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TotalEnergies SE
4/30/2025
Ladies and gentlemen, welcome to Total Energy's first quarter 2025 results conference call. I now hand over to Patrick Pouyanné, Chairman and CEO, and Jean-Pierre Sbraire, CFO, who will lead you through this call. Sir, please go ahead.
Good afternoon, everybody, or good morning, if you are connecting from the US. Before Jean-Pierre will go through the detail of the first quarter results, I would like just to make some few opening remarks. on what appears to be today a more challenging global environment and the ways that TotalEnergies intends to leverage our consistent strategy to deliver resilient results benefiting from our energy production growth and attractive shareholder returns. We have indeed entered into a period of heightened macroeconomics and geopolitical uncertainty. With, and this list is not exhaustive, current fragile negotiations on the Ukrainian-Russian conflicts, the new but fluid tariff policy enacted by the US, decision of OPEC Plus to unwound its voluntary production cuts. Even if the impacts are not yet fully appreciated and might evolve in the coming months, this moving context is creating uncertainties, notably on oil demand, along with volatility in the oil markets, oriented on the downside over the past few weeks, and also on costs for new projects in the U.S. because of tax impacts. In this quite, I would say, fluid and landscape, TotalEnergies has and will, I would say, continue as a unique strength that we have consistently built over the last 10 years, and our efforts are paying off. First, of course, and foremost, we have been strong and never gave up on oil and gas. We have built over the last 10 years one of the best low-cost, low-emissions oil and gas portfolios with more than 12 years of resource life, which today gives us substantial leverage for strong and accretive growth. but clearly differentiates us versus our peers. Delivering this growth is, of course, one way to protect our future cash flows. We are growing companies with two pillars, including the second pillar on electricity, which is not dependent on the oil price, which gives an additional resilience to our model. As you will see, with Jean-Pierre, this quarter, we developed robust year-on-year production growth on nearly 4% in oil and gas and 18% in electricity, which represents a unique total energy production growth of close to 5%. But we are also, at the same time, in control of our costs. Our capex first, because most of our capex have been engaged and are based on lump-sum EPC contracts that secure the level of the capex. But also on the OPEX size, we have maintained in the last year, despite the inflationary trends, our cost per barrel, or OPEX per barrel, is lower than $5 per barrel, and again, this quarter. And finally, we are benefiting, and our balance sheet remains strong. We are confident in our ability to achieve our growth objective for 2025 and keep figuring under control. Because we have confidence in our business model, the board has decided to maintain attractive shareholder research, despite the uncertain environment. The board first and foremost confirmed the first interim dividend, which was announced in February at 85 euros per share, which is a 7.6% increase compared to 24%. In dollar terms, I would say it's even more than that. It's more than 10% at the current exchange rate of 1.14. As you know, dividends is a first priority in our capital allocation framework and we'll continue to maintain and to grow these dividends in future years, even in these uncertain environments. Remember that we did not get the dividends during COVID period. After 12 quarters in a row of $2 billion more of share buybacks, the board has once again announced share buybacks of up to $2 billion for the second quarter, despite a softening price environment which went below $70 per barrel since the beginning of April and in an uncertain geopolitical and macroeconomic context. Just as we have done during over-volatile times, the board will continue to monitor the buyback on a quarterly basis, Within the guidance we gave to the market last September to maintain a $2 billion buyback in reasonable market conditions. And to conclude this introductory remarks, as you will see again today with our Q1 results, I think we are well equipped and well prepared to navigate in certain environments. We remain focused on delivering on our 2025 objectives and to maintain attractive shareholder returns. On that note, I will now turn to Jean-Pierre, who will go through the details of the first quarter results.
Thank you, Patrick. So my first comment will be on the price environment in the first quarter. That was globally similar to the environment we had in the fourth quarter of 24. So Brent was at $76 per barrel versus $75 per barrel in the fourth quarter. TTF, the European gas price, was $14.4 per million BTCU, up 6% compared to Q4. And the average energy price was $10 per million BTCU, down 4% compared to Q4. And the ERM, so our indicator for European refining margin, remained weak, averaging $29 per tonne over the quarter. So in this context, the company reported adjusted net income of $4.2 billion, and a CFO of $7 billion for the first quarter of 2025. Profitability remains robust, with return on capital employed for the 12 months ending in March at 13.2%. Furthermore, total energy continued its strong track record of attractive shareholder distribution, with $2 billion of buybacks executing during the first quarter and, as Patrick mentioned, a 7.6% year-on-year increase in the first interim dividend of 25 to 0.85 euro per share, which is up 20% versus pre-COVID level. Now moving to the business segment results and starting with hydrocarbons. 25 is off to a strong start. First quarter production was above the high end of the guidance range at 2.8%. 56 million barrels equivalent per day, representing nearly 4% growth year on year. Production benefited from continued wrap-up of projects in Brazil, in the United States, in Malaysia, in Argentina, and in Denmark. In addition, we continued to be successful at keeping operating costs at low level. It was $4.9 per barrel equivalent during the first quarter. Looking forward, second quarter production is expected to grow 2% to 3% year on year, reflecting more planned maintenance compared to the first quarter, which has an impact of around 50,000 variable equivalents per day. Given the strong 4% growth achieved in the first quarter, we reiterate full year 25 production growth guidance of more than 3% compared to 24%. Moving now to exploration and production. So the company continues to execute very well. ENP reported strong and growing results with adjusted net operating income of $2.5 billion and a cash flow of $4.3 billion in the first quarter, up 6% and 9% quarter to quarter, respectively. Cash flow benefited from accretive new low-cost and low-emission oil production, which generated roughly an additional $100 million of cash flow, above what the portfolio average would have delivered during the first quarter. We anticipate additional accretion throughout the year, with the Ballymore offshore field in the U.S. having achieved first oil earlier this month, and Meru4 in Brazil expected to be online in the third quarter, both of which are adding high margin barrels that will enhance the cash flow. Moving on to integrated LNG. LNG sales were stable at 10.6 million tons, and integrated LNG achieved adjusted net operating income of $1.3 billion, up 6% year-on-year and down 10% quarter-to-quarter, in line with the evolution of the average LNG price I've already commented. Compared to last quarter, cash flow of $1.2 billion was impacted by the timing effect of dividend payments from some equity affiliates. LNG trading continues to perform in line with expectations for 2025. Gas trading results were impacted by the unexpected downturn of European markets, following new elevated uncertainty on the evolution of the Russia-Ukraine conflict. Forward European markets expect gas prices to remain elevated in the