, efficiency, Donge and Port Harford. And also on the market side, it's more for the polymer business, which is facing overcapacities in the market.
The queue Downstream results benefited from a positive seasonal effect of marketing and services activities, which have done very well, which in fact are stronger with stronger results year on year.
Despite near-term Improvement in refining margins, to be honest, it's a small Improvement in the second quarter refining, chemist all chemicals are still facing some Ed Edwards ever on the operations operational side.
Speaker Change: Do we find a ways? We are not at the optimum, I would say efficiency.
Patrick Pouyann: Moving to CapEx. During the first half of 2025, net investments totaled $11.6 billion, including $2.2 billion of net acquisitions, in particular the acquisition of the ESB. I confirm today that for the full year, we anticipate the net investments will be within the $17-$17.5 billion guidance range, given the disposal program planned for the second half of the year, which is already well engaged. In upstream, beyond our stake in Bunga Nigeria, as announced, we have, in fact this last week, approved some binding offers for our unconventional oil license in Argentina and for two other ENP assets which will represent globally $1 billion of cash flow.
Speaker Change: and also, on the market side is more for the polymer business, which is facing over capacities on the, in the market,
Speaker Change: Moving to capex during the first half of 2025. Net Investments. Total 11.6 billion including 2.2 billion of net Acquisitions in particular, the acquisition of vsb
Speaker Change: The net investments will be within the 17th 1 7. 5 1 8
Patrick Pouyann: We are also working, and the E&P team is working hard, to close all divestments of onshore Nigeria before year-end. This represents next to $1 billion. In integrated power, we are very well advanced for the farm dance of the 1.5 gigawatt portfolio in the U.S., a 250 megawatt portfolio in France, and a 400 megawatt in Greece. These three farm dance will represent net diversions of CAPEX of around $1.5 billion. The gearing stood by the end of June at 18%, increasing quarter to quarter, primarily due to net investments being weighted towards the first half of the year, in particular because of the disposal process.
Speaker Change: Upstream beyond our stake in banga. Nigeria has announced. We have, in fact, this last week approved some binding offers for our unconventional, all licensed in Argentina and for 2 other entps assets, which will represent globally, 1 billion dollar of cash flow.
We are also working uh in the entity is working hard to close our divers of onshore Nigeria before year end this represents next to 1 billion.
Speaker Change: It integrated power. We are very well Advanced for the fund. Dance of the 1.5 gigawatt portfolio in the US.
Speaker Change: At 250 M portfolio in France and 400 megawatt in Greece. Which free from Downs will represent net diverse of capex of around 1.5 billion.
Patrick Pouyann: But it was anticipated and working capital was built on the first time. Estimating the seasonal effects of working capital and the investment pace, normalized gearing is 15%.
Speaker Change: The gearing stood by the end of June at 18% increasing quarter to quarter primary due to net Investments being weighted towards the first half of the year in particular because of the disposals process, but it was anticipated.
Speaker Change: And working capital, small built on first, first, half, and sorry on and working capital built on the first half.
Patrick Pouyann: I will conclude my remarks with the shareholder distributions. The message of the board is clear, we maintain shareholder distribution at... High level, I would say as a payout could stand around 55% in 2025. which is, as you remember, quite above the guidance of more than 40% full cycle. First on dividends, the ordinary dividend is our number one capital allocation priority. We continue our track record of attractive growth. The board of directors approved a second interim dividend of 2025 of 80 cents of euro per share, which is an increase of 7.6% compared to 24, and it's up 25% versus pre-COVID.
Speaker Change: As trading, the seasonal effects are working capital and the investment base, normalized gearing is 15%.
I will conclude my remarks with the shareholder distributions. The message of the board is clear. We maintain shareholder distribution.
Speaker Change: At.
Speaker Change: High level. I would say as a payout could stand around 55% in 2025, which is, as you remember, quite above the guidance of more than 40% through Cycles,
Patrick Pouyann: I would like to underline that in US dollar terms, considering the evolution of the US euro exchange rate, this increase of more than 10%, and it was 8% in 2023, 8% in 2024. So US shareholders have the benefit of that. I would like also to underline that this dividend yield, or dividend yield, is the best among the majors. Man comforted by the ability of the company to reach its 2025 underlying growth objective, in particular on energy productions on both sides, the upstream, which continue to deliver good results quarter after quarter and also integrated power, while maintaining a strong balance sheet, the normalized gearing at 15%.
Speaker Change: First on dividends, the ordinary dividend is our number 1 Capital, location priority. We continue our track record of that traffic growth, the board of directors approved, the second interim dividend of 2025 of 80 cents of Europe, a share, which is in an increase of 7.6% compared to 24, and it's up 25% versus pre. I would like to underline that in US dollar terms, considering the evolution of the US, euro exchange rate this increase of more than 10% and it was 8% in 23, 8% in 24. So us shareholders,
Of the benefit of that, I would like also to make the life that is dividend yield or dividend, yield is the best among the majors.
Speaker Change: When comforted, by the ability of the company to reach is 2025 underlying growth. Objective in particular on energy Productions on both sides the Upstream, which continue to deliver, good result quarter after quarter and also integrated power.
Patrick Pouyann: The board has decided to continue share buybacks for up to $2 billion in the third quarter. The board will continue to monitor the buyback on a quarterly basis, looking to the evolution of the macro environment, but also on possible anticipations on the oil gas refining petrochemical market.
Speaker Change: While maintaining a strong balance sheet, the normalized gearing at 15%, the both has decided to continue share, BuyBacks for up to 2 billion in the first quarter.
Patrick Pouyann: We intend to give you more colors on the buyback scheme at our investor day, end of September.
Speaker Change: the ball will continue to monitor the buyback on the quarterly, basic looking to be evolution of the macro environment, but also on possible anticipations on the old gas refining, petrochemical markets,
Jean-Pierre Zbraer: And now, I will turn the call over to Jean-Pierre, who will go through the details of the second quarter financial. Thank you, Patrick. So I will start by commenting on the price environment in the second quarter, which was overall weaker, quarter over quarter. Brands average $68 per barrel versus $76 per barrel in the first quarter, so down 10%. TPS The European gas market averaged $11.9 per million BTU versus $14.4 per million BTU in the Q1, down 18%. And the average LNG price also decreased. to $9.10 per million BTU versus $10 per million BTU in the first quarter, down again by 10%.
Speaker Change: we intend to give you more colors on the buyback scheme at our investments or at our investor Day, end of September.
And now I will turn the call over to Jean Pierre who will go through the details of second quarter financials.
Jean Pierre: Thank you, Patrick. So, I will start by commenting on the price environment in the second quarter, which was overall weaker quarter over. Co
Jean Pierre: Branch average 68 versus 76 in the first quarter. So down 10%
Jean Pierre: ttf.
Jean-Pierre Zbraer: for refining the ERM, so the open refining margin, slightly improved. $13.05 per tonne during the second quarter. Bets, as mentioned by Patrick, still remained at low levels.
Jean Pierre: The European gas market average 11.9 period versus 14.4 in the queue, 1 down, 18%. And the average LNG price also decreased to 9.10 per million by 10%.
Jean-Pierre Zbraer: In this context, the company reported robust financial results, demonstrating the strength of our business model and of our operations, with adjusted net income of $3.6 billion and cash flow from operations of $6.6 billion for the second quarter which were supported by Affective Productions. Profitability remains strong with return on equity for the 12 months ending June at 14.1.
Jean Pierre: For refining, the ERM. So you've been refining margin slightly improved to 135% during the second quarter, but as mentioned by Patrick Still Remains at low level,
In this context, the company reported, robust Financial results, demonstrating the strength of our business model and of our operations with adjusting net income, of 3.6 billion and cash flow from operation of 6.6 billion. For the second quarter.
Jean-Pierre Zbraer: Now moving to the business segment, starting with hydrocarbons. As anticipated, second quarter production was slightly lower than the first quarter due to planned maintenance. However, on a year-over-year basis, the second quarter marked yet another increase in upstream production, which amounted to a strong 2.5% thanks to new projects, start-ups and wrap-ups. On the cost side, the company continues to be a leading low-cost operator, with upstream operating costs at $4.9 per barrel for the first half of the year. Looking forward, we expect hydrocarbon production in the third quarter to increase by more than 3% compared to the third quarter, 2014.
Jean Pierre: profitability remains strong, we return an equity for the 12 months and in June at 14.1%
Jean Pierre: now, moving to the business segments, starting with hydrocarbons,
Jean Pierre: As anticipated, second quarter production, was slightly lower than the first quarter due to plants Nationals. However, when a year other year basis, the second quarter marked yet another increase in Upstream production, which amounted to a strong 2.5%, thanks to new projects that start up and wrap-ups.
Jean Pierre: On the cut side, the company continues to be a leading low-cost operator which helps clean operating costs at 4.9 per per barrel for the first half of the year.
Jean Pierre: Looking forward, we expect hydrocarbon production in the first quarter to increase by more than 3% compared to the third quarter 24.
Jean-Pierre Zbraer: Turning now to exploration and production. So this segment generated second quarter of 2025 adjusted net operating income of $2 billion and a cash flow of $3.8 billion. Importantly, our Project Q is delivering new, low-cost, low-emission oil and gas that is accretive, with an average of streams CERF-VSO per barrel equivalent, that is roughly two times the base portfolio. In fact, during the second quarter, production from the new project improved the upstream CFFO per barrel equivalent by around $1 per barrel equivalent, generating something like $180 million more than if they had come from the base On a cumulative basis of the first half 25, the extra CFFs generated by new projects totaled close to 300 million dollars.
Jean Pierre: Turning now to exploration and production. So this segment generates its second quarter 25, but just in net, operating income of 2 billion and the cash flow of 3.8 billion,
Jean Pierre: Importantly your project Q is delivering new Locust, low emission oil and gas, that is accurate equivalent that is roughly 2 times the base portfolio.
Jean Pierre: In fact, during the second quarter production from the new project, improves the Upstream safety equivalent by around 1 equivalent generating.
Jean Pierre: Something like 180 million more than if they had come from the base portion.
Jean Pierre: An accumulative basis of the first half 25, the extra SS for generated by new projects, total close to
Jean-Pierre Zbraer: and Integrated LNG Business. Our sales were stable at 10.6 million tonnes for the second quarter, and the company achieved $1 million of adjusted net operating income and cash flow of $1.2 million for the second quarter, reflecting the 10% increase in the average LNG selling price, related to decline in crude price, as well as low market volatility for gas trading. For World, European gas prices continue to be sustained at around $12 per million EU for the first quarter and for 2025-2026 winter period due to storage replenishments in Europe. Given the evolution of oil and gas prices in the recent months and the lag effect on pricing formulas, the company anticipates an average energy selling price of 9 to 9.5 dollars per million BTU in the third quarter.
300 million.
An integrated LNG business.
Jean Pierre: Ourselves were stable at 10.6 million tons for the second quarter and the company achieved, 1 million dollar adjusted in net, operating income and cash flow of 1.2 million for the second quarter. They're taking the 10% increase in the average length. Same price related to decline in good price as well as low Market volatility for gas trading activities.
Jean Pierre: Forward European gas prices. Continue to be sustained at around 12 dollar period you for the first quarter and for 2526 winter period due to storage response in Europe.
Jean-Pierre Zbraer: On integrated power, the net power generation increased 28% year-on-year to 11.6 TWh due to growth in renewable sources and the impact of the 1.3 GW CCGC acquisition in the UK closed in 2020. Integrated Power Adjusted Net Operating Income was close to $580 million, up 14% year on year and cash flow was $562 million. First half 2025 cash flow total $1.2 billion and we're on track to achieve the annual cash flow guide.
Jean Pierre: Even if evolution of oil and gas prices in the recent months and the lag effects on pricing formulas, the company anticipates, an average selling price of 9 to 9.5 dollar per meter in the third quarter.
Jean Pierre: Unintelligible.
The next power generation increased 28% year on year to 11.6 our due to growth in renewable sources and the the impact of the 1.3 GB equation in the UK closed in 24.
Jean Pierre: Integrated power adjusting net. Operating income was
Jean Pierre: close to 580 million up 14% year on year and cash flow was 7, 562 million.
Jean-Pierre Zbraer: Lastly, we are progressing on the company's farm down strategy, which optimizes, as you know, capital allocation. During the second quarter, the company sold 50% of a 600 million watts portfolio of renewable assets in Portugal, and as Patrick mentioned, there is more to come, Moving now to downstream. Although refinements have been improved during the second quarter, to... $35 per ton. Overall, we remain in a global weak price and value. In this context, Downstream reported second quarter adjusted net operating income of $0.8 billion and cash flow of $1.5 billion. Results benefited from positive seasonality in marketing and services business, with results higher year-on-year.
Jean Pierre: First half, 25 cash flow, total 1.2 billion, and we are on track to achieve the annual cash flow guidance.
