TotalEnergies SE Ordinary Shares

Ladies and gentlemen, welcome to Total Energy's second quarter and first half 2023 results conference call. I now hand over to Patrick Pouyanné, Chairman and CEO, and Jean-Pierre Dreyer, CFO, who will lead you through this call. Sir, please go ahead.

Good morning, good afternoon, wherever you are. Patrick Pouyanné speaking. Before Jean-Pierre will go through the details of whether he could characterize a solid set of numbers, I would like to come back on the major investments that we have announced in this last quarter, which are good illustration of oil and gas and electricity strategy, which in fact are based on these two fundamental growth pillars, on one side growing on hydrocarbon base, mainly driven by energy, but all, of course, is our cash engine of today, and secondly, developing a profitable and integrated power business, which is key for the future cash engine of the company. The results, I should characterize them as good cash flows, good ROH and good distribution, strong distribution for buybacks. So continuity and strong and solid set of numbers, but Jean-Pierre will come back on it. So first, on the first panel, I would like to highlight some few important projects. The first one, of course, is our project in Iraq called GGIB. You know that the company is born in Iraq 100 years ago, but it's not a matter of emotion. It's a matter of creating value, let's be clear. And the DGIP, in fact, providing for us access to exactly the type of hydrocarbons we are looking for, low-cost, low-emission oil and gas, because both projects are targeting both, triad gas being, of course, a source of gas for But all, as a RATA repeal, will have to increase in production of RATA repeal over a second objective, who I would say a breakthrough contractual, breakthrough innovative contractual conditions compared to previous service contracts, which were signed by others in the past. This contract offers an attractive reward, well-balancing, of course, the RATA rates. We are fully aware of that. Second, of course, example, a very major example of the strategy in motion is our new project in LNG project in the U.S., the Rio Grande LNG project, which we have announced in June and which now it gets ID. You know that we are very committed to LNG. We think that it's a growing demand and that, of course, the U.S. position is very important because we have the lowest cost, a very low cost source of gas there. And I would say this is a project on which is attractive, because it's one of the most competitive energy plants with $850 per ton. And your kind of project benefits from a very good location outside, I would say, of the Louisiana area. And more importantly, access to skilled forces with no competition. So again, it's a capex-competitive project, and I know it's a matter to deliver it. More importantly, of course, for us, we have decided to integrate Bright Project by different angles. And why do we integrate it by different angles? Becoming equity or the shareholder of Mexican, the company or promoter of the project, but direct investor in the project with 16% and also, of course, a no-staker. We've done that because, in fact, we are leveraging this integration in order to have access to the most competitive pricing for US energy, and which would give us a clear competitive advantage on the market. So it's not only a matter of taking, but the integration gave us the capacity to negotiate better price than others. And that, of course, is a source of value. We might also ensure the value of the project by further integrating the upstream in order to protect our gas feedstock costs in the future. And other upsides will come also for expanding the plant from three to five frames. So that's why we consider that Not only being an off-taker, but more importantly also to contribute directly to the investments is a way to leverage and to create different sources of value from this project. Last project, of course, emblematic from oil and gas is the final award of the contract for the AMIRAR project in Saudi Arabia in petrochemicals. In fact, it's really, I would say, leveraging the Sator platform, an integrated platform, a world-class petrochemical facility, well supported by the kingdom of Saudi Arabia in order to get advantage feedstocks and a very competitive project. Then we have also, during the quarter, continued to deploy, I would say, the second growth pillar of the company, which is building the profitable integrated model in electricity, so integrated power. So it's all gas on one side, integrated power on the other side, on which we focus, I would say, our transition strategy. Two events. So two projects that happened during this past quarter, very recently, by the way. One is the food acquisition of Total Energy, which has been announced for quite a long time. You've seen through the figures that it's $400 million EBITDA. It's a company and cash flow for additional cash flow next year for Total Energy. The multiple is quite attractive. It was negotiated five years ago. It's 3.5 gigawatts, and mainly, by the way, to further them being in what I call the unregulated country, so feeding on integrated power business model. So it's also a lot of competencies which will join the company in order to be efficient and more efficient. With this integration and all the, now the next step, and I think we'll come back to you on that in September, is to We have all these assets around the world, now it's a matter of industrializing the way we operate them in order to deliver more value for the integrated power business. We also won some American business in Germany, Frigge-Gerrard Offshore. Some people think it's too expensive, it's not, because I think it's exactly, I think, what we are looking for in integrated power. It's fitting, it's a perfect illustration of our business model. Why? It's the first in the market, the German market, which will offer the best price for electricity in the future. Germany has decided not to go to nuclear, so you know in the end the price of electricity in Germany will be supported. Secondly, it's like an oil and gas concession. No, we pay only with amounts that are important, but in fact, it's an upfront payment, like we pay a bonus in an oil and gas concession, plus a royalty. In fact, we fix exactly our fiscal terms by what do we pay upfront, 10%, so for all these 3 gigawatts, it's something around 500 million euros, and then we repay royalty among 20 years, and the royalty, by the way, avoids us to pay any connection fee So when you look to the map, I can tell you I'm very happy that we have managed to get access to the 3 gigawatts of offshore wind, because it's exactly the model we want to put in place. The price is not controlled. It's up to us to decide which part we will sell to EPA, to German manufacturing industries, and which part we keep motion in order to trade around and do asset integration. So my answer to the ones who have criticized us is that, in fact, we are exactly in the model, not an infrastructure model, but an integrated power model, exactly what we do in Olinga. And you will see us continuing to deploy this strategy. And by the way, I might be, because Jean-Pierre, it is easy for me to explain that, because Jean-Pierre will explain to you that these results in integrated power are surprising you quarter after quarter, and they will continue to surprise you in a positive way. So that's what we want to do. That's my introduction, I would say. My last comment, of course, is that the board is very comfortable with the cash generation of the company. So yesterday reiterated its trust in the future by increasing the interim dividend by 7.25% year-on-year and maintaining the $2 billion buyback program for the third quarter. It's the fifth quarter in a row that we stay at $2 billion, despite the