second quarter 2025 in the context of inventory replenishment in Europe. Given the evolution of oil and gas prices in the recent months and the lag effect on price formulas, Total Energy anticipates its average energy selling price will be between $9 and $9.5 per million BTU in the second quarter of 2025. Poor integrated power now. First quarter adjusted net operating income was $500 million and cash flow was $600 million. As anticipated, these quarter results do not include any positive impact of farm-down, which are expected later in the year. Thus, it's a matter of timing, and it is driving a 1% temporary decrease in ROACHE to 9% this quarter, which is expected to reverse as farm-down will progress. Looking forward, the campaign is on track to achieve the annual cash flow guidance. Additionally, we are progressing on multiple fronts in the integrated power segment. TotalEnergy signed a premium clean-some-power contract with STMicroelectronics of 1.5 TWh over 15 years during the first quarter. In addition, the company further deployed its differentiated integrated power model in Germany with the launch of six new battery storage projects developed by Ikeon, the company that we acquired last year. during the first quarter, and the closing of the acquisition of the renewable developer, DSB, closed earlier this month. Turning now to downstream. In the context of weak resigning margins, together with declining petrochemicals and biofuel margins in Europe, downstream posted adjusted net operating income of $0.5 billion and a cash flow of $1.1 billion in the first quarter of 2025. Cash flow this quarter was impacted by several factors, first one being the usual seasonability in the market and services businesses, and the timing, in fact, of dividend payments from equity affiliates in refining and chemicals. But beyond that, the macro environment remains challenged, with refining, petrochemicals, and biofuel margins lower than our planning case, impacting cash flow by about $150 million. On operations, we encountered some issues at Donge Refinery and Port Arthur Refinery that negatively impacted cash flow by about $200 million. These issues at Port Arthur have been resolved and work continues at Donge Refinery. However, there are no systemic operational issues, and performance was strong at other sites such as Enverp or Loina. boosting the global refining utilization rate to 87% in the first quarter of 2025 from 82% in the first quarter. Let's move now to the company level. At the company level, net investment totaled $4.9 billion during the first quarter, and we reiterate full-year 2025 guidance in the range $17 to $17.5 billion. We reported a seasonal working cap build of $4.4 billion in this quarter. But I have to remind you that it's less than the $6 billion reported in the first quarter of 2024, and in line, in fact, with the $3.4 to $4.4 billion range reported in the first quarter of 2022 or 2023. The drivers of this quarter working cap yields are mainly, first, a $1 billion reversal of exceptional working cap items reported in the fourth quarter of 2024. Secondly, a $2 billion seasonal effect from gas and power distribution activities in Europe and related to advanced payments occurring in the first quarter of 2025. And third, the $1 billion impact from evolution of the business related to stocks, and sales increased at the end of the quarter. Lastly, the balance sheet remains strong. Gearing is at 14.3%, but as indicated earlier, the $4.4 billion working capital this quarter is highly seasonal. Excluding this impact of this seasonality, the normalized gearing would be 11%. Now Patrick and myself are available to answer your questions. So please open up the line.
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 one on your telephone and wait for your name to be announced. Please kindly mute any audio sources while asking questions. If you wish to cancel your request, please press star and two. Once again, please press star and one. The first question is from Doug Legate of Wolf Research.
Good morning. Very early morning from Houston, Patrick and JP. Thanks for taking my question. I think the reaction to the debt move this quarter, JP, is obviously weighing on your stock. And I think this is probably... Thank you for the explanation on moving parts. But I think it begs the question... How do you think about sustaining the 40% payout, the share buyback, if that means that you end up leaning on the balance sheet to fund the capital program? What is the trade-off? How resilient or how much would you be prepared to continue to do that? Is there a limit where the buyback would become or the payout would become under question? And I have a follow-up, please.
Because 40% of cash flow is not at all into question. It's a strong guidance. It will be about 40% by the end of the year. I am committed to that. What we said about the buyback, I remind you of the guidance we gave you in September, is that, and I repeated it in my speech, the guidance is to maintain a $2 billion buyback per quarter in reasonable market conditions. The board obviously considered that these conditions that we experienced during the first quarter and even since the beginning of April, where I remind you our list was between $65 and $70, is still giving a set of reasonable market conditions. Of course, it will be appreciated. It's not one specific price limit. It's more a global, I would say, approach to the macroeconomics. So we observe like you. In fact, the world, as I said, is very uncertain because this tariff seems to be a hit, but it's quite fluid. And we could expect maybe the U.S. to come back to a more reasonable approach on all that. It's not impossible. We have to adapt ourselves. That's one of the difficulties. And so, in fact, the reaction of the board, like we've done during COVID, is first, no panic. The fundamentals of the company are strong. We deliver a strong cash flow. So why should we overreact today? No, let's look, because we could see some policies change on one side, the other side. It's true that the whole market and, in fact, I'm more looking on our side to what the OPEC Plus will do. In fact, it's more important for us, really, in this type of environment. So that's why, you know, 40% for sure of cash flow and distribution, keep it as a strong guidance. But I remind you, last year we were even at 50%, not 40%. And by the way, I think if we, the first two quarters with 4 billion of buybacks plus a strong commitment to the dividends, as you said, and I repeated what I said permanently is that the first dividend is the first capital allocation. It means that we are on the basis of $12 billion, at least, and more, between 12 and 16. I would say, obviously, you make the math, you will find your 40%, so no point about it. You can be sure of it. And again, the second important part of that is why what we monitor at the board of all is what this concept of normalized gearing that we shared with you, which was not a because I was sure about the reaction of the market in this context. And we monitor it. And in fact, as we told you, at the beginning in February, at $70 per barrel, we are targeting a gearing by 12%, 13% as of the year. Today, without excluding some of the seasonal effects, we would be at 11%. So honestly, there is no thing. Maybe the price is at 65% the whole year, and at 70%, it will be something around 14% instead of 12%, 13%. a guidance which works well. At the board level, I think we are confident in the fundamentals. Growth is coming. Growth is delivered, which is, of course, fundamental. It's not just work. Growth, controlling our costs, we have a strong experience and a track record on that. And so we think it's the best signal we should send to our investors is, as I said, like for the strategy, to know consistency. The word I want you to have in mind is total energy is a consistent company, and even more when the environment is unstable, rather than just making short-term reactions. It's not at all the way we monitor the company for the last 10 years, and the board is aligned on this attitude.