Jean Pierre: lastly we are progressing on the company is founded on strategy which optimized as you know, Capital allocation
Jean Pierre: doing the second quarter of the company. So 50% of
Jean Pierre: 600 million. What what portfolio of renewable Assets in Portugal and aspartic mentioned, it is, there is more to come. We is the 50% far down of 1.5 gigabytes portfolio in the US.
Jean Pierre: For handling Mega work in Greece and 250 megawatt in France.
Molina to Downstream.
Jean Pierre: although refining Market improved during the second quarter to
Jean Pierre: 35% overall. We remain in a global which price on that.
In this context, Downstream reported, second quarter, adjusting net, operating income, 0.8 billion and cash flow of 1.5 billion.
Jean-Pierre Zbraer: In refining, the utilization rate increased in the second quarter due to improved efficiency and low maintenance, but the results suffered from some operational difficulties at Port Arthur and those refineries, as well as weak petrochemical margins as the polymers business is facing a global glut of new capacity in China and in the US. Looking ahead, we anticipate refining utilization in the range 80 to 85% in the third quarter, 2025, which reflects scheduled maintenance at Enver, Port Arthur, and HTC in Korea. In terms of downstream environments, in petrochemicals, we see continued pressure on pricing from the record incremental production capacity that was placed in operation in 2022 and 2023.
Jean Pierre: These are benefited from positive 780 in marketing and services business with results higher year on year. In refining, utilization rate increased in the second quarter due to improved efficiency and low maintenance, but the results are far from some operational, difficulties at 4 or 2 and those signs.
As well as which petrochemical.
Jean Pierre: Has the polymers of business? It's facing a global gut of new capacity in China, and in the US.
with refining utilization the range, 80 to 85% in the first quarter 25, which reflects scheduled maintenance at on their pure and actually in Korea
Jean-Pierre Zbraer: And in SAF business, imports to Europe have significantly increased, pushing prices down and likely impacting value margin for the rest of the year.
in terms of Downstream environments in petrochemicals, we see continued pressure on pricing from the record incremental production capacity that was placed in operation in 22 and 23.
And in fact, business Imports to Europe, as significantly, increase pushing prices down and likely impacting bio Marine for the rest of the year.
Jean-Pierre Zbraer: Moving now to the company label, on working caps, the company reported a 0.5 billion dollar increase in working cap requirements, mainly due to the unfavorable effects of declining prices on tax liabilities and payments during the quarter of the capital gain tax from divesting the German distribution networks to Alimentation Group. This was partially offset by the seasonal release on gas and electricity supply activities in Europe after a strong build in the first quarter. Note that the increase in the first half 25 working cap requirements of 4.9 billion dollars is essentially at the same level that was reported one year ago in the first half 24.
Jean Pierre: Moving. Now to the company level on working caps, the company reported a 0.5 billion increase in working capital requirements many due to the unfavorable effects of declining prices on tax liabilities and payments during the quarter. But the capital gain tax from divesting, the German distribution networks to Alim.
this was partially offset by the seasonal, release on gas and electricity Supply activities in Europe, after a strong build in the first quarter,
Jean-Pierre Zbraer: Looking ahead, the company expects that most of the seasonal working-class bills that were observed in the first quarter of 2025 should be released in the second half of 2021.
Jean Pierre: Note that the increase in the first half 25 working Gap, requirements of 4.9 billion is essentially at the same level that was reporting 1 year ago in the first half, 24.
Looking ahead. The company expects that most of the seasonal working are built, that was observed in the first quarter of 25 should be released in the second half of the year.
Jean-Pierre Zbraer: and Net Investment Size. So net investment totaled $6.6 billion in the second quarter, which notably included the closing of the GSD acquisition for 1.6 billion euros and $11.6 billion for the first half of the year. We anticipate full-year net investments to be within the guidance range, based on planned disposal during the second quarter-half of the year, as Patrick mentioned. That means that the gearing by end of June is impacted by something like 2.6, 2.8.
Jean Pierre: On net investment side. So net investment total 6.6 billion in the second quarter which notably included the closing of the gsv Acquisitions uh for 1.6 billion Euro and 11.6 billion for the first half of the year.
We anticipate full year net Investments to be within the guidance range based on plan disposal. During the second quarter, half of the year as Patrick pensions.
Jean Pierre: That means that the gearing by end of June is impacted by something like 2.6 2.8.
Operator: With that, Patrick and I are now available to answer your questions. Now you can open the line. Thank you.
Jean Pierre: Billion dollar Epix.
Jean Pierre: With that specific and I are now available to answer your question.
Jean Pierre: And now can open the line. Thank you.
Operator: 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 and 1 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 the star and 1. Once again, please press star and 1 if you wish to ask a question.
Michele de la Vigna: The first question is from Michele de la Vigna, Goldman Sachs. Thank you very much. Two quick questions on the LNG market, actually. You continue to grow it very strongly with both long-term contracts and new projects.
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 and 1 on your telephone and wait for your name to be announced. Please kindly, mute any audio sources by asking a question. If you wish to cancel your request, please press the star and 2 key once again, please press star and 1, if you wish to ask a question,
Speaker Change: The first question is from Mica de la Goldman Sachs. Please go ahead.
Michele de la Vigna: I'm just wondering, at what point do you think that it will become really difficult to sign new long-term supply contracts with customers? It feels like we're starting to build a bit of an oversupply for the coming years, and that the oil linkage is probably approaching that 12 percent, which starts to become less attractive. Just wanted your view there also, because it would be interesting to see at what point we start to see a slowdown in new FIDs. And then related to that, in the US, how do tariffs impact the cost of building new LNG plants?
Patrick Pouyann: There are various elements. I think the steel tariffs probably are the most relevant ones.
Michele de la Vigna: And does that make you be more cautious to do an FID on a new LNG project in the US, or that's actually manageable in the context of your portfolio? Thank you.
Speaker Change: Thank you very much. Um, 2 quick questions on the LNG Market, actually, you continue to grow it. Very strongly with both long-term contracts and new projects. I'm just wondering at what point do you think that it will become really difficult to sign a new long-term Supply contracts with customers? It feels like we are starting to build a bit of an over supply for the coming years. And then the oil linkage is probably approaching that 12%, um, which starts to become less attractive. You just want it your view there also, because it's, it will be interesting to see a, what point we start to see a Slowdown in new fids and then related to that in the US. Um, how do tariffs impact the cost of building new LNG? Plants, they are, there's various elements. I think the steel tire is probably the most relevant ones. And does that make you a bit more cautious to do an FID on a new LNG project in the US? Or that's actually manageable in
Speaker Change: The context of your portfolio. Thank you.
Patrick Pouyann: Thank you, Michele. You are right, there is clearly a big... An increase of LNG supply which will come on stream as we said 27, 28, 29, for me 26. still will be quiet because, you know, these projects are always a little difficult to ramp up, I would say, so... Project in Qatar is more or less on time. The first train we expect from NFE is mid-26, then every six months a new train. So 26, for me, will not be so much impacted by this new capacity. From 27, you will see clearly an impact. That's why we, since last year, we decided to move to a clear strategy, which is to sign some medium-long-term contract linked to Brent, because I'm more optimistic on the Brent oil price than on the, I would say, TTF and GKEM spot gas price.
Speaker Change: Thank you m. Um,
You are right. There is clearly a big
Uh, an increase of LNG Supply, which will come on stream as we said, 27 2829, uh, not for me, 26.
Speaker Change: Still will be quiet because, you know, this, this projects are always a little, uh, uh, difficult to ramp up. I would say so,
Patrick Pouyann: And we continue to have some success on that. We have announced this year quite a number of medium-terms. Last year, and we'll continue. The question is why the customers behave like that. I think the customers, they have been, I think, honestly, caught in 22 by some big hike. We are in a world which is honestly quite volatile. The geopolitics play a game in the market more than ever. It's not just supply and demand, you know. But by the way, it's not easy for traders today to manage this geopolitical risk, even if, I would say, all traders within Total Energies have done very well in the second quarter, despite this environment.
Patrick Pouyann: So that's true, but I think the buyers continue to look at it as a way to edge themselves. They want to, yes, it's true, it's better to sign at 13%, but at 12%, I fully agree with you. But you know, by the way, when you have a long-term contract in the end for a company like Total Energies, it's not only percentage which counts, it's also all the optionality. Thank you, Patrick.
Speaker Change: So and we continue to have some success on that we have announced this year quite a number of million Thoughts with last year, I will continue. The question is, why the customers behave like that? I think the customer they have been. I think honestly quote in 22, by some, we are in a world which is honestly quite volatile, geopolitics play a game in the market more than ever. It's not just a supply and demand, you know, that's by the way, not easy for Traders today to, to manage this geopolitical risk, even if I would say, or all Traders within total energies are done very well in the second quarter, uh, despite this environment. So that's true. But I think the the buyers continue to look at it as a way to to Edge themselves. They want to. Yes, it's true. It's better to sign at 13%. But at 12%, I fully agree with you. But you know, by the way, when you have a long-term contract at the end for or a company like total energy, it's not only
Speaker Change: Percentage which count is also all the optionality you know, because we have a large portfolio and then we can uh do you have the capacity to redirect the the Carrows to to a? That's a lot of things which are also important for us. So around the a medium long term contract, there is more value to extract than just the pure formula. That's why it's important to be a portfolio company. And I think, in fact, in 1 of the advantages of the position of s is when we meet these buyers, they see us as a portfolio company.
Speaker Change: And not just as a point to point I would say seller and buyer. You know it's not project 1 but you know we are today marketing. PNG pathway. Sorry, marketing pappu LNG and we have some good results in uh in some Asian countries because of the location. So these Dynamics still there and we we we continue to work on us tariff. I have some good news for you for us because we have a real figure. We know. We are just we are not far from approving sanctioning but not us, Rio Grande. Next decade is not far from, uh, sanctioning, um, the 24 or maybe 25. Uh, so there have been some, uh, I would say, uh, EPC contract discussed with vector and I will say, I will tell you m, I was a little afraid. And where do we land with this tariff impact? Finally, the, uh, of course there is some inflation which it's less than 10%, I would say. So, it's very reasonable.
And so, for me, again, an exec case, once also to commercialize is LNG, so it's more a question of marketing, I think 24 is full. 25 is not yet, but things are moving on, and it's better job. Uh,
Uh but um and fundamentally from this real case, I would say uh that we manage and I think it's also the dynamic when you have a very good EPC contractor, we see some Advantage. You know I think Rio Grande energy is a success story. Train 1 to 3 if we are able to continue and train 4 and train 5, then there is also some synergies there. So your answer to you uh I would say on this specific case. Uh, we are comfortable we don't see much impact on the Tariff.
Uh, we will see more impact on the Tariff. I think on topics, like batteries, you know, because uh, batteries you have to import most of the cells in the world are manufactured in China. So even if you build the modules in the US, you have to import the cells. So these type of business might will be more impacted but um, from this perspective, I think my, my colleagues who are dealing with us, shall are probably more impacted by the increase of tariff from the steel. Because I understand they are using some specific steal. Most of the steel is impacted. So probably the cost of a, well, in USL is more impacted by our own business in the US today.
Speaker Change: Thank you, Patrick.
Biraj Borkhataria: The next question is from Biraj Borkhataria, RBC, please go ahead. I thank you for taking my questions. The first was just on working capital. And if I look at Quarterly changes in working capital over the last few years. It looks like the magnitude is both up and down on a quarterly basis.
Let's go ahead.
Hi. Thank you, uh, for taking my questions. Um, the first 1 just on working capital, um, and if I look at,
Biraj Borkhataria: Field looks like it's increasing over the last few years and I'm thinking about the period 2017-18 to now, just trying to understand You know, if that's something we should expect going forward, whether it's the growth of the power business or something else, or there's any particular reason.
Speaker Change: the sort of quarterly changes in working capital over the last few years, it looks like the the magnitude you know both both up and down on the quarterly basis has been
Patrick Pouyann: And the second question, just a quick one on the buyback, in Q1 you said up to $2 billion buyback. I noticed you did $1.7 billion this quarter. Was that just a timing issue, or liquidity, or... do a bit less sale, anything, any color on that would be helpful. Second question, it's easy, you have find the right reason, it's more a question of timing. We have the $2 billion have been bought by 13th of July, it was a question of liquidity. So no message for the 1.7, we will catch up, according to the guidance of the board.
Was not just a timing issue or liquidity or a conscious decision to to do a bit less sale. Uh, anything any color on, that would be helpful. Thank you.
Patrick Pouyann: Okay, so we are working on it, but it's easy to answer the second question, it will be to do insurance on that.
