TotalEnergies SE Ordinary Shares

Good morning or good afternoon, everyone. Patrick Puyani speaking. So before Jean-Pierre will go through second quarter financials, I thought that mid-year would be a good time to check in on the progress that we have been making. I would say the great progress in just the last 10 months since we presented our strategy last September, Auto Investor Day in New York, or I would say Balanced Transition Strategy. which is anchored on two fundamental pillars, the oil and gas on one side, with a perspective of growth, and integrated power on the other side. And both pillars are driving the growth of the company. So during the last first semester and last quarter, beyond the excellent operational performance which was delivered on the oil and gas pillar, we have sanctioned several major upstream projects, But I would like to remind you, on the oil side, with the financial decisions on three large FPSOs, Camino in Angola, CPA2 and Atapu2, and both which are world-class, world-productivity projects with low technical operating costs, under $20 per barrel sanctioning criteria, Angola is under $30 per barrel break-even. So these are for three major oil projects, but we also have sanctions on the LNG side. Two important projects, the Marsa plant in Oman, Marsa LNG, which is a very ultra-low emissions plant, and the Obetagas project in Nigeria, which will supply Nigeria. So these projects will not only contribute to the objectives to grow our upstream by 2% to 3% per year in the next five years, but they will also boost the underlying free cash regeneration and ultimately shareholder distributions. On the second pillar, integrated polar, where we have reached quite a compelling ROACHE above 10% this quarter, and Jean-Pierre will come back on it, we have also made some strong progress towards deploying and completing our integrated power business model by acquiring flexible assets that allows us to extract maximum value from the renewable assets, in three key markets, in Texas, in the UK, and in Germany. We closed our CCGT deal in Texas and also announced the acquisition of a CCGT in the UK. Both of these markets, we know, have all building blocks, but define our integrated power model, renewable, flexible assets, and, of course, trading, and customers as well, in order to deliver clean, firm power, which prices at a premium level. compared to a green intermittent renewable power. We are also a quite flexible asset in Germany for our acquisition of Keyon Energy, a leading battery storage developer. And by the way, we just sanctioned the first 100 megawatt battery storage project developed by Keyon. These complements our leading position in offshore wind in that country, as well as the acquisition of Quadram, a renewable energy aggregator with a 9 gigawatt pipeline of aggregation to commercialize. So we are clearly, I would say, this first half in a strong execution mode of the strategy. So don't expect any change. There is, of course, still more to come. In particular, we have also announced recently that we made some changes important steps towards the FID of our Suriname Block 58 projects by the end of the year, which is, of course, a key milestone for us, our partners, and Suriname. And as a reminder, this is an operated 200,000-barrel oil development with more than 700 million barrels of estimated recoverable oil. We have achieved, as I said, key steps. including the agreements on the field development area with the authorities, but also securing all of the FPSO to be able to sanction the projects and should be, I would say, end of the first quarter, beginning of the fourth quarter. I'll wrap up my introduction by just saying that our balance strategy is so clearly in motion that we are pushing on all fronts. We are making progress delivering and executing our plan. which will allow us to reach our ambitious targets this year and delivering top-tier performance, but also preparing the future of the company. So we positioned the company to lead the pack, and we are determined to deliver to our shareholders our premium returns. And that's the program that I propose to show you at our next Investor Day, which will be here, will be in New York on October 2nd. that can put that date in your calendar. And so I look forward to meeting you there. But in the meantime, Jean-Pierre will give you all the details of the second quarter results, and I will be happy to answer your question today together with Jean-Pierre.