Thank you, Patrick. My follow-up is related to that. You have built-in capital flexibility there. to the plan, particularly around integrated power. You've talked about a $2 billion flex. What would it take for you in the micro environment to consider a spending reduction on your net capital guidance? And I'll leave it there.
Thank you. Honestly, I think I'm clear as well. We have a plan. We could have some flexibility. No way today to activate that. Again, we are at $65 per barrel. I'm confident in the way to move forward for this environment. So The point might be on what could be led us is more of the impact of the tariff on the supply chain of, for example, renewable projects in the U.S. or batteries projects in the U.S. If you apply some tariff, 20 or 25 percent, on importing Indian panels in the U.S., obviously, we could save some money there. Just to be clear, I say that because we just took a decision recently. There was a 600-megawatt project, which was approved by the XCOM by the end of March. After the tariff impact, we asked our teams to look again to it. And we said, okay, let's pause it. We will not invest. We will postpone it, maybe because of the tariff. Because, obviously, we are not exactly – without tariff, this project was more than 12%. With tariff, it's less than 10%. So we said pause. We are not in a hurry. It's not volume, motor value. We have to take care. So that's the type of things which could happen. But again, it's more on the cost side. The impact on the capex side is more because of the tariff, and we need to monitor that precisely and not to be driven by volume over the value. But again, I'm comfortable to maintain the guidance on the capex. The question of flexibility is more if we go down like during COVID. When we go down to lower than $50, then we'll have to act. And as you follow us for long, Doug, you know that during COVID, we were able to save $3 billion. So we are not there. We have some flexibility. And again, I know that Nicolas Terraz on the shrimp part is beginning to ask his teams, okay, be clear, maybe $500 million could be activated. So he's beginning to take actions at his level. But at the company level, I'm fine, and to monitor that, we will manage it.
Thank you very much indeed, guys.
The next question is from Michele della Vigna of Goldman Sachs.
Thank you very much. I had two questions, if I may. First, I wanted to come back to your point, Patrick, on tariffs. It's pretty clear that they would materially impact the renewable business in the U.S., but I was wondering whether it could also affect some of the oil and gas projects, and also if there could be any issue with the LNG vessels globally, given that so many of them are Chinese-built. And then the second question, you may not have an answer, but I was wondering if you had a view on what happened to the Iberian power systems these days, and if there was anything in terms of structural change to the power systems with renewables that you think need to be addressed. Thank you.
Okay. On the tariff, we have to be clear. As I said, I think this could have an impact on the new projects which have to be sanctioned. And we have, in most of our projects that we have already, the Rio Grande Train 123 are secured. I don't expect any impact on the tariff. because all that was secured in a strong contract, EPC, which is going well, by the way. It's an advance. Progress Rio Grande is an advance. It's already at 39% compared to 31%. We had the good news, by the way, during the quarter. As you know, the legal issue of the permitting has been pushed away, so it's a glory. We were on train four and probably five. This is a topic on which we are expecting to see if there is an impact on the tariff, because a tariff on steel for new projects that might have Again, the difficulty might be more to be sure in which tariff are we speaking about. Is it finally, at the end of the day, 10% across the board? Okay, that probably could be absorbed. Because, in fact, in the U.S. projects, remember the Trump policy was not only increasing tariff. There was a sort of countermeasure, which was to lower tariffs. the income tax, in fact, the tax. So we don't have this part, but you know, this is also something we have to keep in mind. It's not only a matter of cost, it's a matter of profits at the end. So if the countermeasures and the reconciliation bill, which will come before the end of the year, is for me very important. So for me, it's more at this stage a question to monitor a six-month uncertainty, and I think we'll have much more clarity on the U.S. investment case by the end of the year, because we'll have probably all these negotiations of the tariffs will have landed, so one way or the other. And on the other side, we will have the bill, which lowering the corporate tax, which of course is important in the US system. So for me, that's the point. So the way we monitor that. But the rest of the projects for us at this stage outside of the US, we don't see any impact on the tariffs, to be clear. It's not an issue. Your second question on the energy threshold is interesting, That's true, but I think the U.S. understands that if they want to export LNG without Chinese vessels, I'm afraid the export will be limited. And I think it has been raised. I understand, by the way, that there are a lot of discussions and negotiations about this idea to have a special tax on all vessels which are not built in the U.S., but they begin to see some, I would say, amendments. I read a paper yesterday that we are going in the right direction. Honestly, yes, it has been raised to the U.S. authorities that it could be a real issue for everybody, including for customers, including for that. So we know that it's a long way to last. Again, let's look at it. So, again, that's why, again, at the board we took a position which is, okay, no overreaction, no panic. Let's look. We will have more clarity, I hope, and getting out of the small and big issues. There is a lot of noise, but I'm... I think at the end of the day, business will prevail. Business interests will prevail for everybody. Iberian power system, no, I don't know. I know specifically. There are lessons, I think, at the end. And I will tell you, Michele, what happened. In fact, we observed what happened in Germany in February when we had one week without wind. That struck me. Because I can tell you, there was no problem in Germany, but one week without wind, if you don't have the full backup system with your gas-fired power plant, that year it was more of a coal-fired power plant, then you have an issue. And I think the lesson for me of all that is that it's a good time when we think about integrated power and globally to speak about the grid, which needs to be adapted. We observe that when the grids are more than 30% of renewable, it becomes more unstable. So we need to... Investment in degrees, investment in flexible assets. I think the two lessons I learned from the February event, and I'm suspecting, again, I have no specific idea, that Iberia might be the same type of, in fact, tax. We cannot think that a fully renewable system will work in electricity. This is a lesson I learned, which, in fact, honestly, reconforts me in our own strategy, which is to maintain this gas-to-power ratio together with renewables. We gave a guidance, 70-30, between both. Maybe we should adapt it in the future, having more flexible assets to monitor this type of intermittency and impacts on the system. Thank you.