softening environment. The payout for the first part is more than 42% in line with the commitment of the board to distribute more than 40% for 2023. And so I can only reiterate my commitment. And all the transactions and projects, of course, will be the highlights of our presentation to you on September 27 in New York. And then I will leave the floor to Jean-Pierre into the reserves. Thank you, Patrick. So let's move to the financials. The commodity environment in the second quarter, but still at high levels. Quarter over quarter Brent was down 4% to $78 per barrel, and European gas dropped by around 35% to $10.5 per million BTC. In this context, Total Energy Report's second quarter of 23 adjusted net income of $5 billion, a decrease of only 24% quarter over quarter, and was able to generate a strong $8.5 billion of cash flow. Over the first half of 23, adjusted net income was $11.5 billion and cash flow was $18 billion. We continue to deliver excellent profitability, proportioning the 22% for the 12 months ended June 23. And we continue to share our success with our shareholders, as explained by Patrick. During the second quarter, we paid $1.8 billion in ordinary interest payments and executed $2 billion in buybacks, which is consistent with the first quarter distribution, despite the suffering commodity environment as described. As a result, payroll to shareholders, as mentioned by Patrick, was more than 42% over the first quarter, the first half of 2023. Our balance sheet remains strong, with gearing at 11.1% in the second quarter. Moving now on to the segment results. Operationally, our island gas reduction was 2.47 billion barrels of oil equivalent per day, up 2% year-on-year, thanks to new project partners, Johan Verbroek in Norway, EKK in Nigeria, Meruan in Brazil, and Bluestem in Oman. The production also benefited from the integration of Saab and Umlu-Luclis in the United Arab Emirates. Note that our oil production was a 12% year-on-year, reaching above 1.4 billion barrels per day. Production for the third quarter is expected at around 2.5 billion barrels of oil equivalent per day, notably supported by a startup on the upsharing field in Azerbaijan. Exploration and production reported adjusted net operating income of $2.3 billion, down 11% quarter over quarter, primarily due to the lower only guide prices. Similarly, cash flow of $4.4 billion was also down 11% quarter on quarter. These are quite resilient set of results compared to the lower diamonds. I already mentioned the minus 4% for Brent and around 35% drop for European gas taxes. As previously announced, we are now reporting integrated energy and integrated power as in the balance segment. So let's move on to integrated energy. In the second quarter of 2023, energy sales were stable at 11 billion tons quarter of a quarter, benefiting from the restart of free-force energy that decreased year over year due to lower demand in Europe because of mild weather and high inventories. Integrated LNG generated adjusted net operating income of $1.3 billion, down 36% quarter from quarter, reflecting lower LNG price, averaging $10 per million BTU in the second quarter, and softer trading results compared to the exceptional ones we benefited in the first quarter, in less volatile markets. Operating cash flow was down only 13% quarter-on-quarter, also due to lower energy prices, but partially affected by higher margins secured in 2022 on energy cargoes to be delivered in 2023. Given the evolution of oil and gas prices in recent months and the lag effect on price formula, Total Energy anticipates that its average energy selling price should be between $9 and $10 per million in the third quarter of 2023. For Integrative Power, in the second quarter, we met our target of double-digit returns, building a traffic core as an integrative and profitable player in the electricity business. So, for the 12 months ended June 23, we achieved the ROHA at 10.1%. The proof is in the results. Our integrated approach to the business is working, which combines renewable projects, flexible power generation, energy storage, asset optimization, trading, and B2B, B2C supply. Integrative power, second quarter, adjusted net operating income is $450 million, and cash flow is $491 million, up 22% and 12% respectively, quarter on quarter, due to the good performance of our integrated electricity portfolio. Integrated power generated $930 million of cash flow in the first half of 2023 versus only $340 million in the first half of 2022. The different segments have performed well and contributed to this robust first half of 2023 results. gas-fired power plants within wool trading and supply, demonstrating the strength of our integrated power strategy. Net power generation was 8.2 TWh in the second quarter of 2023, up 8% year-on-year, as growing electricity generation from renewables was partly offset by lower generation from flexible capacity in the context of lower European demands. Road installed renewable power generation capacity is now at 19 gigawatts at the end of the second quarter, up by more than 1 gigawatt quarter on quarter, including 0.5 gigawatts installed in the US and the connection of 0.3 gigawatts from our offshore wind project in the UK. Let's move to count three. Downstream contributed $1.5 billion of adjusted net operating income, down 23% quarter over quarter, recollecting clearly lower resigning margins, particularly in Europe, partially compensated by higher marketing and services results, quarter over quarter, due to the termination of in-businesses. The refining margins were impacted at the start of the period by Chinese exports and the quicker than anticipated reorganization of Russian flows following the European embargo. They were also supported at the end of the quarter by higher gasoline exports to the U.S. and lower diesel imports in Europe from China. Our refinery utilization rates on processed goods improved to 82% in the second quarter which is a good performance, compared to 78% in the first quarter. We expect some operational performance, above 80% in Q3. And since the beginning of July, the average refining margin is higher, above 70%. On company working capital requirements, last quarter we had an exceptionally high bill of $4.5 billion, mainly related to higher crude and petroleum product inventories of water, and to the technology of our power and gas marketing business. I said last quarter that we are expecting $1.4 billion with reverse, and indeed we have a $1.5 billion working capital release, mainly due to the effects of lower inventories, seasonality of payments of the gas and power marketing business. Of course, we continue to monitor closely and take action to minimize the working capital requirements, while facing in the next quarter some working cap release coming from exploration and production tax payment schedules. Our net investment second quarter amounted to $8.6 billion, and our guidance for 23 net investments is unchanged in the range $16 to $18 billion. The Board of Directors, as mentioned by Patrick Conqueror, for 23 is a shareholder distribution of more than 30% of cash flow, supported by our Canadian didactics, as expressed by the paper. The Board decided the distribution of the second interim dividend for the 23 financial year in the amount of €0.74 per share, up 7.25% year-on-year and authorize the company to buy back shares for an additional $2 billion in the third quarter of 2023. And with that, let's move to the Q&A. Thank you, Jean-Pierre.

Thank you, ladies and gentlemen. We will now begin the question and answer sessions. As a reminder, if you wish to ask a question, please press star 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 star 2. Once again, please press star 1 if you wish to ask a question. The first question is from Christian Malek of JP Morgan. Please go ahead.