Patrick Pouyann: On the first one, the quarterly, I think Jean-Pierre told you, he told you to make a remark, if I'm looking to... at the end of the first half of 24 first half of 25 we had both years built of around 5 billion in 23 was around 4 billion or 3.5 billion so there is an increase because we are the more we develop this b2c business in in gas and power which is growing in the companies the more we have a seasonal effect which is but in fact the people are using our house i mean somewhere are burning a lot of using electricity consume so it consume electricity and gas during winter times and as their bill is spread about 12 months we have a working capital effect which is we catch up but that's that's increasing a little having said that uh just to to be clear with you uh last year at the end of the last year we told you you know working capital uh so getting went down to seven we made a modification we told you be careful there is a an exceptional i would say uh positive elements of 1.5 billion so for me what i'm expecting between today and the end of the year is a 5 billion built of the first arc should be in fact erased by 3.5 i would say if i don't have any other exception all uh normally we should and like we've done the previous years uh Jean-Pierre has explained as shown as a nice graph in front of us maybe one day we'll share it with you with the monstrosity seasonality so and we of course presented back to the board and we are comfortable with the type of metrics i just gave you to give you more insights of what i Thank you and so that's also why to be honest when we put together to the board and I'm just repeating what I said this working capital analysis plus this I would say capex which have been more weighted on the first half because of the disposal and because as I try to I mean I hope you convinced I gave you a list of all the deposals which we are committed to and which we are really binding offers on which we are with now translating that in SPA so both can consider that all these elements give him confidence to maintain this buyback at 2 billion.
Second question, it's easy. You have find the right result, it's more. A question of timing. We have the 2 billion have been bought by 13 of July. It was a question of liquidity, so, no message for the 1.7, we will catch up, uh, according to the guidance of the board. Okay. So we are working on it but, uh, but it's it's easy to answer the second question. It's a view insurance on that.
Speaker Change: Uh, on the first 1, the quarterly. Look, I think I told you. I told you make a remark if I'm looking to
Speaker Change: At the end of the first half of 24, first half of 25, we had both years built of around 5 billion, in 23 was around 4 billion or 3.5 billion. So there is an increase.
Because we are the more we develop these b2c business in in Gaza and power, which is growing in the company, is the more we have a seasonal effect, which is that, in fact the people are using our our I mean somewhere are burning a lot of using electricity consumed so it consume electricity and gas during winter times and as their bill is spread about 12 months, we have a working capital effects which is we catch up but that's that's increasing a little. I think said that just to, to be clear with you last year at the end of the last year, we told you in our working capital, the green went down to 7. We made a modification.
Speaker Change: We told you be careful. There is an exceptional I would say positive elements of around 1.5 billion. So for me what I'm expecting between today and the end of the year is a 5 billion built on the first Arc should be in fact erased by 3.5. I would say if I don't have any other exception at all, uh, normally we should and would like we've done the previous years uh explained as shown as a nice graph in front of us, maybe 1 day we will share it with you with the most business analysis. So and we of course, presented back to the board and we are comfortable with the type of metrics. I just gave you to give you more insights of what happened.
Patrick Pouyann: Knowing that as an average for the year, we are at $70 per barrel. Like, by the way, we've made a presentation in February at $70 per barrel, giving you some guidance. And so the $70 per barrel has been the average for the year. Today, when I'm looking at the screen, I'm at $70. And well, people can say low bearish on demand supply, but at the end of the day, this is the market. And so we keep trust on that.
Okay, thank you. And so that's also, why, to be honest, when we put together to the board and I'm just repeating why I said this working capital analysis, plus this, I would say, uh, capex, which have been more weighted on the first start because of the disposal. And because as I try to, I mean, I hope you convinced I to give you a list of all the depos which we are committed to, and which we have really binding offers on which we are with now Translating that in Spa. So both can consider that all these elements. Give him confidence to maintain this buyback at 2 billion.
Knowing that as an average for the year, we are at 70 dollar per barrel. Like by the way we've made a presentation in February at 70 about giving you some guidance uh and so the 70 dollar per hour has been the average for the year today. When am I looking the screen? I'm a 70. And uh well people can say low bearish on demand the supply but at the end of the day this is the market and so we keep Trust on that.
Irene Himona: The next question is from Irene Himona Bernstein. Please go ahead. Thank you. Good afternoon. Patrick, you told us before that the $2 billion quarterly share buyback is affordable at $70 and at reasonable market conditions. When you look at the balance sheet with the current 15% normalized gearing, what is The CFFO in the division declined about 6% in the first half year-on-year. Are you confident in the cash flow guidance you provided for that division out to 2028? Be clear. At $70, we told you at the beginning of the year that the target guidance for the gearing was around 12-13%, if I remember well.
Kimona Bernstein. Please go ahead.
Speaker Change: Thank you. Good afternoon. Um,
Speaker Change: Patrick. You, you told us before that the 2 billion quarterly share buyback is
Speaker Change: Uh, affordable at $70 and at reasonable market conditions. When you look at the balance sheet with the current 15%, uh, normalized giving what is
The normalized gearing range, let's say that you would see as reasonable in other words, how high would that normalize gearing? Have to go, uh, to remain acceptable in a seventy dollar environment. And then my second question, um, on integrated, uh, gas and LNG the the CFO in the division
Speaker Change: Declined about 6% in the first half year on year. Um are you are you confident in the cash flow guidance? You provided for that division, how to 2028 thank you.
Patrick Pouyann: There were some acute assumptions in it. So, in particular, there was the idea that the downstream could target a cash of $7 billion. To be honest, today, we've done $2.5 billion in the first year. We think the downstream will improve because the margins, third quarter margins on refining are always better. And in this case, we have margins today of about $60 per ton. It's good. Second, I'm really confident that the performance of the two assets I've mentioned will improve. Teams are working hard.
Speaker Change: Margins on refining, has always better and is the case we have margins to the above 60 of 60 up a ton. It's good. Second I'm really confident that the improve performance of the 2 assets are. I've mentioned, will improve teams are working hard. So I would say maybe not 7, down 3, maybe 6, but we are not so far, so have 1.
Speaker Change: The you have some. So I would say for me the at the end we are still targeting 14, 15% gearing by the end of the year. So the number is gearing for us at 15 is a good uh, is a good guidance and the board is comfortable with 15% to 70. This is a message, I think we delivered to you. So, again, uh, it's not only the gearing, the balance sheet, we are, we know that there is volatility is more, we observe the markets and today as I said and there are some proof, some cons. We not only look to the old markets, the gas markets. I would say we are quite confident for next year. Uh, but also a bit petrochemical Market, the downstream markets. Uh, there are some good reason to think that the diesel spread is quite strong in in particular with all what happens around Russia. So it's a global approach that we take. Uh, but uh, let's say at 70.15%, we are comfortable to maintain this buyback level. Then the second question and I understand your
Speaker Change: Question why? But I mean, I, we were, of course give you more information. Uh, by end of September September, investor meeting we come back, you know, traditionally with all the data about 5 year business plan. So we will of course update you on both uh a rule for Upstream uh the LNG part as well. I can tell you but I think last year we gave you some guidance which were something like uh 6 billion dollar or $60 7.5 billion of 80. And the figures that have read recently from 5 year business plans are confirming this guidance. So we will have we will give more color by the end of September. But I'm confident we can do that. Or let's see the the small Miss but I observe as well to be clear. It's not so big. It's it's linked to in in the gas. In fact, there is in fact, gas markets are where in Europe, but they were quite where renewable. You've seen quite a good volatility.
Speaker Change: In the old price moving from 60 to 70 even 81 and our Traders were really able to capture that during the second quarter. So congratulations to them on the, on the gas. When you look to the gas price in Europe, the CTF I think was moving from 11 to 12, maybe a little 12.5. So there was little volatility. And, and by the way, again, uh, it's true. I seen some comments from 1 of our peer, but in this type of Market where sometimes we are, the it's not only
Speaker Change: Supply and demand is more political impacts Traders are a little more cautious, not to take direct direct directional positions, which could be it by the Tweet, you know? So it's a little more, uh, difficult for them to analyze. The, the market beyond the fundamentals, which is your job normally, uh, fundamentals to do. That's that's the point. So, no, there will be no change in the guidance or energy business will grow will deliver the growth from Qatar from, uh, the us and it will positively impact the CFO.
Patrick Pouyann: Thank you Patrick.
Speaker Change: Thank you, Patrick.
Martijn Rats: The next question is from Martijn Rats, Morgan Stanley, please go ahead. Yeah, I wanted to ask you, I wanted to ask you to, first, if I can pick you up on the point of refining, because, of course, you read your outlook statement, which looks quite cautious on the outlook for refining, talking about long term structural challenges, but we have really quite encouraging refining margin on the screen. As of today, over the last couple of weeks, there's a lot of strength in middle dislet. So reading the outlook statement, what sort of was shining through was a clear belief, I think that this is sort of temporary.
Speaker Change: Martin rats Morgan Stanley? Please go ahead.
Martijn Rats: And I was wondering if you could say a few words about, in your mind, what is what is explaining this recent bout of strength, but also how long this could last and, and how it could dissipate. We're closing a lot of refineries in Europe this year. So I kind of thought that the remaining refineries of Total, at least in Europe, actually should have quite a decent 2026 as well. But I was hoping you could give a few thoughts on that.
Speaker Change: Yeah, I wanted to ask you what? I wanted to ask you too. Um, first, um, I I, if I can pick you up on the point of refining, um, because, um, I I, of course, you, I read your outlook statement, which looks quite cautious on the outlook for refining talking about long-term, structural challenges, but we have really quite encouraging refining margin on the screen. Um, as of today, over the last couple of weeks, there's a lot of strength, uh, in Middle distillate. So reading the Outlook statement what sort of was shining through was was a clear belief. I, I think that this is sort of temporary. Um, and I, I was wondering if you could say a few words about, um, um, in in your mind, what is, what is explaining, uh, this recent bout of strengths? But also how long this could last. And and how it could dissipate we've we're closing a lot of refineries in your
Patrick Pouyann: And also, I wanted to ask if you could give us an update on Mozambique, and the project there and what we can expect going forward. Okay, refining is an interesting question. I think, in particular, what is clearly today happened is that there is a diesel driver in the market, to explain why refining margins are quite good. And we think that stronger diesel prices become a persistent feature on the global market. It's linked in particular to all what happened around Russia flows. In fact, you know, Europeans have banned, have stopped buying Russian petroleum products early 2023.
Speaker Change: Europe this year. So I I kind of thought that the remaining refineries um of total at least in Europe actually should have quite a decent 2026 as well, but I was hoping you could give a a few thoughts on that. And also I wanted to ask if you could give us an update on uh Mozambique um and the project there and what we what we can expect going forward.
Patrick Pouyann: And that means that the source of diesel, because Europe is fundamentally, has a deficit of diesels, we are obliged to import. The source of diesels are coming now from Middle East or from US refineries further away. So it has increased the cost of all that. I would say the last decision of the European Union, which is to ban any imports from refineries, even outside of Russia, but and targeting some refineries, I think, in India or Turkey, which would use Russian crude oil to be refined to make diesel, is impacting again, I would say, increasing the scarcity of source of diesel for Europe.
Why are we finding margins are are, are quite good. And we think that stronger diesel prices be become a persistent feature on the global market. It's linked in particular to all what happened around Russia Flows. In fact, you know, the Europeans have banned, I've stopped buying Russian petroleum products, early, twenty free. And that means that the source of diesel because Europe is fundamentally as a deficit of these. Also, we are obliged to import the, so, for years, olds are coming now from Middle East, or, for us refineries further away. So it has increased, the cost of all that. I would say the last decision of the European Union, which is to ban any imports from refineries even outside of Russia, but and targeting. Some refineries are thinking in India or turkey, which would you use could Russian crude oil to be, to be, refined to make diesel, is impacting again. Uh, I would say increasing this,
Patrick Pouyann: So it's an additional signal which goes in the same direction. On diesel as well, as you have observed, diesel is easier to produce from heavier crude oil than light crude oil. And in fact, the mix of the crude oil, the basket, is lighter and lighter because shale oil. So in fact, that means that it's more difficult, more costly to produce diesel. So that's another source, which is again, I would say, and you have also more NGL when we speak about liquid. So NGL plus light oil, at the end, is not good for making diesel. That is, again, pushing diesel prices up.
Speaker Change: The scarcity of source of diesel, for Europe. So, it's an additional signals which go with the same direction and this all, as well, as you have observed, there's all is easier to produce from every year, or could all, than light crude oil. And in fact, the mix of the crude oil. The basket is lighter and lighter, because Shell Shell Oil. So, in fact, that means that it's more. It's more, more difficult, more costly to produce diesel. So it's another source which is again, uh, I would say. And, and you have
Patrick Pouyann: And I think that's the fundamentals, if I try to analyze the diesel, the fundamentals which are supporting this market.
Patrick Pouyann: In Q3 of course is the driving season so there is more demand but I think the news coming the people have underestimated this news from the EU banning import of products from non-Russian refineries if they use Russian crude oil that of course is pushing up so there is something for me more structural there then you know it's a margin business it's not like of course it's not like oil but this On Mozambique, I'll be clear, we are working, you know it's a major project, and I would say we are working in order to ensure a very strong alignment between the government of Mozambique and the investors, and this is for me absolutely necessary before to re-engage to have a very strong alignment between the Mozambican authorities and the investors.