The next question is from Lydia Rainforth of Barclays.
Thank you, and good afternoon to everybody. Patrick, if I just come back to the idea around the sustainability, affordability of the buyback, part of the reason that there is that shortfall is that the pace of growth that Total Energies is delivering. And I'm just wondering, could you give us an idea of the difference in capex that you would need just to keep the business flat versus delivering the growth you are? So really, what's the growth capex? And the reason I ask that is that clearly others in the sector are delivering slightly higher pre-cash flow, but actually are growing less than Total Energy is. And then the second one, just linked to the balance sheet, it's clearly strong at the moment, but that weaker market always creates opportunities. So how should we think about how else you would look to deploy the balance sheet, potentially for acquisitions or Put another way, are there any holes in the portfolio that you would like to fill? Thank you.
Great question, Lydia. Thank you. The first one, let me be clear. We are given by value. So we have some good projects delivering accretive value. So the growth is coming from accretive value. So this one must be preserved. That's a medium and long-term industry. We need to develop it. Then, of course, again, if we have to cut capex, again, I remind you, I'm able to cut capex, but not on the fundamentals of the growth in oil and gas, where we will deliver a creative cash flow for shareholders. But I have other ways to arbitrate. If I need to invest less in EV charging, don't worry, I will do it. I will give you a list of things on which we can be on CCA. So we are spending some money. This will be reviewed. By the way, we are making our business plan exercise in June, July, and I will look at it with preparing the future 26 and our future investors' meetings by beginning of October. We'll look at it, obviously, with a scenario, what happens if, and looking to flexibility and define it to arbitrate. But I will not arbitrate what is a fundamental future cash flow growth for shareholders. This is clear. It's already, you know, we have these projects have been sanctioned. They are being, they will be delivered. And in fact, the priority must be to maintain their budget and their timing rather than beginning to arbitrate. But we have enough, you know, when you speak about $17 billion budget to find $2 billion. It's not so complex in a company like that. If we have to do it, we will do it. As we have done it in the past, and I think we have a track record over the last 10 years, we demonstrated you that we are able to do it. But I want to do it in a smart way and not, again, at the expense of a future cash flow growth. The balance sheet. You know my position. My position, in fact, it's always good to be counter-cyclical. So the question is, can we create value when we buy at a low price? And then the question for us is an arbitration. Of course, buybacks today, price is low. It's cheap. And it's good to buy your shares. They are cheap, even cheaper. And by the way, the debt is lower than the cost of capital. So it's a good investment. But then we will have to compare that against, can we do a beautiful acquisition with a chip, which will be a credit for everything? But the way to think about it, the way to use, in fact, the balance sheet, this is the trade-off at which the board will have to answer. Today, we are not there. Today, I'm sorry, I don't see $50. I don't see chip acquisitions. I'm more, we are divesting some few things and I continue to sell them at $70 per barrel. So we'll see. But this is the type of things which I think we need to think again to the medium and long term. And do we create more value, more cash flows for our shareholders? That's the fundamental way to speak about the balance sheet and the way to use the flexibility which we have. At this stage, the buyback is okay. Clearly, that's why we maintain with $2 billion for the quarter.
Brilliant. Thank you.
The next question is from Biraj Borkataria of RBC.
Hi. Thank you for taking my question, and thanks for the comments. The first one is just a quick clarification on the way you and the board look at the normalized gearing versus the number that we see. Is it just the seasonal factors that are in there, the adjustments? I think Jean-Pierre talked about $3 billion of roughly seasonal factors, and I can't quite reconcile that with the 11% normalized gearing. And then the second question is just on the latest situation in Mozambique. Obviously, we're a few months on from the election. Important project for you. Just wanted to update there. Thank you.
Good luck, Jean-Pierre. But to be clear, the calculation, yes, we took up $3.4 billion. We said you had $4.4 billion working capital built There was one billion of reverse of exceptional elements we mentioned at the end of the year. So when you make the math with 3.4 and instead of minus 3.4, you find 11%. Jean-Pierre could give you, and the team can provide you the details, but it's very easy. It's straightforward, in fact. That's what has been done, because fundamentally what we observe, and again, We as a team can provide you the slide, and you can do it yourself because it's public. The build and the release of working capital for a year. In fact, we know that what is built at the beginning will come back along the year, except some exceptional elements. We mentioned to you, I remember in February, that there was end of 2014. $1.5 billion of exceptional, $1 billion has been reversed, but still $500 billion, which we should come one day. So this one, we cannot, it's not seasonal, it's something which we lose. But again, so we are confident because we have observed the company and the way it's able to to erase this seasonal effect along the year. So that's what I think, and you know there is more release by the end of the last quarter. We have a bit of the first quarter, a strong release in the fourth quarter. In between, things are moving down, and that's the point. The Mozambique update, Mozambique, I mean, we had the good news. So all the financing is back on track thanks to U.S. Exim decisions. So now the shareholders have decided fundamentally to move forward with the projects. We are all working on it. We are still expecting one or two answers, but in fact, we could finance with our equity. And in fact, it's more a question of paperwork. On the ground, the security of the industrial area where we are building our projects is a huge area. It's completely secure. It's safe. So what we are working with contractors today is to be sure that all contractors will remain within the perimeter of the secured area. This is a point on which we work with them. And on the other side, as you noticed, we have worked in order to answer to some controversies about human rights. I don't know if it happens or not, these events. We have no proof at all. But we have worked with myself. I went to visit the president to tell him, you need to take your general prosecutor. We want really an inquiry. We took the initiative to consult the National Commission of Human Rights in order for them to be sure that this inquiry will be done properly and they are committed to make a report. So I think we have taken some actions in line on our side which is our societal responsibility, I would say. And I think we have done it. So I would say the target is to be able somewhere to relaunch this project by the middle of the year.