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

Thank you Christian. You know we have, and you will come back on this question of courses of the core of our presentation in September to all of you and to our investors. It's true that we have quite a large portfolio of oil and gas projects, oil and energy projects, and we'll come back on it. We have Ghana, Angola, we have Iraq. We should have already shown our project coming. We are just facing the last wells. And so, but be clear, at the end, the guidance we gave you for $16, $18 billion in an environment that we feel like today, it will be maintained. Be clear. And if we have more oil, we'll have to arbitrate the project. We have room to maneuver in our portfolio, let's be clear. So don't expect the capex to increase. But again, we will not arbitrate against oil and gas profitable projects. It's a question of time. We have two pillars in our strategy. One is our three pillars, the oil. And if we have more oil, I'm happy to deliver oil. We have gas. And we have a blue ball as oil and gas growth. You can make the math. I mean, some of you have knowledge. We'll find a 2% to 3%, I think, and that's good. But we are also a company in transition or integrated power pillar. As you said, we are looking to the various energy, new energies that we are strong and we consider that a commitment to build this integrated power and the business we are delivering is a core of our transition strategy. And we might... We say simplify the rest of the molecules which, by the way, we see a demand later in 2013. So that might be a – we come back on this topic, of course, in the strategy presentation in September that you should describe total energy as oil and gas and electricity as a core for strategy, more than a sort of energy supermarket, you know. So let's simplify and then deliver the value.

Thank you.

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

Good afternoon. Thank you. Just on LNG, and specifically United States, Focal Energy, I think, is the largest off-taker of US LNG. It's just you've got bigger now with Rio Grande, but I wanted to ask about that exposure to U.S. gas feedstock, I think you touched on potentially integrating further upstream. Is there a number here, a percentage, something we should think about in terms of feedstock coverage for these terminals, for these off-ticks that you would think about looking forward is the first question, please. Thank you. And then secondly, I noticed it looks like you may be planning to drill a well in the South African portion of the Orange Basin perhaps next year. I was curious if you've completed any further analysis over the last quarter around the Venus discovery that gives you the confidence to really extend the exploration campaign further south. Thank you.

For the second one, I think we will focus on Namibia. My priority is Namibia. We are doing an appraisal of Venus, which is very positive. Of course, we still are expecting the dynamic data. The first test will start again over August, and I think when we'll meet, I'm sure, in September, we'll have the results of the first test, which, of course, is important because positivity per well, of course, is 15,000 by the day. It's fine. If it's fine, it's not fine. But I can tell you the oil column is very big. So, my focus will be Namibia first. We have a lot in the plate. Of course, we have some license in South Africa, and we work on it. But it's, again, I feel comfortable, my priority will be to give value to Namibia if it's confirmed. And then we'll see what are the expansion in the orange basin on the other side. New energy exposure, and it's true. We have 10 million tons. We've moved for 15 million tons. It's quite a big exposure. And again, you have noticed that each project, we try, since I am CEO, not only to uptake, but to integrate the project. Cameron Energy, ECA in Mexico, Rio Grande. Why? Because when you contribute to the investment, you have a leverage on the pricing, you know. And of course, yes, because I believe in integration. It's not new. You know, we have already produced a production, the net production, more or less of 500 million steps per day in the U.S. on the bounded shape that we maintain. And we can extend and double that exposure. No, really. No, really. There is no specific. It just, for me, takes time. So we'll have opportunities one day. But it's part of course because I think the cost of the pit stop is a smart way in order to control the full integration value. And so it's part of, I would say, our strategic agenda and integration in the U.S.

Understood. Thank you.

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

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

Okay. It was a debate in the board. You know, we have this investment meeting in September. The board is meeting in September and decided to reduce the full distribution policy for the end of the year. But as I told you, we have the fifth quarter in the world, $2 billion. So you should be very surprised. And to be perspective to you in New York about all these elements. So we decided that it was... We maintain 2 billion per quarter, and again, you know, the environment is softening, so we want to keep that flexibility. But the main commitment both have taken to oil and buses is more than 40% of distribution per year. We are 42%, so it will not be 40.1, it will be more than 42. So with this bet, we can make the number, I think. But again, the board is working, and remember that the commitments are also linked to the closing of the Canadia sales. And so we are moving forward on these elements positively. Conopo has created an HPA with Conopo has been executed. So we think we've closed by the end of the third quarter. And the discussions with Centre are also progressing. Also to the board, we have a complete view in order to make the right decision for our investors in terms of distribution. On the projects themselves, I cannot disclose all the figures, you know, there are contracts in particular. I experimented, I talked to you about the new active projects. Yes, that's true, we have created a new category of contracts, purely thinking with our standard way to work, you know that. And I mean, I commend it, but the reward was commensurate to the risk, you know, so we can imagine that it's positively, it's a good return. But through those, you know, producing oil off-country or Iraq is probably the best way to maintain a record of, in terms of capex to capex, even like $7 an hour, you know, so $7 an hour of capex. It gave you a good base to make competitive returns rather than other areas of the world. So that's first. We commented on whichever project I commented. Rio Grande, Rio Grande, again, we have a good leverage. And again, for us, I'm looking to that as an integrated way because not only we invest in the project, but thanks to the investments we negotiated, of course, I told you a very good off-take contract. The price is very competitive. And we make more money than somebody who does not invest in the project thanks to our downstream exposure, the off-take contracts. And also because in fact we want to capture the infrastructure margin somewhere, leveraging input of two state contractors. Globally speaking, the integrated IRR is more than 15% of these NG projects. So 15, next to 20, in fact. So globally, it's a strong project for us. Which other comments? And Germany, to be clear, the Germany project, we are perfectly in line with the objective in Germany. And even more because I'm absolutely convinced that the German electricity project price will be meeting when we come. and we have flexibility to deliver this technology project. Okay.

Thank you very much for the question.

The next question is from Christopher Kaplan of Bank of America. Please go ahead.