Speaker Change: Also more NGL in the in the, when we speak about liquids. So NGL plus light oil at the end is not good for making diesel. That is again, pushing diesel prices up, and I think that's a fundamentals. Have, I tried to analyze a diesel fundamentals which are, uh, and supporting this Market.
Speaker Change: In Q3, of course, is a driving season, so there is more demand. Uh, but I think the news coming, the people have underestimated. This news from the EU Banning uh import of products for uh, non-russian refineries, if they use Russian product, that of course, is pushing up so buy something for me more. Structural then, you know, it's a margin business. It's not like, oh, it's not like all but this is a point on mobi.
On. We are working. It's you know it's a major project and I would say we are working in order to ensure a very strong alignment between the government of Mozambique and the investors.
Speaker Change: And this is for me, absolutely necessary before to re-engage, to have this strong alignment between the mozambik and of course it is and the investors.
Lydia Rainforth: The next question is from Lydia Rainforth Barclays, please go ahead. Thank you and good afternoon. I have two questions if I could.
Speaker Change: The next question is from Lydia rainforest Barclays. Please go ahead.
Lydia Rainforth: Firstly, just picking up on the downstream and the structural side, can you talk about the potential you see from the digital AI deployment that you announced, I think it was with Emerson, and how quickly do we start to see results?
Patrick Pouyann: And then secondly, if I can come back to the bye bye. get the job done. Today, we stick to what we said. We are $70 for the first half, $70 on the market, and the $70, we're committed to $2 billion at the beginning of the year. And even if we have a lower cash flow from the downstream, it doesn't change dramatically. It's not missing a billion. A billion-dollar miss will not change the full picture like that.
Thank you and good afternoon, 2 questions. If I could I firstly just picking up on the downstream and the structural side, can you talk about the potential? You see from that, the digital AI deployment that you announced I think was with Emerson and how quickly do we start to see results on that and then, secondly, if I can come back to the buyback, I mean I get the idea that the rest of 25 looks covered. By divestments that gearing doesn't go work that you can afford the 2 billion for the quarter. Um, but as we but you did talk about the payout ratio being high at 55%. So I'm just thinking about as we go into sort of next year, how you're thinking about that, and why you want to stick to that 2 billion dollar buyback? Is it just because you're seeing the value in the share price of just really why you still think that's the right level. Thanks Patrick.
Speaker Change: Okay, the first question, thank you for the question of AI and digital. Uh, we are now moving speak. Going. I would say, from Works to action. And this is this announcements with Emerson on, that digital is quite a fundamental. In fact, we have decided to invest in. Uh, I would say real time data platform. Uh, we need to structure all these data. It will be done, not on a pilot basis but on the worldwide basis, for all our assets in Downstream and refineries also in Upstream. So the same platform, which is the information platform, which behind the platform, we are developing with Ms. Some, some some softwares which I've got the objective is to, I would say, and, and the value.
Speaker Change: That's for I would say a general Services. It's enhancing the value of the assets because we could better monitor these these machines. So, this is a world of purpose. No, for total energies, it's action. And we are also, by the way, working with another company, and there will be an announcement soon to another additional AI platform which will come on an assets. So that's good because digital for me. It's really the source of future competitiveness in our in our operations. Uh, we are also establishing by the way within 1. Take a full digital line in order to. It's not a question of uh it people. It's a matter of business, making business people to put it at the heart of the technology of the assets. And the digital line will be established within 1 tech with a strong teams. So that's for this 1 on the second 1 uh,
Speaker Change: You know, when we think about buyback first firstly, why do we buy back? Just a fundamental, it's just a matter. Also a good management of our of the money of jump here, you know, when I observe is that today, Gene here has been able with these teams to make a bond issuance that in Euro recently again at around 3.5%. So we borrow money at the depth is a 3.5% at the same time, but I hope it will not be for long, but considering the share of value share. We, we serve the cost of the capital. If I say the dividend over the Share value is around 6%. So, why do I buy make buy back? It's not because it's just, it can
Speaker Change: Demonstrate to anybody uh but I'm saving some money from 1 side and I'm borrowing at the lower side but but the fundamental there is no and on the top of it when you buy back as I said, it's a base of increasing future dividend so it's a virtual Circle. So there are the 2 fundamental reason. Then the question we have we benefit from a strong balance sheet, you know, in the past. It was a 30s because we moved from 10 to 15. Okay, I'm I'm a little bit clearer. We we, we should, we should look at it in an IC title in newspapers. When I'm a little surprised, as if it's problematic know, I think we need to monitor that. Uh, for me again, there is a point. I, I answer to a question when, what is the novel I say? I think I said 6570 is renewable reasonable. That means that at a certain point Beyond 6065, maybe not reasonable, but we'll see that and I will come back to you because I know that unfortunately we will be guidance to all of you who want to always more color on it. So the
Speaker Change: Reasonable guidance is maybe not enough for you. So end of September. We are working with the board will come with you. With I would say a more
Speaker Change: Not fully detailed. You know, we like to keep some uh, some some capacity to maneuver but we will give you answering your question in particular because we are at 70, we are no more, 80 some people in the market looked up 60. So I think it will be time to come back with you with a a, a clearer picture.
Today, we stick to what we said. We have 70 for the first hour 70 on the market and the 70, we committed to 2 billion at the beginning of the year and even if we have a low level low, a lower cash flow from the downstream. It does not change dramatically, it's not missing a a billion dollar. Miss will not change the full picture like that.
Doug Leggate: The next question is from Doug Leggate, Wolf Research, please go ahead. Thank you. Good morning, everyone. Good afternoon over there.
The next question is from a dog. Legate, uh, Wolfe research, please go ahead.
Patrick Pouyann: Patrick, I think the working capital discussion has been fairly well debated, but I'm wondering about the CapEx guide for the year. You're running pretty hot, obviously, with the acquisitions year-to-date versus the $17 to $7.5 billion guide. What visibility can you give us on disposals to get you back into that range in the second half of the year?
Uh, thank you. Good morning everyone or good afternoon over there. Um Patrick I I think the working capital discussion has been uh fairly well discussed Fair fairly well debated, but uh I'm wondering about the capex guide for the year. You know, you're you're running pretty hot obviously, with the Acquisitions year to date versus the 17 to 7 and a half billion guide. What, what what visibility can you give us on disposals? To get you back into that range in the second half of the year.
Patrick Pouyann: Okay, Chris, Doug, sorry. I think I gave you in my speech, I tried to give you a lot of visibility, more than ever, more than ever I've done, I think. So I think the first time because I knew that you will have to be secured with that because you, but you know, generally, I have, when I say something, we execute it. So I know it's a matter of credibility. But what I told you is that we had already Banga, which has been divested. I told you that we have approved the executive committee, some taken some binding offers from other assets, in particular on conventional oil license in Argentina, with a good offer, and two other assets that I cannot disclose, because it's not yet public, but it will come.
Speaker Change: Okay. Chris uh, I uh, look, sorry, I think I gave you in my speech. I tried to give you a lot of visibility more than more than ever have done. I think so. I think the first time because I knew that you will have to be secured with that because you but, you know, generally I have when I say something, we execute it. That's why I know it's a matter of credibility, but I what I told you is that we had already banga, which has been diverted. I told you that we have
Patrick Pouyann: So it's within 1 billion, we have another billion coming come from closing the onshore Nigeria divestments, which was announced last year in Nigeria, it's always longer, but we are we are working on it. And then, of course, we have all the farm downs on the integrated power, which will represent $1.5 billion. So when you make the market, 1 plus 1 plus 1.5 makes $3.5 billion. So and it's more or less, you know, the guidance of the year for CapEx was a net between acquisition divestments of zero, which is what I told you at the beginning of the year.
Speaker Change: On it. And then,
Patrick Pouyann: And on the on the, I would say, organic CapEx, we are in line. To be honest, I assigned even a small challenge to my team, telling them that 17, 17.5 is within the range, it would be better to be next to 17 than next to 17.5. It's a challenge, I'm not sure that we will manage, but we are working on that.
Speaker Change: of course, we have all the farm Downs on the integrated power, which will represent 1.5 billion. So when you make the market 1 + 1 + 1.5 M 3.5 billion, so, and it's more or less, you know, the guidance of the year for capex was a net between acquisition divestments of zero, which is what I told you at the beginning of the year. And on the, um, on the, I would say organic capex. We are in line, uh, to be honest. I assigned even a small chance on my team. Stealing them that 17 1 7. 5 7 7.
Patrick Pouyann: It's early here, I guess I missed the details. Sorry, sorry, Patrick, but thank you for. I give you again, you should benefit of it because I'm not sure I will do it again to give more visibility.
Unknown Attendee: My follow-up is a little detailed. You bought or you took the 25% of SEPSA's block or share in Block 53 in Suriname and our understanding is that from one of your, basically your FPSO providers, that things might be moving a bit faster there. Can you offer any insight on the timing, your latest thoughts on Grand Morgue and what Block 53 means for the resource recovery and perhaps the plateau production? I mean, on Grand Mogul, honestly, I don't know who is telling you they are moving faster. I would be very happy if we deliver the first hole by beginning first half 28 that we committed.
Speaker Change: It's early here. I guess I missed the details. Sorry, sorry, Patrick, but thank you for for. So I I give you a again you should benefit of it because I'm not sure I will do it again to give more visibility.
Speaker Change: Okay. My my, my my, my follow-up is um, is a, a little, a little detailed. Um, you bought or you took the 25% of steps as block, or share and block 53 in Suriname. And our understanding is that from uh from 1 of your your um your or basically your FPS or providers, that things might be moving a bit faster there. Can you offer any insight on the timing? Your latest thoughts on Grand morgiou and what block 53 means for the resource recovery and perhaps the plan.
Speaker Change: Production.
Patrick Pouyann: No, I think they are moving. I recently went to KL, to Kuala Lumpur, where I met my team. There was good news and some a little more cautious news, so I need to take all that. No, honestly, we are, for me, there is no reason to change, not the reason to accelerate, but then Block 50-53, there was a small discovery there, I mean, we're in the range of 50 million barrels, so we had the opportunity to capture it for quite a decent amount, quite very reasonable ones, you know SEPSA wants to exit from upstream, so we were the obvious buyers, so we'll connect it.
Patrick Pouyann: We have, I think we have, the plateau of Ranmogu is at 220,000 barrels per day, you know, these machines, generally, when we are designing them for 220, they can easily go up to 240, it's not 10%, it's generally the case. So if we can connect these type of things, it will give more value, but for me, as I always told you, since we sanctioned Ranmogu, at Ranmogu, there is a lot of hydrocarbons, including around, you know, we made other discoveries that we put behind, so there will be a planning, we are discussing, we are trying to look, to come back on some and to appraise some of the previous discoveries, so I've asked my teams, because even if there's maybe not enough to make a second FPSO, but for sure, the objective is to extend the plateau and to make a higher plateau to create a lot of value from this infrastructure.
Speaker Change: I mean on ground mou honestly, I don't know who is telling you where I'm moving faster. Uh, I would be very happy if we deliver the first all by beginning first half 28 that we committed. No, I think they are moving. I, I, I recently went to KL to where I met my teams. There was a good news and some little more cautious news. So I need to take all that know. Honestly, we are for me on on. There is no reason to change, not no reason to accelerate, but but then block 5053, if there was a small Discovery there, I mean, we're in the range of 50 million barrels. So we had the opportunity to capture it for quite a decent amount. So quite very reasonable ones, you know, sepsa wants to exit from Upstream. So we will have the access buyers. So it's a it's we will connect it. We have, I think we have the plateau of grand Mughal is a 220,000 boy per day. You know, this machine generally when they were designing them for 220, they can is
Speaker Change: go up to 240. It's not 10%, it's generally the case. So if we can connect this type of things, it will give more value. But for me as I I always told you since we sanctioned the front Mogul, the grand Mughal. There is a lot of hydrocarbons including around the you know we made over discoveries that we put behind so there will be a planning we have discussing. Uh we are trying to look to come back on.
Christopher Kuplent: So it was a very good opportunity for us to make things, and being inside will smooth all these type of unitization stories, you know, we'll be a partner of it, it will help a lot with our colleagues to, in order to move this resource quickly. Thank you very much indeed.
Speaker Change: Consultant to appraise some of the previous discoveries. So I've asked my teams, uh, because there's even if there's maybe not enough to make a second fpso, but for sure the objective is to have to extend the plateau and to make your higher Plateau to create a lot of value from this infrastructure. So it was a a very good opportunity for us to to make to make things and being inside will will smooth all these type of unitization stories? You know will be a partner of it, it will help a lot and we work colleagues to in order to move this resource quicker.