Thank you.
The next question is from Irene Imona of Bernstein.
Thank you very much. Good afternoon. Going back to your adjusted gearing, it is obviously low at 11%, so there's no issue with a $2 billion quarterly buyback. But I was wondering if there is a level – we cannot know if $65 Brent is a flaw. Is there a level for that normalized gearing where the board would feel the need to revisit the $2 billion quarterly buyback? And my second question on Namibia, is there an update on the timeline of maturing that project and progressing towards FID? Thank you.
Okay. Thank you, Irene, for the two questions. I think I've answered somewhere previously to Doug. I think, again, we gave you a guidance at the beginning of the year, but the board was ready at $70.00. to go to 12%, 13%. I just told you at 65% we'll be somewhere around 14%. So if I'm saying that, that means we are comfortable with that somewhere. It's not an issue, it's not a precise figure, but this is the range where we are comfortable to use the balance sheet. And secondly, honestly, I will not play that game, but I think in New York, I told you at 50% obviously we will revisit it. Probably lower at 55 as well, just to be clear. But we are not there, so let's monitor that one step by step. And again, I think we prefer the consistency rather than being erratic on that. Namibia, I was in Namibia last week. I visited Namibia for the first time, the authorities. We are working on this one. To be clear, we have a project which we have given some use of information, by the way, in February. I think it's a matter now to find a common ground between us and the authorities. It's a project which faces, as you know, in fact, fundamentally some challenges. It's feasible. We have quite a lot of oil, and we have something like 750 million bar of oil, so it's quite a big pool of oil. There is a low permeability, so it means that, in fact, when you inject the gas, it's a longer plateau. So we need to have a long license to produce a 750 million barrel of oil. We need as well, because there are some challenges, it's a 3,000 meter water depth, which means capex with the lines, pipeline, flow lines are more expensive. All that makes $20 per barrel, let me say. So in terms, of course, I express to the government that we have some thresholds in terms of, I would say... IRR targets and that I need to protect the project in case the price of oil will go down. So we have opened the discussion. It's premature. But again, it's like I see a very similar situation that the one we had in Suriname one year ago, where at the end of the day, we find a way to find a common ground between the government and ourselves in order to be able to move forward the project. So it was, of course, a first visit. I don't expect any answer. But I've noticed that there is a will in Namibia to open the oil and gas industry. We could be the first mover, which means sometimes also some additional cost because of logistics. So the authorities have also taken that into consideration. Again, you know we have a very large pipeline of projects. And as I said last year in Suriname, you know, at the end, I'm not driven by the volume, the volume, and we have already quite a good growth. So I think Namibia will be, of course, it's our common interest, but it will be down if we find, again, if we are fitting with our return targets for us. And if I spend my time to visit Namibia, it's because I think there is possibility to find a common space, but it has to be, we need to be two to be... We have two persons to play a tango.
Thank you.
The next question is from Giacomo Romeo of Jefferies.
Thank you. Two questions for me. I think your message on buybacks in the current or macro environment is very clear. However, I just wanted to go back to What you showed in your slide in the CMD where you were showing the community CFFO below $50, in there you give us a flex level of capital investments, and you would expect those levels to generate free cash flow above the dividend. So is there a minimum level of buyback in that macro environment that you think you'd be able to sustain? The second question I have for Patrick is on Argentina. We have some – you have seen some of your European peers taking early position in LNG projects in Argentina. There have been some headlines suggesting you're looking to scale back your presence in the country. Just – just trying to get a bit of your thinking around the investment prospects in the country and whether you think there's some attractiveness around the potential for Argentina to become an LNG exporter. Thank you.
Yeah. So, first, you refer to a slide, which was slide number 53, according to my colleagues, which gave me the slide. which you have the answer, I think, on the slide, because if I remember, if I was reading the slide, we told you that at $50 per barrel, between a disciplined capital investment, which was down by $2 billion compared to the global guidance, we were able to deliver the dividend, of course, to grow the dividend, and there were some cash flows remaining for buyback. So I think you have the answer to your question. So at $50, I don't think the buybacks are going down to zero. That's the case. It's not the idea. So you can make your math up and down. But the tips will give you more information. So for me, the answer was clear. We have, in fact, a post-dividend break even, which is lower than $50 by the end of this period. So that's a way to monitor that. And by the way, today, the price was going down. I suspect we have done already $4 billion by the end of half of the year. But if the board is confident, you know, if we maintain the $2 billion. I remind you as well that there is a strong guidance, which has been a little forgotten, and maybe we could have repeated it today, which is more than 40% of cash flow from operations. This is another guidance on which we told you repeatedly it will be full cycles. So more than 40% of cash flow from operations full cycles. It's supportive of the distribution to shareholders. We are committed to that. And this is not. And so I know that you had a trend to forget it because we were up to 50%. But we didn't change the guidance of more than 40% through cycles. And in fact, we didn't change it through cycles because it's exactly what we want to cover in case the oil price is going down. So keep that in mind, and you can make your mark with it. Argentina, yes, we have a lot of projects in the world in energy. You know, I think it's a question of allocation of capital in LNG, and we consider we have better projects in our approach. We have enough. We have a lot, you know, in Qatar, in the U.S., in Mozambique, in Papua. We have enough, and we didn't feel... I would say, I know that today President Millet is making a lot of reforms, but along the last 25 years, Argentina tracked records for investors... I think we managed to get some dividends two or three, two years out of 25. So to invest in heavy infrastructure in a country which has quite an unstable, I would say, foreign exchange policy is not really for me my priority. And again, by the way, we have other ways to monetize our gas, Argentinian gas, on which we work. We recently signed some interesting contract to monetize our gas to Brazil, to Bolivia. So this is more of a crisis. So I respect the decision of others, to be clear, but on our side, we didn't put, and I visited Argentina last September, and I explained to the president of Argentina that others can be afraid, but for total energy, it was not a priority. So again, it's a question of portfolio loss.
The next question is from Matt Lofting of JP Morgan.