Thank you very much. Just two quick ones, hopefully. Patrick, I wonder, as you are highlighting the more than 40% of CFFO payout ambition, whether you've learned anything from last year's special dividend. Is it a fair assumption to assume that the continuation of the $2 billion buyback run rate into Q3 is by now your preferred way of redistributing these, let's call them extra proceeds from your expected oil sands closing? So just wanted to see whether you have a view on what the market prefers buybacks over a special dividend. And my second question is going back to the LNG portfolio which is growing nicely and I wonder whether if you consider all your options that are still pre-FIDE and I would count Mozambique into that too, whether you think by the end of this decade all these options will actually be in development and will be operating. Or whether, to your point on CapEx, whether you're answering, actually it might be a good thing to have more portfolio options because then you can be tougher on the returns. You can squeeze out of them from a project-on-project competition. Talking about P&G, Mozambique, of course Arctic 2 is no longer in your consolidated numbers. and you're very busy in the U.S. too. And I'm not even mentioning some of the smaller assets. So sorry, it's a long-winded question, but hopefully a relatively short answer. Thank you. It's always a very relevant question.

I'm taking the second one first. It's clear that today we are in a position to arbitrate this cost after a sentiment. To be clear, I think we'll make an arbitration in the U.S. because $850,000 a year is better than the cost we are paying today from the additional train on Camel. So, I mean, I have the option. and clearly I'm very comfortable and if the capex on Cameroon will not decrease compared to the first feedback we get to contractors, it will be easy for us to postpone it and that will come later. The option is there, it's not just one. We can keep it in the portfolio. We are delivering PCA phase one shortly in Mexico. We have also the possibility to expand it there again. It's a matter of arbitration. We like a specific position that we can arbitrate it. So the key for me is really what is the position of the project in terms of quota and capex is very important to keep at this end. Because at the end, long term projects, that's the key. On the recent P&G, where you see what we did across at Mozambique, you know we have a public debate with some contractors. So we are keen to deliver them. And that's part of the plan. As you said, we have a large portfolio, and we work on all of them. And at the end of the day, if CapEx are not meeting our expectations because there is an eating market, we love it. But again, for me, I mentioned the North American project because this is where we see many projects coming together. So I think on the international arena, we'll find a way to make this project work. But again, we are in that, I would say, comfortable position to select the ones on which we consider we have a better interest. On the cash flow, we are in exactly the same position as last year. Last year, remember, the special dividend came out super early. We generated last year $45 billion of cash flows. This year, we are more. I will not say it's not bad. It's $18 billion for half of the time per year, and $36 billion, $35 billion, $36 billion. Again, it's not $45 billion. So the growth is making a difference between $45 billion and $36 billion. Even if we see $4 billion from Canada, we make $40 billion, not $45 billion, $46 billion. So we keep the debate there. We also know that today the market is keen on buyback because we consider that the share of total energy is undervalued for several years. So there is a certain logic, I think, from the board, which was a trust in the share. The share will be evaluated. So that's my argument. But with all these elements, I think you can make a conclusion yourself. We'll see. But let me be. I will try my best on the 27th of September to the investors and to the markets.

Very good. Thank you.

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

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

Okay, the first one, let me be clear. It's like exactly, at the end, it's like an ancient answer. We will invest in projects if we obtain the returns we get. And that's why, by the way, the Germans Auctions were interesting because, in fact, we have submitted a bonus to get the auction in our portfolio in 10% of the global bid, which is for me, I'm putting my auction, like when I'm buying an exploration license in Brazil, I could pay a bonus of 300 million dollars, although it's very low. There, in this one, I'm sure there is wind. But the cost has to be there. You have the cost. So, of course, we see that there is, and again, it's a question of, Honestly, offshore wind, I've often told you, I'm not surprised at the end that all major companies are coming into that business because it's clearly exactly the type of project that we are able to manage, project management. We can leverage the skills of the company, relations with contractors. It's exactly what we do in any offshore oil and gas project. So for me, that is the right way to look at it so I'm not worried. I'm just, you know, I'm not worried. I don't like capacity to be neither in energy nor in oil offshore nor in offshore wind, but it's up to us to leverage our purchasing power. And I think this is where we have an advantage. I think total energy in this business, I think it scales at the value and the purchasing power of total energy, capacity to collect efficiently. We have approved a very large solar module contract to cover part of our future needs, leveraging our purchasing power. So that's where we need to work in order to be more efficient than others. And I think this is what the state of St. Louis is expecting from us, to be efficient. And again, the other point for us is that we consider that European electricity price because of all that happens in Europe. No Russian gas, more renewables. Nuclear energy becomes more expensive than nuclear. So price will go on the right direction. So that's why we think fundamentally. And we think that is the volatility, of course, but the price is up. So we understand the concept that we have, and it's up to us, you know, exactly the same as the other monolinguals. We have to manage these CapExile. Refining margin. Refining margin. Okay, where do we see the refining margin? I would say today on the, so the first margin today, as I said, I think Jean-Pierre said that, $70 per channel, which is more the average for a month. They are supported as well on the gathering by the driving students, which is quite, we have more consumption in Europe than in the U.S. on both sides. So in the U.S., the industries are quite low. This means that today we have four gatherings from Europe to the U.S., which is good for our European refinery. And it looks good that they have a good performance availability today, more than 80%. So that's what we think on the gasoline, so we are positive on the gasoline. On the diesel, the demand is lower, it's true, because it's more linked to a global macroeconomic environment. But we can benefit also, you know, there is an effect in Europe when the Rhine is low level, low water, then you have some problem of supplying Germany and then you create some in our downstream business, so it's another part of it. So I would say, I mean, some I'm trying to get, but we are more positive on the refining margin for the third quarter. So I would be surprised to go down to $40 a ton, which we experienced as an average on the second quarter. I think the third quarter will be higher. That's my view on this market. By the way, when it's hot, you know, refinery and refineries do not like hot weather. So running a refinery is not so good in particular in the U.S. when the weather is too hot. So it's good for margins as well.

Next question, maybe?

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

Thanks, Patrick. On Iraq, I understand it's confidential, but are you able to say maybe what your maximum capital employed exposure would be in the country. We all see this $27 billion headline, so I just wanted to give it some context. And then I'm just interested and fascinated in your comments about Germany having the highest power prices in the future, and that's quite a statement about one of the industrial powerhouses in Europe. How do you think about the issue of industrial competitiveness and affordability for consumers? Thank you.