Speaker Change: Thank you very much indeed.
Christopher Kuplent: The next question is from Christopher Kuplent, Bank of America. Hi there, thanks for taking my questions. Just two quick ones, please. On FX, can I ask, your dividend has become almost 10% more expensive since the start of the year in dollar terms. Is that still irrelevant in the greater scheme of things? Patrick, as you said, a billion in downstream here or there, 10% of the dividend is less than a billion. How does that inform your take on the overall payout?
This is from Christopher capland Bank.
Speaker Change: Of America, please go ahead.
Christopher Kuplent: And secondly, if I may, how's the arbitration outcome between the Exxon? changed anything the way you are thinking about right Really appreciate that.
Hi there. Thanks for taking my questions. Um, just 2 quick ones. Please um, uh, on FX. Um, can I ask your dividend has become, uh, almost 10% more expensive, since the start of the year and dollar terms, is that still, uh, Irrelevant in the greater scheme of things, Patrick, as you said a billion in Downstream here or there? Um, uh, 10% of the dividend, um, is, is less than a billion. How does that inform? Um, uh, your your take on the overall payout? Um, and secondly, um, if I met, um, has the arbitration outcome between, um, the Exxon and Hess changed, uh, anything the way you are thinking about writes, a first refusal in, uh, in contracts. Thank you.
Speaker Change: To do. I talked for a few, you have with the debate, you are asking for something, but what is the right to to say, no? I mean, it's always a source of confusion, I think the outcome is good for the industry because this type of clothes exists. In many. Uh, GA they are standard standard AIP and clothes and it would have been quite a problem. If suddenly we had to review all these clothes in all go. So, I'm, I'm comfortable with the outcome. I don't have all the details to be honest of the clothes itself, but, uh, that's for me, the way I'm thinking I prefer honestly, right of preemption. If I have to accept an error for or with a little clinical to manage on the expect. No, I think. I mean I'm working on the control of um, of of here. It's not. There is no real impact on 25 because in fact, 25 first, we make quarterly dividends. So the advantage is that most of the dividends beginning of the year where were even lower. I think 1 of them was lower than 1.0 and 1.0.
06. So on the average of the year, they will be a very limited impact, maybe 200 million dollars or something like that. So it's not, it's not sizable, there is an impact, your question is more relevant and that's part of when I see the macro environment for the board. There is also this question of us euro exchange rate, we design, I would say at 17 dollar when we say, in fact, the return to shareholder you could translate it but 16 billion dollar, it was 8 of dividends Plus, 8 of
Speaker Change: Buyback 1670. We are considering that it was
A high return, but the return we could support. Of course if we engage and we have no, not yet enough, I would say background on this dollar euro exchange rate but if we consider the macro is going from 1.1 to 1.2, then the 16 billion could be done in another way, you know? And that's the way the board will think about it. If we have to spend 10% more on the dividend in 26, then we have to adapt take in mind. Keep in mind that is a 16 billion dollar in that case, but it's too uncertain today. Again, I've seen the dollar euro race moving down to 1.064%,
Matt Lofting: Thank you. The next question is from Matt Lofting, JP Morgan. Please go ahead. Thanks for taking the question. I wanted to just come back on the earlier comments on gearing and the balance sheet. If I understood right, I think you were saying that 12% to 13% gearing year-end of $70 from February is now more in the range of $14 to $15. Sounded like downstream cash flow at around a billion is a part of that, but I guess the margin assumption is $35 looks okay versus where we sit today.
Speaker Change: Could be done in another way knowing that the dividend is always a priority for the board.
Jean Pierre: Really appreciate that. Thank you, Patrick.
Matt Lofting: So could you just add a bit more colour around where the delta is there on gearing and perhaps within the downstream piece, the sources of those moving parts, but perhaps more through asset performance than the margin? Thank you.
Speaker Change: Thanks for taking the question. Um, I wanted to just come back on, on the earlier comments on on gearing, in the balance sheet if I understood, right. I think you were saying that 12 to 13% gearing year. End of 70. From February is now more in the range of 14 to 15 sound, like Downstream cash flow at around a billions part of that. Um, but but I guess the margin assumptions. The 35 looks okay versus where we sit today. So so could you just add a bit more color around sort of where the Delta is there on gearing and perhaps within the downstream piece? Um, the the, the the, the, the the sources of those moving Parts, perhaps more through asset performance than, than the margin. Thank you.
Yeah, good M know but I've been clear. No it's not. Honestly there is a Miss on the first art. I will not on the downstream part and part and partly is leading to the performance and particular of 2 assets that I mentioned on in the second quarter the bad performance of I would say port and do that almost 200 million dollar. There's another element if 2 other elements in the downstream today 1.
Speaker Change: Is uh the biofuels Market in Europe is another Supply today in Europe.
Speaker Change: Markets exporting to South America, or to China. But in the meantime, at the same time, Chinese have built a lot of petrochemical capacities, which by the way are are supplied by ngls coming from the US. So it's a little funny or that. Uh but this and this created, in fact, the Chinese that follow a policy of of the almost self-supply in petrochemicals, they try to secure. They are obsessed by this idea of security of sovereign economic sovereignty, Economic Security. And so today, in fact, when you look even the Chinese are complaining by the way, because most of their petrochemicals are NAFTA and they are complaining. I met the German of sop. Yes. But you are a little, yes, you are. But so you have a lot of polymers us Middle East China and and that, that today, this in a in a global macro which is not so good, you know, you have a global slowdown and uh, in this field activity in China is not as strong as it was.
Patrick Pouyann: industrial tools in Europe begins to face the overcapacity that we have. We are obliged now to streamline and so it will take time when we enter into a low cycle because it's again you have to take strong decisions to shut down a plant so that's the point. So that's also why today we had I would say first quarter first half of the year we had a miss of around 400 400 million dollars globally which I think we can reverse on the second half not on the petrochemicals but my refining margins as I said are better years old driving season so six billion right with them.
Speaker Change: Before. And so this is clearly on polymers. There is an impact and I'm not surprised to see today, by the way, it's good news. But, you know, we have just announced we shut down 1 of our cracker in adverb, but over a crackers have been shut down. In fact, last year in in France, and so crackers shutting down. So of course
In just your tools in Europe begins to to face the over capacities that we have. We are obliged now to streamline and so it will take time when we enter into a low cycle because it's again you have to take
Speaker Change: Strong decisions to shut down a plan. So, that's the point. So that's also why. Today we had, I would say, first quarter first, half of the year, we had the myth of around 400 400 million globally which I think we can reverse on the second half, not on the petrochemicals but my refining margins. As I said are better the all driving season so
Speaker Change: 6 billion might be there.
Lucas Herrmann: The next question is from Lucas Herrmann. Yeah, thanks very much. Two, if I might, one was just a follow on. Patrick, just going back to Mozambique, you talked about trying to ensure alignment between yourself and the government. I wonder whether you can make any comments on where the misalignment lies. And secondly, staying with chemicals, sorry, it's an asset specific question or a business specific question, but Hutchison, just wondered how that asset has been performing and to what extent you feel that that business continues to lie easily within Total's portfolio, given the way that you've been pushing and directing the business.
Lucas Herman: The next question is from Lucas Herman BMP. Please go ahead.
Patrick Pouyann: Thanks very much. No, Mozambique, I think I made comments. There is no don't misunderstand it negatively what I said. I made a positive comment, which is to start up a lot, to restart a project, we need a strong alignment, and we are working on a strong alignment. So don't try to interpret my words. It's just that we are working on it. We speak about large projects, 20 billion. So we need to be sure. And again, you know, we have been obliged to stop to restart, I need to have all the all the strong alignment between parties, security, everything, you know, I would say it's, it's important.
Yeah, thanks very much. Um, 2 if I might 1 was was just a follow on Patrick, just going back to Mozambique. You talked about trying to ensure alignment between yourself and the government. I wonder whether you can make any comments on where the misalignment lies and secondly, staying with chemicals. Um I'm sorry, it's an asset specific question or a business specific question but that's your son just wondered how that asset has been performing. And you know how your or and to what extent you feel that that business, you know continues to lie, easily within total portfolio, give them the way that you've been pushing and directing the business. Thanks very much.
Patrick Pouyann: And we are working on it. And again, summer, I said summer, so summer and September 19. So give me time. Chemicals. No, I mean, again, I think in the chemical business, we have some strong assets. which I would say are the ones which are fundamentally on cheap feedstock. simply stock. And the ones which are historically on NAFTA, which are not so competitive.
Uh, no. Mozambique I think I made comments. It's not. There is no, don't understand. Don't misunderstand it. Negatively. What I said, I made a positive comment which is to start up a lot to restart a project. We need a strong alignment and we are working on a strong alignment. So don't try to interpret it. My my, my my words. It's just that we are working on it. We speak about large projects, 20 billion. So, we need to be sure. And again, you know, we have been obliged to stop to restart. I need to have all the, uh, all the, the strong alignment between parties, security, everything. You know, I would say it's a, it's, it's important. Uh,
Lucas Herman: And we are working on it. And again, summer, I said summer, so summer ends, September 19th. So give me time. Uh, chemicals, no, I mean again I think in the chemical business, we have some strong assets
Lucas Herman: Which I would say are the ones which are fundamentally on, keep it stock.
Patrick Pouyann: most of the European assets are on NAFTA and the domestic market in Europe is not growing you know for polymers you know it's more the global there is no big growth in Europe and that's the point so by the way should it stay within TTE portfolio there is an integration between refinery and crackers which works it works if we have integrated platform but for why did we stop decided to shut down one cracker in another it was not integrated at all in our portfolio we had a cracker and all the ethylene was in fact sold to ExxonMobil which was making polymers ExxonMobil decided to shut down their own polymer plant so no more integration I will not keep alive and running a cracker with ethylene with no outcome so integration is key it's another demonstration it's true on the chain so if we have the as long as we have some integration it works then it's better to make again to produce this type of polymers in Saudi Arabia or in Qatar with cheap feedstock than with NAFTA which is more expensive in Europe so by the way maybe you have an idea to whom I could diversify but I'm afraid that you never make a good business when you sell at a low cycle you know you prefer to buy at a low cycle but I will not buy assets in chemicals that's true it's not a joke but don't be afraid don't be afraid Luca there is no message I'm not there no I think it's part of the as long as they are integrated to the refineries and strong refineries it's okay again when we have weaker assets we take a decision and on Anwerp it has been possible and we accelerated the decision by the way because on the same time the refineries is doing well so translating some people we have a lot of more and more people going in pensions on pensions in Anwerp because the retirement age and so we move people from the cracker to refinery so it was a good way to manage this shutdown so that's where we are.
Lucas Herman: Cheap cheap with stock and the ones which are historically on NAFTA, which are not so competitive. Most of European assets are on NAFTA and you have a, and, and, and the domestic Market in Europe is not growing, you know, for for, for polymers, you know, it's more, the global there is no big growth in Europe and that's the point. So by the way, if you stay within City,
Lucas Herman: If we have the, as long as we have some uh, uh, integration it works, then it's better to make again, to produce this type of polymers, in Saudi Arabia in Kata with ship fit stock than uh than with NAFTA which is more expensive in Europe. So by the way, maybe you have an ID to whom I could do a diverse but I'm afraid that you never you never, you do not make a good business when you sell at a low cycle. You know. You prefer to buy a zero cycle but I will not buy assets in chemicals. Let's do it. It's not a joke but not be afraid. Don't be afraid. I look up. There is no message uh I'm not there. No I think it's part of the as long as they are integrated to the refineries and strong refineries. It's okay. Again when we have weaker assets, we take decision and on an it has been possible and we accelerated the decision by the way because on the same time, the refineries is doing well. So translating some people, we have a lot of more and more painting. Going people going in pensions on inventions in because every time.
Patrick Pouyann: Sorry, Patrick, the question was more on Hutchison itself, you know. Oh, but Hutchinson, you should ask your question clearly, you know, but Hutchinson is not a chemical business, it's a manufacturing business. And by the way, Hutchinson's performance is very good. and the other side of it was to what extent and it still fits very comfortably within your portfolio. Oh you know it's uh I don't spend much time I can tell you one hour per quarter. For a good business, that's fine. But if you find a good buyer, no, no, no, no joke. Honestly, it's a it's a company which works well.
An age. And so we move people from the cracker to Refinery. So it was a good, a good way to manage this shutdown. So that's that's where we are.
Lucas Herman: Sorry, Patrick the question was more on Hutcherson itself, you know. Oh, but you don't, you should ask your question clearly, you know, but actually it's not, it's not a chemical business, it's a manufacturing business. And, and by the way, Atchinson performance is very good.
Lucas Herman: Yeah, on the other side of it was to what extent and it feels still fits, very comfortably within your portfolio. Oh, you know, it's, uh, I don't spend much time. I can't tell you 1 hour per quarter.