Thanks for taking the questions. Two, if I could please. First, I just wanted to follow up on the earlier comments on buybacks, payout ratios, and gearing. If I understood correctly, Patrick, what you said earlier, the board, it sounds like, views April conditions as well as Q1 as within the bounds of reasonable and 50 to 55 for a sustained period is perhaps where you review. As you were referencing earlier that the mid-cycle payout is greater than 40%. When the board thinks about 2026 and beyond, how mechanically and swiftly should investors expect total energies to revert to 40% plus as an underlying payout? And then secondly, I just wanted to ask you about working capital. the quarter-on-quarter fluctuations appear to have been quite substantial over the last 6-12 months versus history, perhaps. I wondered if you could touch on some of the reasons behind that and the extent to which you expect that to continue, perhaps related to evolutions in the portfolio setup. Thank you.
So, I mean, Mathieu, I'm sorry to correct you. I never said that it was. I just took two examples, 50, 55, and never said there is a limit somewhere. It's true that this year, this quarter, we are still at 65, 70. We are comfortable to move forward, which is not a surprise. It was a comment I gave you in New York in last September. And again, the 40% is not a mid-cycle. It's something which is a sort of flow. The flow, we said through cycles, whatever, will deliver a payout of more than 40%. So that's to remind you of that. So it gave you the guidance, which means that it was, again, it's a fundamental one. I think it does not mean either that we will take 40% as a strict What we want to deliver is at least 40%. You know, last year we delivered 50% and the year before as well. So it's at least 40%. And in fact, the reality is that considering the dividend of Total Energy, which represents $8 billion, you are, I can tell you quickly, about 30%. Because the dividend has never been cut, we continue to be maintained. So even in a low-price environment, if we generate a cash flow of only $20 billion, When you have 8 billion of dividends, you have already the 40%. So, I mean, just don't try to guess more than what we said. I think we, and again, we are monitoring that, as I said, as well, in the best interest of the shareholders as well. Obviously, when the share price is low, it's good to take, to use the balance sheet to buy some cheap shares, and that's a case of buyback is a good one. So, when you ask me a question of mechanically, no, there is no mechanics. It's not mechanically. We appraise the situation, the macro environment, geopolitics. It's not a board. It's not just looking to one figure. There is no magic formula hidden. It's more a question of global environment. And again, yes, it's true that we have uncertainty today, but as I said, it's quite fluid, and it could be reverse. I'm I think maybe after summertime we could have some calm down after the tempest, you know, we never know. And we are well positioned to weather the storm, so let's continue. Working capital, now I think you have two explanations very easily. You have some, I would say, structural parts. Part of it is fiscal. You have some fiscal reversal. We have some debts which grow with working capital, fiscal working capital, which come back every first quarter in Norway or other countries. The other part, which is also seasonal, is the marketing. Gas and power marketing. You know, people are eating their homes much more in winter times. And you know, in fact, they pay their bill monthly on equal installments along the year. So you have a difference of revenues between the fact that we have some big consumption during the year... and equal installments. And that creates around a billion, at least this phenomenon. It's really seasonal, but we know that at the end of the year, the people will have favor bills. So this is a type of thing. That's why we have some real between the fiscal and this example. And I think we have one or two which we could qualify from seasonal. And that's the point on which we are comfortable. It will continue, yes. We have observed it for several years. Again, we were monitoring that internally. This time, because I was sure when I saw the jump from 8 to 14 that you will have some questions, we prefer to share that with you in order to be able to give you some better, the way we ourselves, the way we think internally with the board, which we put on the table. I propose to share it with you.
Super. Thanks, Patrick.
The next question is from Henry Patricot of UBS.
Yes, hello everyone. Thank you for the update. Two questions from me, please. The first one, on the integrated power business, you mentioned that roadshows will be lower this quarter because of the lack of farm dones. So I'm just wondering whether that's something that you see as very much temporary or if you see actually some more challenges in agreeing on these farm dones given the increased uncertainty around renewables, in particular in the U.S.? ? And then secondly, on the integrated LNG business and the guidance on CFO, you targeted earlier this year $6 billion of cash flows. Looking at your Q1 performance, I realize it would be more like a stable cash flow at $5 billion. Do you still see that $6 billion target as achievable in 2025 in the current environment? Thank you.
Okay, first one, to be clear, it's really a question of timing of the farm downs. You will see our anticipation already on Q2 is that we should have almost two quarters in one. In fact, the farm downs revenues represent more or less $70 million per quarter. On an annual basis, it's an amount of around $300 million, $280 million, $300 million of profits which are planned. So it's 75 per quarter, 70, 75. In fact, this time there was no found out, but I know already that we just closed one in Portugal, which will generate what should have been done first quarter. So it's really a question of timing. We don't see much difficulty. We continue to do it. We continue to do the found out, including the U.S., by the way. So we have a program to execute. We have put in place a dedicated team, specialized team, working with many players. which is by the smart person, so we have to deliver. It's part of the business model. And so at this point, I can tell you, I don't see why the team would not deliver. There is no hint. Of course, it's not linear for quarter. We have quarterly results, and that's more it has to come. So on the second quarter, you would have a result of found out, which will be, I would say, higher than what it was planned, okay? And so no challenge on this one. Obviously, the main challenge is that interest rates are higher, but again, you have still quite a good, I would say, appetite from this type of assets, from platforms, et cetera, et cetera. IL&G, so the guidance, yeah. When I looked at the slide in February, if you look carefully, it was target 6, but it was a shadow part, so it's between 5.5 and 6. It's true. On this one today, I would say if you multiply by 4, we are more on 5.5 than 6. But, you know, my teams have... Honestly, on this one, I want to make a comment on it. In fact, and I think like others, what happens in Q1-25, the fundamentals of the markets were bullish. So we are long on gas. And unfortunately, as other players, by the way, and other competitors, the geopolitics became bearish suddenly because of the comments on Russian-Ukrainian story, which was not anticipated. So in fact, you had a bullish position based on bullish fundamentals, which were right, because we've seen the inventories declining. So it was the right position. And this bullish position was suddenly by an abrupt market reversal taken back by mid-quartier to bearish geopolitical events. So that was difficult. And that's the way the business of our traders is quite complex today, to be honest, in this type of fluid and environmental environment, because it depends on some, we don't know what will happen tomorrow morning. So the position was perfectly right. And so we were supportive of it. Suddenly you have some, so we experienced some few losses in February, which were reversed. But globally speaking, the LNG trading was good, was strong. It was more the gas trading, which was it. So I'm fine. We took a decision recently. By the way, we have a new leader for all this gas trading, which wants to make some ideas. So I'm supportive. And so between 5.5 and 6, just to clarify this guidance, and I maintain it today.