Thank you, Patrick. So let's move to the financials. So the crude market remained supportive in the second quarter, with bread slightly increasing by 2% quarter to quarter, to average 18%. while the company average LNG price decreased by 3%. In refining, margins continue to normalize, with our European refining margin marker down 37% quarter to quarter. In this context, Total Energy reported second quarter 24 adjusted net income of $4.7 billion, with the first half 24 totaling close to $10 billion. The company generated $7.8 billion cash flow during the second quarter of 2024 and close to $16 billion for the first half of the year. Importantly, profitability remained robust. We watched return on average capital employed of close to 17% at 16.6%. And we maintained strong CapEx discipline and reiterated 24 net investment guidance of $17 to $18 billion for the year. But last but not least, we continue to build on our strong track record of attractive shareholder distribution with $2 billion buybacks executed during the second quarter and up to $2 billion of buybacks authorized for the third quarter of 2024. Also, the Board has maintained the second interim dividend at $0.79 billion euro per share, which is nearly a 7% increase year over year and is 20% higher compared to pre-COVID levels. First half 24 shareholder payout stands at 45% of CFFO. Moving to the business segment, starting with hydrocarbons. So production was 2.44 million barrels per day in the second quarter of 24, close to the high end of the guidance range. We continue to see good performance from project startups and ramp-ups, including Meru2 in Brazil, AgpoWest in Nigeria, Block10 in Oman, Absheron in Azerbaijan, and multiple projects in Norway. Looking forward, production for the third quarter of 2024 is expected to be stable, between 2.4 and 2.49 million barrels per day. with the expected startup of the Anchor project in the U.S. Gulf of Mexico in the third quarter. Exploration and production continues to perform well, with reported adjusted net operating income of $2.7 billion and cash flow of $4.4 billion. The company maintains its cost leadership with upstream OPEX per barrel below $5 per barrel during the second quarter. In integrated LNG business, we continue to increase our structural resiliency by advancing commercialization of LNG through new medium-term brand-linked contracts with Asian buyers, having recently signed two contracts for a total of 1.3 million tons a year. Turning to the results now, hydrocarbon production for LNG increased 1% quarter to quarter, which includes entry into the Dorado upstream gas fields in the Eagle Ford Basin in the United States, and we progress on our objectives to increase upstream integration in the U.S. to further improve resiliency. LNG sales decreased by 18% quarter to quarter, notably due to lower spot purchase in a context of lower LNG demand in Europe. Integrated LNG adjusted net operating income and cash flow were both $1.2 billion in the second quarter. The results reflect a lower average LNG price and lower sales, as well as the impact of gas trading not fully benefiting in the continued low volatility environment. LNG trading continues to perform well. Given the evolution of oil and gas prices, In the recent months and the lag effect on price formula, we anticipate that our average LNG selling price should be around $10 per million BTU in the first quarter of 24, which is higher compared to the second quarter. Moving now to integrated power, as mentioned by Patrick, we recently enhanced our asset integration with several flexible capacity additions. Integrated power once again delivered profitable growth with first half 24 adjusted net operating income of $1.1 billion, up 36% compared to the first half of 23 due to activity growth. First half 24 cash flow totaled $1.3 billion, which is in line with the annual guidance of more than $2.5 billion. In addition, return of capital employed for the first 12 months and in June 2013 increased to about 10%. In downstream, refining and chemicals reported $640 million of adjusted net operating income and $1.9 billion of cash flow during the second quarter. Results reflect the sharp decrease in global refining margins since the end of the first which remained impacted by low diesel demand in Europe and market normalization following the disruption in Russian supply. The company's utilization rate improved to 84.5% from 79% in the first quarter of 2024, mainly due to lower planned maintenance, which partially compensated the decrease in refining margins. For the third quarter of 24, we anticipate that the refining utilization rates will benefit from the restarts of the Donge refinery in France and will average above 85%. Marketing and services benefited from the lower refining margins environments in the second quarter, with adjusted net operating income increasing to $380 million and cash flow increased by 38% sequentially to $660 million. At the company level, we have been, as usual, active in M&A on both sides, with $1.9 billion of divestments and $1.6 billion of acquisitions over the first half of 2024. Our net investment stands at $8.2 billion at mid-year, and we confirm our 24 net investment guidance of $17 to $18 billion. During the second quarter, we reported a $1.2 billion working cap release, and we anticipate that the working cap bills reported during the first quarter will continue to reverse over the coming quarters. Gearing was stable quarter to quarter and improved by nearly 1% year-on-year, at 10.2%, at the end of the second quarter, 24%. As a reminder, we continue to anticipate structural gearing of around 7% to 8%, all else being equal. During the quarter, Total Energy successfully issued center bonds on the U.S. market, totaling $4.25 billion. using conventional formats and privileging long maturity. The average maturity of this insurance was indeed 27 years. Indeed, the board of directors decided to return flexibility on the format of the bond insurance and to give priority to long maturity. Lastly, I'm pleased to announce that after the capital increased reserves for employees earlier this year, employee ownership in the company is now more than 8%. We also have strong support from our shareholders who supported all resolutions submitted to the vote at the recent Annual General Meeting. I will stop here and let the floor for the Q&A. Thank you.

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 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 two. Once again, please press star one if you wish to ask a question. The first question is from Lydia Rainforth of Barclays. Please go ahead. Thank you, Anne. Good afternoon.