Patrick Pouyann: There is no, no problem. It's not I have over more interesting I would say M&A to do for the company, for the future portfolio of the company in oil and gas, or in integrated power, not to spend too much time and to have issues or worries about this type of, it works well, so I'm comfortable, that's where we are. I have better ideas for the future of TotalEnergies and no problem with Kitchensound being in our portfolio.
Lucas Herman: Okay, for a good business that's fine. But if you find a good buyer no no no no joke. Honestly, it's a it's a company which works. Well, there is no no problem. We'll uh it's not I have over more interesting.
Lucas Herman: Uh I would say m&a to be to do for the company for the future of portfolio of the company in Allen gas or in integrated power, not to spend too much time and to have a problem issues or worries about this type of it works. Well, so I'm comfortable. Uh, that's where we are.
Kim Fustier: Thank you. The next question is from Kim Fustier, HSBC. Please go ahead. Hi, good afternoon, and thank you for taking my questions. I had two, please, on the upstream. The first one is on your portfolio activity. You've been very active in recent months, and you've done a lot of deals to replenish your upstream and LNG portfolio for the post-2030 timeframe. I'm thinking of deals like Algeria, Gulf of Mexico, Malaysia. I just wondered if that signaled a change in your view fundamentally on the prospect or the timing of peak oil demand. Are you effectively trying to extend your production plateau to sort of match the shape of global oil demand?
Lucas Herman: I have better ideas for the future of of, of total energies and no problem with it. It should sound being in our portfolio.
Lucas Herman: Thank you.
Speaker Change: The next question is from Hakeem.
Lucas Herman: Please go ahead.
Hakeem: Hi, good afternoon and thank you for taking my questions. I had 2. Please on on the Upstream. Um, the first 1 is, is on your portfolio activity. You've been very active in recent months and you've done a lot of deals to replenish your upstream, and Allergy portfolio for the Post 2030 time frame. I'm thinking of deals, like Algeria, you go from Mexico and Malaysia. I just wondered if that signal to change in your view fundamentally on the prospect, or the time,
Kim Fustier: My second question is on disposals. Some of the upstream disposals that you've announced weren't necessarily expected, thinking of Bongo or Argentino Shale, all these opportunistic deals whereby you're sort of open to incoming bids, or are disposals increasingly an important part of your cash flow cycle as a way of maybe generating cash to support your balance A very, very interesting question, Kim, both of them. Okay, you know, in an oil and gas company and an energy company, and oil and gas in particular, you have a natural decline. One of the objectives of the management is to think long term and to not, it's not because we have a very large portfolio of opportunities between today and 2030, but life does not end in 2030.
Of peak oil demand are effectively trying to extend your production Plateau to sort of match the shape of of global oil demand.
Hakeem: My second question is on on disposals. Um, some of the Upstream disposals that you've announced to our necessarily expected um thinking of banga or Argentino Shale are these opportunistic deals. Whereby you you sort of open to incoming bids or our disposals increasingly an important part of your cash flow. Cycle is a way of maybe generating cash to support your balance sheet. Thanks.
Patrick Pouyann: So we must continue, you know, and I think for the time being, Dr. Matteo We have one way to look to opportunities. If it's first quarter, second quarter, which means less than $20 per barrel, capex plus opex, low break-even, less than $30 per barrel, I'm happy to continue to provide this type of opportunity to the portfolio of TotalEnergies for the future, because these opportunities will be profitable even during the 2030 plus. Even if you have a beginning of a decline of oil demand, it's possible. I don't say no. So the protection that I bring to our shareholders is we are first, second quarter assets.
Hakeem: Okay, very, very interesting question. Kim both of them. Uh, okay, you know, in a, in a, in a gas company and in Energy company, and oranges in particular, you have a natural decline. 1 of your objective of the management is to think long term. And to not, it's not because we have a very large portfolio of opportunities between today and 2030, but the life does not end in 2014. So we must continue, you know, and I think for the time being, uh, certain material, you know, the story people, blah, blah blah. I don't know, because or big demand, or pick up, right? Or duty is clear
Hakeem: They we have 1 way to look to Opportunities if its first quarter, second quarter, which means less than twenty dollar per barrel. Capex, prox low break even less than $40 per barrel. I'm happy to continue to provide this type of opportunity to the portfolio of total energy for the future because these opportunities will be profitable.
Patrick Pouyann: And that means that we can continue to allocate capital to these assets, because they will make money even if we decline of oil price. The decline of demand, by the way, decline of demand does not mean necessarily decline of all price, you know, because if everybody anticipates the decline of demand, you have less projects. So it's good to have some projects just to be there and to capture these good opportunities. So yes, we continue to work. By the way, most of what we have done, it's not so much oil, what we have announced, it's more gas, in particular in Malaysia.
Even during the 2030. Plus even if you have a beginning of a decline of all demand, it's possible. I don't say no. So the protection that I bring to our shareholders is we are first second quarter assets and that means that we can continue to allocate Capital to this asset because they will make money even if we decline of oil price,
Patrick Pouyann: The Malaysia story, we will come back on it. You know, some of you were probably surprised when we acquired Sapporo LV last year. Why do we build this position? And now you have this follow-up. We are very happy about the last deal we've done with Petronas, which is 12 blocks, not only explorations, because in the 12 blocks, there is a DRO, a Discovered Resource Opportunity of 340 CF, which we will develop. So it's giving, I can tell you, a good additional value to the fact that we have acquired this position. These type of things are very logic in gas.
Patrick Pouyann: Gas in Asia, honestly, there is a bigger demand, so it's good to continue. DiversMinds, no, I think it's very consistent about DiversMinds. We told you we have a very broad portfolio. Some people even think we have too many opportunities, but I prefer to have a lot of opportunities than to arbitrate. Of course, look, these two opportunities, which were non-operated by us, with minor share. Why allocating capital? Even if the project, I don't consider the project is not good, I just say we prefer to allocate capital to larger to Suriname and to block 53 to expand Suriname than putting some millions of the hundreds of million dollars to finance a 12.5 percent share in Banga.
Hakeem: Because if everybody is anticipating a decline of demand, you have less projects so it's good to have some projects just to be there and to capture these good, these the opportunities. So yes we continue to work by the way, most of what we have done but it's not so much all in what we have announced its more gas in particular in Malaysia, the Malaysia story, we will come back on it. You know some of you were probably surprised when we were quite surprised here. Why do they build this position? And now you have the follow up. We are very happy about the last day we've done with Petronas, which is 12 blocks, not only expiration because in the 12th, there is a, a d discovered. There's also opportunity of 340 CF, which we will develop. So it's giving I can tell you a good additional value to the fact that we have acquired this position. This type of things are very logic and health gas, gas, gas in Asia. Honestly there is a big bigger demand, so it's a it's good to continue diverse but no. I think it's very consistent. The last diverse.
Hakeem: We told you, we have a, a very broad portfolio. Some people even think we have too many opportunities, but I prefer to have a lot of opportunities. And then to arbitrate, of course, look, these 2 opportunities which were non-operated by us with minor share.
Why are locating Capital to even is the projects? I don't consider the project is not good. I just say
Patrick Pouyann: So it just makes sense. And we get to do the same. We have a huge portfolio in Brazil, Sepia 2, Atapu 2, all that, Lapa extension. So it's a matter of managing and to keep the discipline, I think, on the CapEx. If I keep everything, and so I prefer to arbitrate the non-operated assets, which, by the way, in both cases have a higher cost than $20 per barrel, so are not completely fitting our metrics. That's quite logic to diversify and to find a buyer, which in both cases, by the way, is the operator. So it makes a lot of sense.
Patrick Pouyann: And I think it's part of what we have to do for keeping care of the allocation of capital for shareholders.
Hakeem: We prefer to allocate Capital to larger to Suriname and to block 53 to expense Suriname. Then putting some billions of dollars of million dollars to finance the 12.5% share in banga. So it's just it makes sense and get to do Metro the same. We have a huge portfolio in Brazil, sepia 2 all that La extension. So it's a matter of managing and to to keep the discipline I think on the capex uh if I keep everything. And so I prefer to have it raise the non-operated assets, which by the way, in both cases, have a higher cost per $20 per barrel. So I'm not completely fitting with our metrics. Uh, that's quite logic to diverse them and to find a buyer which in both Case, by the way, is the operator. So it makes a lot of sense. And I think it's part of what we have to do for keeping care of the allocation of capital for our shoulders.
Unknown Attendee: Hi Patrick, just one question on biofuels. By observation, maybe I'm wrong, but European countries seem to be quite slow to legislate on REDD3. Do you sense in your discussions that there's any political debate about the cost of biofuels? you know given that renewable diesel and SAF are still three times the cost of the fuels they're meant to be replacing. Um...
Alastair Sim: The next question is from Alastair Sim, uh, City. Please go ahead.
Speaker Change: Um iPad. You did just 1 question um on biofuels the you know by observation maybe I'm wrong. But European countries seem to be quite slow to legislate on on red 3.
Speaker Change: Um, you know, do you sense in your discussions that there's any political debate about the cost to buy a fuels you know given that renewable Diesel and south are still 3 times, the cost of the fuels, they're meant to be replaced.
Speaker Change: Um I I I on the boat you know no I see most debate about what is around the hydrogen and all these type of molecules on bio fuels. I don't think there is a in fact the bio fuel business is more it today by different elements. In particular on the sustainable Edition. Fuels there was a new regulations which was issued in in December 24th allowed to make a co-processing in our refineries. You know, we process some use could call or some hvo that we produce in BIO Refinery to make sustainable Aviation fuels. Of course, the cost when you co-processing in an existing flow of the margin of cost is almost near, I would say. So that clearly is a is has changed some and I think some countries begin to think, what is the share we want to allocate to that, to compared to? They would say, the pure bio fuels products. Of course, it's very important for
Patrick Pouyann: We need to integrate these. There are some technological disruptions, in fact, which is what happened, you know. Because when I was asking to my refiners, why don't we co-process five years ago, they were speaking about corrosion difficulties. In fact, we make some tests, I know not real corrosion, etc. So things are moving, you know, things are moving in all these new low-carbon fuels.
Speaker Change: This is true to regulate. There are new, uh, new elements of Regulation. The lesson is that this bio fuel Market, is regulated market is molecules, are regulated every regulated and all that and it's a little true. What you said rate 3 is a European interactive but then each country begins to make its mix. So we have to navigate for that and not to anticipate too much on what could be the regulations, but that then we could make some misallocation of capex. So this is the where we are so, but but the bio fuels, I I see I think we will have explored. I mean,
Speaker Change: We need to integrate these. There are some technological disruption in fact, which is what happened, you know. But because when I was asking to my refiners, why don't we go process 5 years ago when we were speaking about corrosion difficulties. In fact, we make some tests, there is no not real corrosion Etc. So things are moving, you know, things are moving in, all these new low carbon fuels,
Unknown Attendee: Great, thank you.
Speaker Change: Great. Thank you.
Henri Patricot: The next question is from Henri Patrickot, UPS. Please go ahead. Yes, I want to thank you for the great touch.
Audrey patrico: The next question is from Audrey patrico UPS. Please go ahead.
Patrick Pouyann: One topic left, which is Namibia. I was hoping you could give us an update on the latest online and also whether the project could change if you get involved in the blocks next door with the demo pain discovery. Thank you. I told you that I visited, I don't know, I mentioned that I visited Namibia, I met the new authorities, it's a new government and they're very willing to of course to develop the oil industry. We are the first ones there with a project, so we have of course to tackle some issues with them. I received a letter asking us to engage in the discussion, so I think there have been a team set on the Namibian side reporting directly to the president of Namibia, it was her decision, and on our side we are ready, so I think it's a matter of, we are working, but again, I think we need to do, it's a little like Mozambique, you know, you have a new country to oil industry, so it's important to ensure the alignment, the good understanding.
Audrey patrico: Yes, I want to thank you for the great. I just want topic left which is, um Namibia. I was hoping you could give us an update on on the news that the latest online and also, um, whether the project could change, if you get involved in the blocks in the block next door with the demoing discovery. Thank you.
Patrick Pouyann: I don't want to have a dispute, we're investing and then discovering a problem, because the Namibian authorities would have the feeling that we are not, that they did not understand all the projects, so I want everybody to, it's better to take time at the beginning, even if of course we are ready, and they are very motivated, they would like the oil to be produced before end of 29, so that means that we should take decisions this year before end of 25, if we want to meet the target. So this is what we explained to them, and then we'll do it, we'll work, we are working with them, I cannot tell you more.
Um yeah let me I know I told you that I visited, I don't know man, I mentioned that in. I visited Namibia, I met the new authorities. It's a new government and very willing to of course to develop the old industry. We are the first 1 there to with a project. So we have, of course, to tackle some issues with them. I received a a letter and asking us to engage in the discussion. So I think they have been a team set on the namibian side, reporting directly to the president of Namibia. It was a decision and on our side, we are ready. So I think it's a matter of we are working. Uh, but again, I think we need to to it's a little like wasn't big, you know, you have a new country to early industry. So it's important to ensure the alignment the good understanding. So I don't want to have a a dispute, we're investing and then discovering a problem because Namibia and authorities would have the feeling that we are not, but we, they did not understand.