Got it.
Thank you. The next question is from Martin Ratz of Morgan Stanley.
Hi. Hello. I've also got two questions, if I may, which actually sort of just follow up on the question from Henry. I wanted to ask you about your thoughts on the true appetite that Europe might have for more Russian pipeline gas. So many sort of contradictory comments, indicators. It's a real market concern, but clearly... You're connected to talk to a lot of people. I was wondering, Patrick, what your impression is of how likely this really is, say on a timeframe of sort of 12 months or so. I mean, like, you know, multi-year view, probably all sorts of things are possible, but on a sort of 12 month view, how likely is this really? And then secondly, perhaps a bit of a technicality, but I wanted to ask about the guidance for LNG price realizations for the second quarter. down to $99.50 prime in BTU, I would imagine that doesn't fully capture the impact of recent sort of spot price declines given the lag that is sort of built into the system. If you had to think about that for the third quarter, how much would that sort of incrementally fall, assuming, say, oil prices stay the same, the AKM stays at sort of current levels? Would we see a drop? below nine to eight and a half, eight? Is that sort of a trajectory that we should be thinking about? I was interested in your comments on that.
Okay. First one, I think, you know, my view on that is to be cautious. First, because I'm not sure of it. I'm just observing what happens on the geopolitical scene. It doesn't seem that it is easy to land between the different parties. So I'm cautious about it. And I think the market has overreacted to some news It's a very complex situation. What I observe as well is that on one side, you have quite a lot of pressure within the trade negotiations between the US and Europe to buy more US gas. And that, in fact, the US energy is obviously an obvious case to fill the gap. And I think, honestly, the European authorities seem to be quite inclined to please the U.S. from this perspective, which is a good news for TotalEnergies, by the way. As you know, we are quite involved in that business of energy between the U.S. and Europe, so I see that as a good support for all our business. And I think on the other side, politically, the Europeans are not so happy with what happens on the other side. You've seen that when I look to the program of the new coalition in Germany, I don't see a lot of support for a lot of Russian pipe gas in that platform, on the contrary. And I know that in Brussels they are working on a sort of platform which is off to exit from Russian fossil fuels because of security of supply. In fact, it's interesting to observe that the European, I would say, narrative on energy is moving from green to security of supply. There was a conference in London with all the leaders speaking about security of supply, where renewable could contribute. But from this perspective, I don't see much space today politically to take a lot of Russian gas. So I think it's more US LNG, which will come again, than Russian gas in Europe. That's my comments. And over the next 12 months, I can even confirm that I will be very surprised to see suddenly a shot of Russian gas coming to Europe in the next 12 months. We take time for that. It's also a matter of trust between customers and producers, in fact, fundamentally, to rebuild the trust. On the guidance, okay, look, if we gave you a figure, 9 to 9.5, when we gave a guidance, when you are making the math, we have some cautiousness. So if there is 50 cents, it's because of the spot price. Because on the I would say on the long-term contracts related to Brent, generally you have two months of time lag. So it's quite easy to anticipate what will happen on this contract for the next quarter. On the spot, of course, I'm not sure. So this is why we gave you 9 to 9.5. It's different to a bearish one on the spot, which was, I think, around something like... It was big in 9 and 12, I would say, but we tested between 9 and 12 European gas. Today we are between 10 and 11, so you should be in the middle of the range. I don't know what will happen. Our first quarter, again, I'm not a magician, but it's quite clear that the drop of the oil price during the second quarter, which is today, April, will impact July. That's quite clear. Again, if you want me, I don't have the math in front of me, and there is it's uncertain. What you propose as a range is probably quite reasonable, but again, let's... It's very difficult today. Again, these markets are super fluid. Maybe tomorrow the tariff will disappear and suddenly the oil price will jump, you know, so let's see. Let's all hope for that. Wonderful. Thank you.
The next question is from Lucas Herman of Exxon BNP Paribas. Yes.
Yeah, thanks very much. A couple of quick questions, if I might. The first, just going back to debt, but also balance sheets and what's been going on with currencies. In fact, maybe, Patrick, I should ask you more broadly on currency and impact. But the question specifically was, you know, the debt you hold, a proportion of it is Euro-denominated. And the question simply is the impact that a strengthening Euro rate has had on, you know, dollar-reported debt last quarter. And I guess if currencies remain strong, We should probably expect absolute debt to see a modest uptick as well as a consequence of currency moves. But maybe talk more broadly on, given the volatility we've seen in the dollar, the way that plays to your business. And secondly, just a quick question on cash flow and associates. JP, where should we expect the net associate contribution to end up for the year as a whole? Clearly, you know, there's been $400 million of profit booked in the first quarter, which was not covered by dividends. But how do you see things for the year as a whole? What should we be modeling? That's it. Thank you very much.
Sorry, Lucas. The second question, I didn't catch it up. I mean, the $400 million were related to what?
It's just looking at the associate move, you know, the difference between dividends received and associate. Ah, yeah, yeah.
It's checking.
Equitability. Equitability.