We're at $3 billion, maximum capital input, $3 billion. You know, we have 45% of capex, which are around $10, $11 billion, but we are also the oil production for the country individually, you know, and the duty of the contract is that right now we feel it's producing. We'll stabilize very quickly the production to... 50,000 barrels per day very quickly. Our kids are already, we work just on the EMF. Then we have a phase on the improvement of the oil production up to So we have some cash coming in, so it's a way to generate exposure to whom we have in Iraq. So keep that in mind. And for me, it's very acceptable with the . So that's the . Generally, industrial competitiveness, okay, I mean, it's a more global question. The question will be more for the state, which is how do we, what will be, again, and we see that what will be the support of states to energy-intensive industries, in fact, is the question mark. But, you know, I think in Europe, thinking that the price of electricity might be around 70 or 70, 80 euros per megawatt hour is not the best in fact. So that might work. Then it's a matter of course, I will tell you, if we go to some industries, it's long-term commitment. It's always the same. For me, when I'm answering to the government, to my colleagues, to the customers, if you already take some long-term commitments, we can't lose the price. In fact, it's just a question of, if you want to stay short, the competitive defense is without like that value. I don't recommend to anybody to invest in Europe based on stock prices, because then you could be in trouble. So within what we discovered last year, I would say, so I think the question for me is, yes, there is room for industrial competitive defense in Europe and Germany, if we are able to put together some long-term contracts. And I think part of our intent with this offshore wind development will be to commit some of the capacities to this type of long-term contracts and to keep out of it as much. And so we have this famous 70-30. But we know that this is the type of price we kind of take today in Europe, in Central Europe, and people are ready to commit on this level of pricing.

Patrick, can I ask, you know, when you speak to politicians, are they surprised at that 70 to 80 euro megawatt hour sort of number? I mean, that's twice what it used to be, right?

Yeah, because the world has changed. The world has changed? No, I mean, we have to be clear, politically, by the way. The energy transition has an impact on the energy prices. And there's no way to make the transition in Europe without the higher prices. And I think they understand, you know, the nuclear is not under the prices I just gave you, you know, I can tell you. And so you can ask to the UK investors or to the French government, you know, I will tell you. So I think it's part of the transition. And again, if you have to adapt towards this, but including at the end the customer, we have to accept to pay somewhere. the cost of the energy, the cost of the transition. But, you know, I observe as well in the U.S. that the contracts, even the solar contracts in Texas begin to increase a little, you know, to recover. So it's part of the, we have to keep that in mind. The energy transition will happen if we accept some cost increases. And we have a super-efficient system, which is the human gas system, And we want to move to a system which is not inefficient in terms of energy efficiency. That has a cost, that has a price. And it's a real question for all of us is at which phase we make that transition in order for the customers to accept it. It's what we call the trust transition. We have to manage the transition. If it's just a jungle, we will be rejected. So I'm not sure they are so afraid. It's just a matter of accepting the reality and we have to be consistent. then it's a question for industrial competition. For European manufacturers to be competitive and probably to have, like the US, to take actions in order, as we are accepting this price of CO2 somewhere, we have to protect these industries. If only Europe is integrating price of CO2 in products and not Europe, we'll have an issue for sure.

Great. Thanks for the call, Patrick.

The next question is from Viraj Borkataria of RBC. Please go ahead.

Hi, thanks for taking my questions. First one's on your LNG business again. In the past, I think you used project financing to deliver some projects, so obviously your balance sheet is extremely healthy at this point, and you probably have some capacity to take on some more capex. Could you just talk about your plans, whether it's Rio Grande, Mozambique, or otherwise, and your intentions on financing? and how you're thinking about that split between balance sheet and off-balance sheet. And then the second question is just following up on Al's point on competitiveness. Obviously, you have a refinery in Germany and chemical operations. With your view on higher power prices, obviously that would feed into gas prices, and then you've said you won't take Russian crude. How do you think about what more you can do in your operations to remain competitive in a global context. Thank you.

OK. Project financing in energy is both. I know, by the way, has been announced with the project financing. I think it's a, globally speaking, it's a $15 billion capex. and I think it has been announced as a 70-30% project, with a package of law of lending, project financing has been announced as well, and we really help them, we contributed to that, GIP has strongly contributed to that, they're giving us shareholders, so I think it's easy to finance, it's competitive in terms of interest rate, so because we are working hard on it, and between GIP and Total Energy in order to get good commercial terms, and this is the case, And in Mozambique, the package was already there, you know, and has been preserved, I would say, because it remembers when we stop the project, we stop, we maintain all the project financing. We close the project financing, but it will, what I'm discussing with Orlando, of course, we will start it, but when the Mozambique project will restart, of course...

And freeze the project financing.

So the conditions are good. So as soon as conditions for project financing are okay and competitive to our equity, I would say, I think we'll maintain that stance. P&G, I don't know. I'm not yet there, I think, today on this project that we are working. Japanese banks are very determined to finance P&G, you know, and you could have good conditions with Japanese banks in that part of the world. So, for us, I think we are fine with that and it's part of the way to globally have the returns I mentioned to you on Rio Grande, for example, 15 to 20% part of that into accounts. It's true, that's what you said, it's perfectly true. I can tell you when we look at refining the breakeven in Europe today, 23 compared to 21, no more Russian gas, no more CO2 pricing, less quota. At the end, there is an impact. And I think the breakeven went from $25 a ton to $30, $35 a ton. So at the end, the question is we have to work. in order to find the efficiency way to compensate it. And this is why, by the way, my position on refining in Europe, it's a good way to transform to biorefineries. So the question is the place of it. So we are managing that for every year. We have transformed two refineries. The next one will come, as I told you before, because we understand that the question of competitiveness, and we take it into account in our industrial decisions. That's not obvious, so I cannot hide it. But again, the question will be then on this type of more complex for refineries in Europe, because they are so huge. We don't like that too much. But again, it's a question of security of supply for the government. And this is the debate we'd like to have. If you want to maintain this activity in Europe, because you still need a gasoline and diesel, and you don't give us conditions in order to have an attractive, I would say, we might make decisions which might be detrimental. But again, there are also positive ways to look at it. We are working today to see how we can leverage all the hedge-free directives in order to get the green hydrogen and create additional revenues. In fact, when you look carefully to the new scheme, which has been published by Europe, so you can see the cost. CO2 has a cost, but CO2 might be a source of revenue as well when you combine green hydrogen with pure products. And we are working on two projects, one in France, one in Germany, which would make additional revenues, which might compensate part of the lack of competitiveness. I think it's two ways to look to the energy transition. I've got to look at the cost of an opportunity. It's a price framework I put into it seems to be the case for hydrogen, green hydrogen, that is a strong push, then that might become a new source of competitiveness for refineries in Europe. And we are working on it, and I think in September we'll be able to come back to you and to give you two good examples where we created value from, I would say, these energy transition frameworks. And so that's also, I would say, the negative and the positive way to think about it. By the way, I'm convinced that the transition will work only if we create opportunities and not just increasing costs and prices, you know.