Patrick Pouyann: On the opportunities next door, again, it's not really next door, it's a little far away, we'll see, I mean, we'll see what will happen, we'll see what will happen in this business, but again, it's, I'll let the company working on it. Then, what we do, by the way, on our side, Namibia, for me, it's also, the next news will be South Africa, because, you know, we have also some wells to be drilled, we have some attractive license just across the border, and we have, I think, two or three prospects, and we'll, we are working in South Africa, the process to get all the authorization is quite a little long, but we hope to begin to drill South Africa.
Audrey patrico: With all the projects. So I want everybody to it's better to take time at the beginning. Even if of course, we are ready and they are very motivated to. They would like the all to be produced before end of 29, so that means that we should take decisions this year before end of 25. If you want to meet the target. So this is what we explained to them and then we'll do it. We'll work. We are working with them. I cannot tell you more on the opportunities next door. Again, it's not really next door, it's a little far away. Uh, we'll see. I mean, uh, we'll see what we will happen. Uh, we'll see what will happen, uh, in this business. But again, it's, uh, I'll let, uh, I let the company, uh, working on it.
Audrey patrico: Okay.
Patrick Pouyann: targets in 26 from 26. So that's where that's also that video is also linked to this.
Audrey patrico: Uh, then what we do, by the way on North Side Namibia, it's for me, it's also the next news will be South Africa because, you know, we have also some wells to be drilled. We have some attractive license just across the border and we have actually 2 of the prospects and we will we are working in South Africa as a process to get all the authorization is quite a little long but we hope to begin to drill South Africa, uh,
Audrey patrico: Targets in 26 from 26. So that's where that's also Namibia is also linked to this 1.
Unknown Attendee: The next question is from... Thank you. Hi, Patrick, good morning or good afternoon.
The next question is from Paul Shang a Scotia Bank. Please go ahead.
Unknown Attendee: Two questions. First, in the US, we have a precedent that love to trace it at maybe in the middle of the night and subsequently that oftentimes make a significant impact on the market condition. And see, in any shape or form that impact the way how you manage your trading operation, that because a lot of times that the is going to insert an element of a predictability. You can't really predict what he may or may not do yet at a particular moment. So how you guys would be impacted or that you say, okay, this is just part of normal operation, so I'm not going to impact.
Patrick Pouyann: The second question is, you've been reducing your European refining and chemical operation. And for the obvious reason, in the long haul, do you foresee that you may totally exit from refining and chemicals in Europe, or that you think you ultimately is still going to have some position, you just need to strengthen it? So just how you view on those aspects in the long haul position in your portfolio? Thank you. I think the first one I commented is already, you know, it's true that traders do not like too much to see, I would say they fundamentally try to trade around fundamentals, to take position about analyzing the supply and demand and the different regions and the different optimizing logistics and all that.
Audrey patrico: Uh, thank you. Hi, I'm Patrick good morning or good afternoon. Um, 2 questions first, um, in the US we have a president that love to trace it at, um, maybe in the middle of the night and subsequently that often time make a significant impact on the market condition. Um, that's it. In any shape or form that impact the way, how you manage your trading operation that? Because a lot of times that the truth uh, is going to insert and element of an pre capability, you know, you can't really take what he may or may not do yet at a particular moment. So how you guys uh will be impacted or that you say, okay this is just part of normal operation. So I not going to impact by that.
Audrey patrico: Long hold. Do you foresee that uh you may totally accept uh from refining and chemical in Europe or that you think you ultimately is still going to have some position. You just need to uh strengthen it. So just how you view on those, are that in the Long Haul uh, position in your portfolio. Thank you.
Patrick Pouyann: And of course, they don't like too much to see this element of uncertainty with markets reacting very quickly to a tweet makes their position quite strange. So yes, like Jean-Pierre is just telling me, a nice sentence is, volatility around tweets is not tradable. You know, this is what, by the way, but true, volatility around tweets is not tradable. And that's what our traders told us. So they told us, don't expect us to make, maybe they make very good results about the old business, the old guys, they were completely aligned with our expectations, but they told us, don't expect some time.
Audrey patrico: I, I think the first 1 I commented is already, you know, it's true that Traders have to be uh, do not like to match to see. Uh, I would say they fundamentally try to trade around fundamentals to take position about analyzing the supplies and demand, and the different regions and or, and all the different optimizing Logistics and all that.
Patrick Pouyann: We could expect more, but we can be reversed, and so we are obliged to be more short term, I would say. The consequence of that is that if you want to play three, six months, you could be suddenly your position, which seems to be good, could become not in the right direction. So that's the difficulty of it. Having said that, again, they have our trust and our support, and they are, I would say, they are aware, and I trust them, they know what they can do, and what is tradable. And so, honestly, again, the old trading of TotalEnergies has done as expected, so there is no problem.
Audrey patrico: And of course they don't like too much to see this this element of a certainty with markets reacting very quickly to a tweet makes their position quite strangely. So, uh, yes, like, uh, drop here is just telling me a a nice sentence is volatility around to, it is not tradable, you know, this is what by the way. But, but true volatility around which is not tradable and that's what our Traders told us. So, they told us don't expect us to make, maybe they make very good results about the old business. The old guys, we are completely online. We work expectations, but they told us. Don't expect sometime, we could expect more but, uh, we can be reversed. And so we are obliged to be to be more certain
Audrey patrico: And see if that's the consequence of that. Is that, if you want to play 3, 6 months, you could be suddenly your positions which seems to be good could become, uh, could become not the right direction. So that's the difficulty of it. Having said that again, we we we have our trust and our support and they are
Audrey patrico: I would say they are. They are aware and it's very I trust them. They are they know what they can do and what is tradeable and not.
Audrey patrico: uh,
Patrick Pouyann: So, on refining, okay, look, it depends what will happen. There are two different positions that are linked. If Europe really goes to no more... Gasoline EV vehicles, light vehicles in Europe, we don't need to have refineries to produce gasoline. You know, but I mean, I'm, I'm just, so the question is not 2035, 2035 will be stop commercializing if they really take a stick on this position. But by 2015, I believe there should not be a lot of gasoline cars in Europe, you know, but I could think it will be a reality. Then, of course, we have to think to this perspective, it's still a long way, but we have to think to that.
Audrey patrico: And so honestly in again, the old trading of total energies are on as expected. So there is no problem. So on refining. Okay? Look, uh, it depends what will happen. There are 2 different positions, but it's linked. Um, if Europe, really goes to know more,
Patrick Pouyann: We have some very strong assets in Europe. So it is a stronger ones, are well known, it's Amverp in particular, it's a very strong asset with integration. So the first four star assets will survive. The third quarter, we need to think to their future, their future might be to become biorefineries like we've done for two of them, or their future for a cracker, if we can do it, shutting down the cracker in Amverp, because in Amverp, we are able to, we have taken the decision because we didn't see how to maintain an isolated cracker in this context.
Audrey patrico: Gasoline EV Vehicles like vehicles in Europe. We don't need to have refineries to produce gasoline you know but I mean I'm I'm just I'm there. So the question it's not 2035 2035 will be stopped commercializing, is there in 3 kits? Take stick on this position but by 2015 I believe they should not be a lot of gathering cars in Europe you know. Uh but I could think it will be a reality. Then of course we have to to think to this perspective, it's still long away but we have to think to that, we have some very strong assets in Europe.
Patrick Pouyann: So I mean, will we keep the position? I think this position is a dynamic position, which will evolve according to the market, which is declining.
Audrey patrico: So I would say, the stronger ones are well known. It's a verb in particular, it's a very strong asset integration. So this, the first postal assets Will Survive the third quarter. We need to think to their future, that future might be to become bio refineries like, we've done for 2 of them all their future for a cracker. If we can do it, shutting down the cracker in number because in anber we are able to, we have taken the decision because we didn't see how to maintain an isolated cracker in this context. So, uh, I mean,
Operator: Thanks for watching.
Audrey patrico: Will we keep the position? I think this position is a dynamic position which will evolve according to the market which is declining.
Operator: Bye.
Patrick Pouyann: Strengthening Enverb maybe, because it could be one of the last refineries in Europe. We cannot spend too much money on this one, and that's one difficulty. But refineries, if you want to maintain, I mean, good availability of refineries with high level of safety, which for us is fundamental, requires... You've seen the debate in California recently, where California people are very afraid not to have enough refineries, quite funny, because they have made regulations to shut down all of them. The UK as well, you've seen that two refineries have been announced to be shut down.
Audrey patrico: strengthen it, uh,
Strengthening and the maybe because it could be 1 of the last refineries in Europe. We cannot spend too much money on this 1 and that's 1 difficulty is that refineries if you want to maintain uh I mean, good availability of Refinery with high level of safety which for us is fundamental the request.
Audrey patrico: To have a maintenance capex, which is quite burning some cash. So, all that is better to have a, what we monitor. Their, I will tell you is what is the global cash position? Net cash position on on refining in Europe? And, of course, if we begin to have a net cash negative, and we will have to be to be tough on these ones. We know that we know the issue we are in Europe, it's part as well. You know, that's why it started.
Patrick Pouyann: So that's where, by the way, governments will be an interesting direct debate with them. Because on one side, they give us a signal that they don't need gasoline by a certain distance. And on the other side, some people will say, yes, but we need these tools just in case, you know, just in case in the future.
Patrick Pouyann: So I think we have, so our objective is, at the end of the day, to reinforce the first quarter assets and the others, to find a respectful evolution for our people.
Audrey patrico: Shut down. So that's where by the way, governments will be an interesting debate with them. Because on 1 side they give us a signal that they don't need gasoline in by a certain distance and on the other side some people will say yes but we need these tools just in case you know, just in case in the future. So I I I think we have so our objective. It's at the end of the day to to reinforce the first quarter assets and the others to find a respected respectful Evolution for people.
Operator: Thank you.
Thank you.
Audrey patrico: Question is.
Cic Market Solutions, please go ahead.
Unknown Attendee: Do you believe it will put back Roche? back within your 10-12% The second is about VSB, out of the portfolio of VSB, how much went into the under construction Papers, and how much went into the. and Development. The first one, no, I mean Jean-Luc, it's reasonable. We announced that we want to be at 12% by 2028-2030. So we don't, we will not reach 12% because of the divestment of the second half. No, it takes more time. We are still in a, you know, we are still in a growing mood. So our capital employees are still growing, which is normal, I accept it.
Speaker Change: Thank you for taking my questions, it relates to um the assets. It says you planning the second half in um integrated power.
Do you believe it will put back the um Roi of of this division back within your 10, 12% Target. That's the first question. The second is about the vsb out of the, um, portfolio of vsb. How much did it to be went into the under construction?
Speaker Change: Tables and almost went into the um uh under a development project out of uh what I think, 18 megawatt of projects that were mentioned that uh in the press release of the acquisition.
Unknown Attendee: So today we are more in the 9-10% range, at least for a year. The 12% will require at a certain point to have enough capacity to stabilize all that and to continue to develop the integration, which is done. So, no, I will be cautious this year. We are still, let's say, targeting the 10%, 9 to 10, that's what we want, and this is where it will go, and I'm optimistic of that. But I don't expect 12% in 2025. It's not on the roadmap for my integrated power teams. They have a lot of challenges in front of them.
Unknown Attendee: I don't want to add on this one. So that one, maybe I disappoint, but it's more pragmatic.
Unknown Attendee: On DSV, I'm looking to my friends to give me a... What is installed? There was 500 megawatts installed, but the question you are asking is what is under construction and what is more in development. So, I mean, I know that we have approved recently three projects on DHB, so in the executive committee, they came in less than two months, they came to us to approve three projects. So I'm quite, I think, I don't have the answer to your question Jean-Luc, sorry, but I think Renaud and his team will come back to you. I mean, I've seen the figure, but I don't want to make a mistake there, to give you a wrong figure.
Speaker Change: Yeah. Okay. Uh the first 1, no, I mean generally there is a level we announced that we want to be as 12% by the 2028 2030. So don't we will not reach 12% because of diverse of the single large, take more time. We are still in, you know, we are still in the growing mode so capital or Capitol employees are still growing, which is normal. I accept it. So today, we are more in the 9. 10% range is 4 years. Uh, the 12% will require, just a certain point to have enough capacity to stabilize all that and to continue to develop the integration which is done. So, no, uh, I will be cautious this year. We are still on, let's say targeting the 10% 9 to 10. That's what we want and this is where it will go and I'm optimistic of that. But I don't expect 12% in 25 M for my integrated forward teams, but you have a lot of challenges in front of them. I don't want to add on this 1. So that 1 maybe I disappoint but it's more pragmatic.