Great. Thanks for the call.

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

Good afternoon. Thanks for taking my question. Firstly, just on your existing targets on renewable capacity, I was just wondering, what is the acquisition of the 71% stake in Total Air and then other deals as well that you've announced? So what do those do to your targets, particularly the 2025 target of 35 gigawatts? If I recall, you'd already reached a pipeline of over 35 gigawatts more than a year ago. So I mean, there's upside to that 35 gigawatt target, or do you have the opportunity now to pick and choose the best projects as you talked about with respect to LNG and high-grade your project portfolio. My second question is around reports a few months ago that Total was looking at a major gas development in Saudi Arabia together with Saudi Aramco. I just wondered what the angle is here. Is this about the domestic market or more about exports in the form of either LNG or blue hydrogen or ammonia? Thank you.

You don't have a good information on the second one. I don't think you should believe what all the press agencies are writing in the paper. Second one, because as long as I know, Eurasia has a monopoly on the free gas. So, second one, first one. No, let me clear up. It was just created online, but the acquisition of 3DLN will be part of our roadmap. So when we said the 35 year, what the acquisition of 3DLN was, so because I know that is an additional element, We knew that total rent was working well. We knew what were our conditions to leverage our options. And with the figure I gave you, 400 million euros, it's going to be easy. You understand that we can easily, it's an attractive multiple. We use that. So for me, it's a big additional. By the way, now you know we are also working more on value and volumes than on all these points for me. Of course, there are some symbols, the 35 gigawatts, and we are working. There are optionalities, and the value of the offshore in Germany is not there. It will be in 2030, not 2025. There is no way to build a 3 gigawatt offshore in three years. So the more I'm thinking about, again, the more... If we have more opportunities, we can arbitrate in terms of projects, right? Because we have in my portfolio more opportunities to reach a target by moving the target up and developing all the volumes. Not volumes over value. We know that when you do that, it's value over volume. So I'm happy that the teams are able to generate opportunities, and then we might re-collect the ones which are the best for us. And more importantly, by the way, for me, what is important is the Because it's clear we focus on how much terawatt-hour we produce, like for oil and gas. For oil and gas, you load my 2.5 million barrels per day. You will have to learn that we speak more in terawatt-hour a year rather than in gigawatts. Terawatt-hour a year, that's what creates the revenues, the results, and the profits, and the cash flows. So I think we should move in that direction. as well, because for me, it's improving. You know, we reached quickly 50 terawatt hours per year. 50 terawatt hours per year, we're looking at the 15 largest utilities. So it's not small. So let's take in terawatt hours per year, and I'm just in capacity. At the end, what is important is delivering revenues, cash, and results.

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

Yeah, thanks very much. And that's been answered for a couple of our mics. But first, Patrick, ask it too. Do you have any interest remaining in that project? I'm just conscious of, you know, Novotek's comments around, you know, tonight in startups and so on and so forth and, you know, the original position, even though you obviously have not been funding anything. And the second question was just around going back to balance sheets and how you think about gearing debt levels at this time. Is the range still 10% to 20% something you're comfortable with? Just a reiteration, really.

I think the best way to protect a non-engaged company is to have the strongest possible balance sheet. Then it's a question of arbitration, and you remember the scheme we gave you is very clear. dividends, capex, and then strong balance sheets, and even targeting potentially a devaluating if we can. So I'm still there. Then it's a question of, then we have the buyback. So the board is looking to all of that. Recently, by the way, Jean-Pierre has bought back 1 billion euros of hybrid debt. So we have decided to lower the hybrid debt. because we thought it was a good way to maneuver. So, of course, balance sheet is important. So, 10.1020 is as low as possible. That's my thinking on this. I agree. That I am. No, it's clear. As we have said in March 22, we don't bring any capital from total energy to this project. You know, the project when we left was, in fact, the equity was already injected and it was more project financing, in fact. So the project is moving on. We didn't put a single more equity from Total Energy FC, from Paris. And then, so today, yes, we still are around, but honestly, I have zero information because, as you know, governance, we decided to leave all the Russian assets. So I cannot tell you what is really happening there. I'm reading the newspaper like you. There was no representative of the solar energy of this last ceremony.

And did you have, remind me, did you have any legal liability to offtake volume? Remember you were two million tons of heads of agreement.

If the plan is produced, we have some off-take volume. I don't remember exactly how much it is, but the contract, it's like Yamal. Yamal, we have a long-term contract, 25 years. It's a take-off contract, and we have one on Yamal. Today, we only off-take the long-term contract on Yamal. There is absolutely nothing else than the long-term contract. No spot, no additional produce. We have reduced our ocean activity to the only long-term contract. And that's the reality of what we do. And if Arctic 2 came on stream, we'd have a commitment. So I don't remember exactly. I should read that. To be honest, I didn't spend much time on Arctic 2 for the last year. But I think we'd be able to tell you exactly what is the volume. We had a lower share in Arctic 2. It was 10% and not 20% on the amount. So I think it was proportionate. And by the way, so we see, but we can go back to you. But again, it's the same policy with a price. We have a contract, we have a contract, we have to execute and choose a contract as long as sanctions do not prevent to do it. So that will be the same policy. But we can't go back to you on exactly what is the estate version with the 10%. So independently of our shareholding, what happens to our equity, the contract, the estate contract is that.

Okay. Thanks very much. Good summer.

The next question is from Jason Gableman of TG Cohen. Please go ahead.

Hey, thanks for taking my questions. First, just on the Novatek dividend, I believe historically you guys got it in 2Q and 4Q. So I'm wondering if you received the NovoTech dividend this quarter, and if not, what the certainty is you will see them moving forward. My second question is on global gas. You know, there's a lot of concerns around European gas storage actually filling – over the coming months ahead of winter draw season and given your unique position in operating European gas assets, just wondering what your outlook is for the European gas market in the fall and kind of an extension of that, how these tighter gas oil spreads have impacted your outlook for trading given last year's integrated L&P trading was particularly strong in part because of the wide gas oil spreads. Thank you.

No, we did not receive any dividend this quarter. That's the first answer. Second one, a new gas storage claim, HK, but the storage could be full by October. So today is why we have a soft gas price, $10 per million BTU. We don't anticipate difficulties because we exited the winter with high inventory, so it's easy to replenish it, and so it will be down. So that's why today. But then, as I always explain, if the winter is cold, if the Ukrainian pipeline, the gas from Russia going through Ukraine stops, the situation will be quickly in tension. So cold weather, if on the top of it China is recovering its activity and is buying more energy, which seems to be the case today, we have another additional factor of tension. The situation in Europe will be what it is. We are relying on the meteorological conditions plus external elements, including the ones I mentioned about the transit for Ukraine. So that's the reality. So that's why, by the way, the full price of European gas is $15. So the price in the $15 next week, next January, next first quarter, the first half of 2023 is higher because markets see more risk than more of a bearish bull factor than bearish ones. I think that's the reality. So what happens? What will happen? We'll see. We'll see what will happen, but there are some elements of tension. By the way, it's also why today you don't see manufacturing industries in Europe shifting because the price was very high in 1922, the manufacturing industry has shifted from gas to fuel. We could have expected that the price is lower than the fuel price today in Europe, but they stick on fuel because they are afraid. What could happen next winter? So it's an interesting behavior. That's why people say that the demand of gas in Europe is lower, and say no, because in fact they should make that shift on the short-term front. They don't do it because they are still afraid of it. There is no stability, I would say, in the gas price in Europe, the volatility. And that's why, by the way, all traders, you know, traders, they love volatility. They make more money. This quarter was lower for the time, so lower results that we could expect. Winter time, generally, so volatility is higher. That's what I can tell you.

Sorry, just thanks for that, Collier. Just to clarify on the first part of the Novotek dividend, should we assume that you stop receiving it moving forward

I don't know. It doesn't depend only on us, you know, it depends on others. So I think I just answered you. Very honestly, I have decided, the board and the CEO of Total Energy, the chairman of the CEO has decided that Russia is not normal in my account, it's not clear. And we do not plan any distribution or any shareholder returns linked to any cash flow coming from Russia, to be honest. So the way we think, If we think about Russia, the board and the figures I'm showing to the board are without Russia. That's all. Because anything could happen. So I prefer to show the case. If something is coming, it's coming. But we are not changing it. It's more the way we think in total energy. So the consolidation was a very clear decision by the board in December 2022. And this is the way we manage companies.

Thanks.

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

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

Yes, first question regarding the hybrid.

At the present time, our hybrid portfolio has very low costs, below 3%. It's 2.4, if I remember well. So we have the flexibility offered by S&P to diminish the global level of hybrid, minus 10% on the yearly basis. In May, we have a tranche maturing, and so we decided to use this flexibility. Otherwise, in the market at present time, the hybrid cost increased compared to the 2.4% I mentioned to you. It's around 5%. So given the cash that I want to generate at present time, so with Patrick, with the board, we think we do not need to renew this hybrid tranche, and that's the main driver behind the decision not to renew this tranche. And so we decided to... to get rid of this one billion euro. Yes, yes, at present time, the cost of the hybrid in Europe is more than 5%. So it makes no sense to... So that means that the DGNV here could be renewed in the next year. Yes. Just to, because we don't want to encroach it behind us, right? You know, it's just the management of the cash and the balance sheet of the company. So I think it's an obvious decision to make. On the downstream, no, we have changed. We finally did do biofuels. We changed Lamed. We are changing Grand Prix. I told you that will be over. In fact, there is a clear framework in Europe. That's why I'm comfortable in Europe because you have some mandates in Europe. In particular, the sustainable addition tool in Europe is a mandate. It's not just a target. It's a mandate. When you have a mandate, immediately you create a market and a pricing which will integrate CO2 cost, so I'm comfortable to invest because I think that really Europe is very serious You have a 6% mandate by 2030, which is increasing to 15% mandate in 2045. So it creates a market, a positive market. Then the big question is, how do you produce it? So we like old refineries, because we have a capex per ton, which is lower when you make it grid-filled. So you will not see total energy investing in grid-filled refineries to make start, to be clear. I prefer to convert the old refinery, by the way, part of the transition, We are willing to let the demand for gasoline and diesel will diminish in Europe. We have more EVs in 2025, so we need to prepare the transition. And transforming, we can reuse some units to make a biorefinery. And the capex per ton is around $500, $600 per ton. The greenfield one is around $1,000 per ton. So let's convert further and create a new greenfield refinery that's fundamentally of use. but we need to find the feedstock yet to arrive and the feedstock in europe is an issue because they want they don't want 1g they do 1g vegetable oil inside so we need to secure it we don't want to import used cookers from far away and being trapped into i don't know where But there are ways, you know, we have security stuff on Grand Prix by a TV with a German company who produce animal fat, so we are looking to that segment. And we are also beginning to look to another technology, which is which might be the next one. Because when you look to, in fact, the balance of the European markets by 2035 to reach a 15 percent mandate, it will be difficult to be done only with lipid feedstocks. I mean, we've used coca or animal fat. We could have to be obliged. So it opens the room to additional next technologies. So we try to select the ones which don't be the most expensive. We don't need issues, but we might have technologies in between, providing the stuff in, I would say, a little more expensive, but not the most expensive one. So this is the way we approach this issue. But again, for me, for us, the focus will be in Europe again because we have the assets. We know we have to make the transition. It's an opportunity which is, in fact, given to us by this transition and all these famous European Green Deal frameworks. So let's see the opportunity. It's like I say, green hydrogen. It's the other way to compensate the cost of CO2 and the cost of energy in a positive way to create new markets and to decarbonize the airlines' So that's the way we look at it. So we work, and we are going to project. We are working on the third one. Great. Thanks.