Speaker Change: On vsb, I'm looking to buy friends to give me. Um, so
Unknown Attendee: I think under, I will come back to you. Again, we have, just to demonstrate that we have approved around two, three projects recently, which were representing globally, I think, something like 600, 700 megawatts, and there is more to come. Yeah, what we plan to develop, yeah, but I'm not sure.
Speaker Change: Uh it's more. What is the store if there was 500 megawatts installed? But the question you are asking is what is a split? What is under construction and what is is more in development? So I I mean we I know that we have approved recently 3 projects on the SV. So in the executive committee they came in less than 2 months. But in less than 2 months, they came to us to approve a free project. So I'm quite uh uh that I think I don't have the answer to your question generally, sorry. But I think, uh, Renault and his team will come back to you. I mean, I've seen the figure but I don't want to to, to, to to to, to make a mistake there, to give you a wrong figure. I think under, I will come back to you. Again, we have a but just to demonstrate that we have approved around the to to 3 projects recently, which were representing globally. I think something like 600 700 megawatt and there is more to plan. So uh,
Unknown Attendee: Okay. Uh... In no long term, but I don't know what it is, a long term plan. Yeah, we could see something like, no, we will come back to you. I think it's wrong thinking about it, but we will come back to you. I prefer to give you wrong information.
Speaker Change: Yeah, what we plan to develop via but I'm not sure. Okay. Uh,
Speaker Change: In Northern submit but I don't know what it is in long term plan. That's
Speaker Change: Yeah, we we we could see something like no we will come back to you. I think it's around 3 gigawatt but I will come back to you. I prefer to to give you a wrong information on this 1.
Unknown Attendee: Thank you very much.
Speaker Change: Okay, thank you very much, very clear.
Speaker Change: The last question.
Unknown Attendee: T.D. Cowan Yeah, hey, thanks for... I wanted to ask on integrated power. Given some of the changes to the tax Tax Regulations With that change of view on the pace of development in integrated power in the U.S., the return I will tell you, in fact, what I observed on the farmland of the country is because there is a fear of scarcity of this type of asset. Financial investors, which are in fact buying this farmland, are even more aggressive on the valuation. What is more piloting the farmland is more the interest rate, to be honest. But today, the scarcity of assets, or the risk of scarcity, there is some appetite.
Speaker Change: Yeah. Hey thanks for taking my questions. Um, I wanted to ask on integrated power in the US specifically given some of the changes to the tax credits in the recent tax regulation that was passed, does that change your view on the pace of development in integrated power in the US the returns and and the ability to to farm down assets there
Speaker Change: I will tell you, in fact, uh, what the result of the I've done on the country is because there are, there is a fear of scarcity of this type of assets. Financial, uh,
Unknown Attendee: There is no doubt, and as I said, we are farming down 1.5 gigawatts, and we receive very good offers, in line with our expectations. Then, don't misinterpret what has been the big, beautiful bill for renewables. In fact, when you look at the end of the process, tax credit, either PTC or FTC, that did not really change, providing that the project will be put into construction before mid-26, or 27, mid-26, I think.
Speaker Change: On the valuation, what is more? Uh, piloting. The fondant is more, the interest rate to be honest than. But today in the scarcity of assets or the risk of scarcity, there is some appetite, there is no doubt and as I said, we are, uh, farming down 1.5 gigawatt and we received a good offers in line with our expectations. Uh then uh don't be interpreted, what has been the big beautiful bill for Renewables? In fact, when you look uh, at the end of the end of the process uh
Unknown Attendee: But I think we will come back to you on this one as well, at the end of September. But the ITC and PTC quantum did not change, in fact. And you know, the capacity to, I would say, how do we say that, migrate between projects. The market for ITC-PTCs continues to remain, the tax partnership and all that remains, so most of the, it's just a matter that it will elapse in time, but with what has been voted in Senate, it's possible to use that. It could have some impact, but there is one part which is more impacting in fact for me, these businesses, is more the tariff.
Speaker Change: Tax credit. I have a PTC act that did not really change uh providing that the project will be put into construction before mid 206 or 27 by 26. I think. Uh and so we are working on that. Uh you know what we could say Fairing. And we of course, the condition of safe harboring are important, but when we look to our portfolio of projects, it's for us. I mean, it looks what we were planning to develop between today and the 2029 2030 we are, we, there is not much impact on all that if we can say, farther, of course correctly and according to the rules, uh, that. But I think we will come back to you, uh, on this 1 as well. End of September, but the ITC and PTC Quantum did not change in fact and you know the capacity to I would say, how do we say that?
Unknown Attendee: as I said before because the tariff you don't have today in the U.S.
Speaker Change: Migrate between is a market for ITC PTC continue to remain. Uh what has been the tax partnership and All That Remains? So most of the it's just a matter that it will elapse in time. So uh but with what has been voted in Senate it's possible to use that. It could have some impacts what there is. 1 back 1 part which is more impacting impacting. In fact for me this businesses is more of a tariff
Unknown Attendee: enough manufacturing capacity to make all the projects so this tariff where if it depends and as a tariff are not the same for all the countries we are we are I would say in a in a shadow today we don't know so of course it will it could have an impact on us on diversifying our supply chains finding new countries I know that we stopped one project in April with a provider coming from from China which we managed to replace it with a provider with yet from Vietnam and by the way this Vietnamese company wants to build a manufacturing plant in the U.S.
Unknown Attendee: so you will see some ways to I mean this dynamic will come finally building a solar plant manufacturing plant manufacturing plant for solar is not so complex in fact it's but we see some trends so again I don't tell you there will not be a form of slowdown but it will not be dramatic and again for us it's value over volume to be clear I've been very clear with my teams okay you want to grow but we will grow at a pace which will be allowed by the global framework and so we need to digest all these information and but the last news I've got now that the bill has been enacted are more positive than what we thought there is one segment which has completely we put into I would say a sleeping mode is offshore wind this is completely sleeping now sleeping that means nobody is taking we have reduced at the minimum any any cost But you know, integrated power is also gas-fired to a plant.
Uh, they said before because the Tariff you don't have today in the US enough, manufacturing capacity to make all the projects. So this time is if it's it depends, then as the type are not the same for all the countries we are we are, I would say in a, in a shadow today, we don't know. So of course it will. It could have an impact on us on diversifying. Our supply chains, finding new countries. I know that we stopped 1 Project in in April with a provider coming from from China that we managed to replace it with a provider with yet from Vietnam. And the better way visit Vietnamese company wants to build a manufacturing plant in the US, so you will see some ways to I mean, this Dynamic will come. Uh, finally, the new building a solar plant manufacturing plant. A manufacturing plant for solar is not so complex. In fact, it's, uh, but they, they are, we see some friends, so
Speaker Change: Again, that I don't tell you they will not be a form of slow down but it will not be dramatic. And again, for us it's value over volume. So be clear, I've been very clear with my teams, okay, you want to grow, but we will grow at a pace which will be allowed by the global framework. And so we need to digest all these informations and, uh, but the last news, I've got now that the bill has been uh, enacted are more positive than what we thought there is 1 segments, which has completely we put into, I would say a sleeping mode is offshore wind, this is completely sleeping. Now sleeping
Speaker Change: That means nobody is taking. We have reduced at a minimum in any any cost on this 1?
Unknown Attendee: On this one, I can tell you, we could make a lot of money by farming down part of a free 1.5 gigawatt we acquired two years ago in Texas, you know, we could find, at the end, we want electrons we can move from the totaling scheme. So there are ways to mine to use these type of assets to get some money back. So there are good things as well in what happens in the US on the electricity side, including gas to power, which is of course, at the core as well of our business model, certainly renewables.
Unknown Attendee: My business model, in particular in the US, is gas to power plus renewable, but gas to power are very important. Yep, got it.
Speaker Change: But you know, integrated integrated power is also gas 5 to a plant on this 1, I can tell you, we could make a lot of money by farming down part of a 3 1.52% to to get some money back. So there are good things as well in what happens in the US on the electricity side, including gas to power, which is, of course at the core as well, of our business model and it's not only a renewable. So my office, this model in particular, in the US is gas to Power Plus renewable. But gas support are very important.
Unknown Attendee: And then my follow-up, it's probably fitting to end on a CapEx question, given all the focus on that. So, it seems like to hit the organic CapEx target, CapEx needs to slow by, you know, almost a billion dollars. from 2Q11. Um, can you just give us some sense about where the activity is slowing down and also. Mozambique LNG, if that Forward. Is that already in the CapEx budget, or would that be incremental? If Mozambique LNG is moving forward, it would be externally financed, so the impact on the CapEx budget is quite limited. and just more broadly on, yeah.
Speaker Change: Yep, got it. And then my follow-up, it's probably fitting to end on a capex question, given on the all the focus on that. So, it seems like to hit the organic capex. Target capex needs to slow by, you know, almost a billion dollars from 2 Q levels. Um, can you just give us some sense about
Speaker Change: Beak LNG. If that moves forward, is that already in the capex budget or would that be incremental is moving is moving forward, it would be externally, financed of the impact on the capex budget, it's quite limited. Got it.
Unknown Attendee: Thank you.
Speaker Change: Just more broadly on. Yeah.
Patrick Pouyann: So Jason, but I cannot give you, I mean, I don't have all the details. No, but I mean, we know where we are going. We know why. But for example, I will tell you, this pipeline in Uganda, we put in place a project financing in the middle of the second quarter. So it has a positive impact on the capex on the second part of the year. So the run rate of spending was higher on the beginning of the year than the second half. This is very pragmatic, this one. So when I told you that we will stick on the $17, $17.5 billion, I repeat it, you can, you can believe me, no one is behind.
Speaker Change: No, thank you.
Speaker Change: So EJ on but I cannot give you. I mean I don't have all the details know this 1. No but I mean we we know where we are going, we know why. Uh but for example I will tell you uh uh this pipeline in Uganda we put in place a project financing in around in the middle of the second quarter so it has a positive impact on the capex, on the second part of the year. So the run the Run rate of spending was higher on the beginning of the year, but the second half, this is very pragmatic, this 1, so that when I told you that we will stick on the 1777 billion, I repeat it. You can
Speaker Change: You can believe me know what is behind.
Unknown Attendee: Okay, thank you.
Speaker Change: Okay, thank you. Thank you.
Operator: So, I think we've come to the end of the call, no? Yes.
Operator: Do we have another one? No? It's okay.
Patrick Pouyann: So, thank you to all of you for all these debates and questions. Again, I think the key word of TotalEnergies, I know it's a little boring, but it's consistency. It's good stuff, so boring can be consistent. Consistent is a strategy, and again, keeping the return to shareholder on the high side. So, I think it's good news for our shareholders.
Speaker Change: So, I think we come to the end of the call. So yes. Do we have another 1? It's okay, so thank you to all of you for this, all this debate and questions. I again, I think the key word of total energies. I know it's a little boring but it's consistency. Uh, it's good, it's not so boring. Can't speak inconsistent consistent.
Patrick Pouyann: Okay, we are in a cyclical, we are in a commodity business. We don't control the markets, and today there is volatility from supply and demand side, but also from geopolitics, so it could be on one side, and we go in the other way. What I'm sure is that we manage, we have the flexibility, the agility in the company to manage all this volatility, and we are growing again, and as always, the growth is delivering some additional cash flows, which is very important for the board. The board already monitors as well.
Speaker Change: Is a strategy and again, keeping the uh, the return to share all the older on the right side. So I think it's good news for shareholders.
Patrick Pouyann: Do you deliver what you said in terms of growth of productions on both sides, in integrated power and in oil and gas?
Patrick Pouyann: And I would be happy to meet all of you again in New York on September 29th.
Operator: I know it's an annual one, so we will give you even more certainty about our business plans towards 2030, and that I am happy to advance to and enjoy to meet you there with all my executive committee. Thank you.
Speaker Change: Okay, we are in a cyclical, we are in a in a commodity business. We don't control the markets and today they are very volatility from supply and demand side but also from geopolitics. So it could be on 1 side and we go in the way the other way. What I'm sure is that we we managed, we have the flexibility, the agility, the company to manage all these, how it related and we are growing again. And as always, the growth is delivering some additional cash flows which is very important for the board, the board of already monitor as well. Do you deliver what you said in terms of growth of Productions on both sides in integrated power and in knowing gas and I would be happy to meet all of you again in New York on September 29th, uh, I know it's a manual 1. So we will give you even more certainty about our business plans towards 2030. And that's, I hope will. Uh, I am happy to, in advance to and enjoy to, to meet you there, with all my
Speaker Change: My executive committee. Thank you.
Operator: And gentlemen, this concludes the conference call. Thank you for your participation.
Speaker Change: ladies and gentlemen, this concludes the
Speaker Change: Conference call. Thank you for your participation. You may now disconnect
Operator: Thanks for watching.