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

Yes, Patrick, thank you for the update. Two questions, please. The first one, I wanted to come back to Integric Core and the strong performance in the second quarter with the earnings sequentially. As I think you can give us some details on the driver of the sequential improvement, because for instance, the production is down quarter on quarter, so it's interesting to hear what was driving the improvement here sequentially. And then secondly, Mozambique Energy, if you have an update to provide on the timeline next milestone for the project before we can restart. Thank you.

Mozambique Energy, we are working on both parts. One is with the contractors, and I expect that to be done in the second half of this year, so we'll have the answer, and I hope it will be positive for them. And then we are working also, like Jean-Pierre told you, on the relaunching, defreezing the financing so I think my objective for us is to come to you and to have a before your hands and we should have a clarity on the way forward but again we need to not only cost before and make things let's do it step by step properly but that's I would say the objective we have but if we need to wait it's another way I think Jean-Pierre in his speech gave you some indications. He told you it's coming from everywhere. I can't tell you, but you know why. In markets, for example, in supply business, the winter is always more tough in terms of results because we have an average cost of supply, more demand, so you have a sort of seasonal effect. I think when you look, you have So it's more positive in the second and first quarter. The second and first quarter are more positive, but we have also good performance coming from flexible generation capacities because of the, I would say, the gas to gas, the spread between gas and electricity. We have some good results from trading as well, and we have positive results from renewables. So everything is increasing, I would say. So there is not one. And by the way, it's why the more we look at it, the more we keep our approach of integrated power. And this is why we report to you these results in this way. And then we report the results of refining and chemicals in an integrated way. And so I think, yeah. But nothing special. Everything was positive, which is a good source of, I would say, confidence for the future on this one.

Thank you.

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

Thank you. Two questions, please. Patrick, any update you can provide on server name? And I know that you guys may not be ready yet, but any kind of preliminary capacity for the first FPSO soon that that's going to go forward? and also the timeline that you would expect for the first oil. Second is that I just want to see if you can share over the past several months what your investor feedback given the changing weather conditions about your pace of investment in the low carbon, et cetera, on the wind and solar policies, et cetera. Remember, Do you think that the case is right, or do they think that the case should be .

Thank you. I captured the first question. The line is not very good on this one. I captured the first question, I think, is about Surina, I'm sure. And the second is about investor feedback on our renewable energy business. I understood carefully. Did I capture two questions? Yeah? OK, good. So sure enough, again, I told you that we are just finalizing the test of the last . So I will give you a meeting point in September, because my teams are working. I gave you a positive indication that seems that we are moving forward with development. But I want the teams working to take all these results together, to put that together, to have a case. I think we'll have a case for development, for sure. Exactly what we just signed. In terms of my name, you take your name and then you come back to me end of August, September. So we'll answer to you with a clear, I think we'll have a clear ID by September 27. So come to New York and we'll have the answer to your question. if not before. But obviously we worked on it. I can tell you we have an integrated group of the government. So even positive sanctions might be targeted by end of 2024, what I would say. And then it's a question of execution. But that's more or less what I have in mind. But again, I want to, there are still some debates about what could be decided exactly. The news that I read about the death seems to be quite good. So that's concerning us. So just a little patience if we can. I mean, our investors, you know, they are just investors, you know, they want to have the cash flow. So if we demonstrate that this business So that's a question mark for us, and I think before I decided to publish this result, so that's why I think it's profitable, but we may generate cash flow. And the question for us will be when does it become net cash flow positive? And again, we are working hard on that because our objective is that this should be a cash positive generator. So we invest more or less in these I think 4 billion per year. So when do we add the threshold for 4 billion? And that, again, we'll come back to you in September on that, because it's also part of the question. So this question is only from investors. We understand you are in transition. I think the message is, okay, if you focus on one thing, let's focus on it. So that's my message. Let's simplify. And again, I think it's a matter for us to, but I guess, yeah, I think the last, what we've clarified in the last year, which is, in fact, we want for the message to apply to these integrated programs. It's the same way we think in all India, the volatility capturing integration. I think it's a great answer to investors. And so that's where we are today. So we'll think of our strategy a bit later. We might simplify it from some molecule spots, but we are clear on these spots.

Thank you.

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

Yes, thank you. I have one last just based on cash flow this quarter and obviously showing the impact of your hedging position integrated. I just want to check if you can remind us what sort of the hedging level for the remaining quarters of the year and whether you're still continuing into your rolling hedging program given where the current cash prices are looking for next year.

No, but you know, it's a strong, it's a clear policy. We are edging more than 80% of the portfolio. So what has been done in 22 for 23 is gone, and we do the same for 23, for 24, and 24 for 25, and that's it. You know, we have a merchant exposure on our balance sheet in energy, and we assume it, but we try to, I would say, to cover part of it and to keep some of it much. And by the way, you know that we have decided that... all the Russian energy to the edge, because I'm not sure that will continue. So it's part of the answer. So it's continuing, and so that's why you should expect the next portion of the cash to remain more or less positive, because if I remember well, The four for 2.3 and 2.4.23 were higher than the one for 2.2. The war begins in March and you remember the peak of the prices were in 2.3, 2.4, not in 2.2. So we should have good cash flows. Although it might be something I did not understand in my business, but I think we understand. No, I'm clear. So I'm very clear. No, I'm joking. I don't know. No, no, it's clear. The goal of the AGs will come on the second half of 2023, more than the first half. So thank you to all of you for your answers and all your participation. I know that you have a busy day because we are three European companies that are delivering data the same day. I will not be longer. Just again, the key, I think, on the results of the second quarter, we demonstrated that we are profitable, 22% for FJ. We have a strong cash flow, including from energy, $8.5 billion, much stronger than, I would say, the decrease of the environment. And third, of course, we are committed to the distribution through order by maintaining the buyback at $2 billion for a fifth quarter in a row, despite the softening environment. So with this message, have a good vacation, have a good summer, and I hope we meet all of you on September 27th in New York for our update on strategy. And just to remind you, we took your lesson, but you don't want to listen too much to us. So it will be only morning, and then we'll have lunch with you and answering questions. Thank you for your attention, and have, again, a good rest during the time.

Thank you.

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