Thank you for the two questions, Lucas, and your support. The first one, the depth, I will let Jean-Pierre answer. But what I can tell you on VFX, in fact, the dollar-euro foreign exchange rate does not affect our global results. The only positive impact it has today the dividend is expressed in euro, and when the dollar is at 1.15 or 1.14, in fact, we lower the burden of the dividend by the equivalent of 5%, which can make something like $400 million. So it's not neutral. But the rest, between the difference, in fact, when I look at the global cash flows and the results, the plus and minus are, in fact, equal. When we make the test around the portfolio, we have no global impact. We have some On some businesses, of course, but globally, it's not an issue. In fact, when the price dollar is weak, it's better for us on the dividend. Of course, that means, by the way, that all shareholders in the U.S. would not see a 7% or 10% or 10% or more increase of the dividend. So, but I will let... On the equity FES, honestly, it's just because we have some equity FES which are run not on a quarterly basis, but on a yearly basis. So some of them are delivering their dividend by the end of the year. Some of them, like Nigeria LNG, for example, they make second quarter, third quarter, a big fourth quarter, but no first quarter. So we don't have Nigeria LNG. It's not only us in control. It's more of these equity affiliates are run by a board. And so you have different, I would say... timing of releasing dividends. Of course, our interest, I can tell you, all board members are pushing to maximize that. So, honestly, this $400 million, they will come back, unless, of course, they are affected by the price environment, and that you have lower results. But the timing, so maybe it will not be $400, but $300, but I have no doubt that this equity affiliates will deliver their dividends, because generally, They are all run with a single concept of maximizing the dividend release, respecting, of course, the debt ratios, which may have some debts, but that's the way it works. Jean-Pierre, I gave you the time to think about the complex question.
Now to confirm you, my debt is in dollars, because even if I issue bonds on the euro market, given that my business is in dollars, I swap this bond into dollars. So my exposure to... ethics on my end is very, very limited because of that.
So, in fact, I should have known the answer, but it's better expressed by the CFO. You trust him better.
Okay.
Thank you, Lucas.
The next question is from Paul Chang of Scotiabank.
Thank you. Good morning or good afternoon. Patrick, you guys signed the agreement with Egypt and Cyprus. to export the gas there. Can you give us some idea of what's the timeline? What's the next step and the size of the project? Thank you.
Okay, there was a big step done by, E&I is the operator, so Claudio is better positioned than me to answer to you because the operator has and I trust and we support them. There was a good signature in January in Cairo. It was quite an achievement. because we managed to have the scheme now to be able to bring the gas from Cyprus through some existing facilities, through one of the LNG plants. And in fact, the main discussion for us, the important point was to be sure that we could export the gas. And so I can tell you, even if there is one provision where some part of the gas could be delivered but on a net back to the Egyptian market, at the end, we protect it and it will be, in fact, LNG going through an existing plant in Egypt, in Nabieta. So for us, and for ENI, and I must thank ENI Works, and also the Egyptian authorities, in particular Minister Badawi for all the work he has done, the support, I think it's the optimal position to monetize this Cyprus gas. And so we are there, supportive of the project. And so the next step will be for ENI, I think, to go to to the FID by 26, which is a target. So there is some technical work which is being done, and of course some paperwork, development plan. But for us, in fact, as TotalEnergies, we were putting this agreement as a precondition to spend any capex even on the engineering side. We didn't want the teams and the operator to spend some money as long as we have not secured a real political agreement between the two countries, which was supportive of an acceptable scheme. You know, some engineers really love to spend money to make nice designs, but at the end, if you don't have the commercials, nothing is given. So as it was a complex situation. So it's quite a, it's a good progress. We have 50% of the projects, E&I being 50%, and this progress come photos, but it will, by the way, it was not, to be clear, it's another project which will come. was not feeding the growth by 2030. So maybe, by the way, the delivery, I know ENI is very good to tap to market. So we'll see how long it will take. But it's something which we could feed, will feed, will feed the growth because the scheme that we are using as existing facilities is mainly a subsea and a pipeline. We don't build a lot of processing facilities. There is no processing facility. So we should be able to deliver the gas by 2028, 2029. So it will feed... or growth of production in the future.
Okay. Second question, if I could. The U.S. has a new rule in the Gulf of America, the downhill commingling, that allows the multi-zone to be tapped. Is that much of an opportunity for total energy there?
I don't think we have value on our I don't know if ANCOR is a paleogene. ANCOR is a paleogene. Yeah, ANCOR is a paleogene. Yeah. We have some, Jack and ANCOR are paleogene, no? Jack as well, I think. Jack and ANCOR. And so what can we do? I didn't know that rule, but you know, again, yes, obviously this is a good rule. By the way, one of the objectives we have, I said that in Houston during Sierra Week, is to, we are discussing with some operators, to take again exploration in the Gulf, in the U.S. Gulf, as a priority. I think it's a good thing. So, you know, we don't want to operate also, so we are discussing with some other companies. But one of the ideas in terms of for the future renewal of reserves is to take again, because we are happy with what we've done with Anchor, with Balimo. Balimo came on stream yesterday. last week, I think, or very recently. And Chevron, again, is a very excellent operator in the Gulf of Mexico. So doing more in the Gulf of Mexico and exploring again is, for me, one of the, I would say, the new action plan for our exploration teams. So that will help with production and reserves to lower the cost, so it's a good rule.
Thank you.
The next question is from Christopher Coupland of Bank of America.
Yeah, thank you very much. Just a quick one to follow up on cash conversion, $7 billion BFFO relative to your full year guidance. So what I picked up was LNG and gas trading, the farm downs that are missing and associated dividends. Let us know if you can point to other improvements for cash conversion later in the year. And the remaining question I had was, Patrick, regarding your appetite for more renewable growth. I thought it was quite important to hear at the end of March new or tighter, even tougher net zero targets. You are now competing against utilities that are being told to do buybacks and stop growing as fast. So I wonder whether you can comment on the competitive environment in this new world, leaving the tariff uncertainty for one moment out of the debate and just looking at your competitors in the low-carbon space. Thank you.
Okay. Seven billion compared to 29. Seven times four makes 28. Price environment for E&P has done well. It has delivered more than... what we were anticipating for the full year. So if they are in line with our guidance. I told you that it was a, where are the one billion, it's a little from gas trading. I'll explain to you why. I mentioned to you about 500 billion, 5.5 to 6 billion. All integrated power, I'm very fine with the guidance we use. More than two, between 2.5 and three, and we will be there. We are online and there is a growth coming, so I'm fine. And the refining and chemicals is more challenging, to be honest, than you observe it. Having said that, I had the good news when I wake up this morning. I've seen that the European margin is up to $50 per ton. So maybe, again, we could have some good news. Price of oil is going down. Integration will work. And I think this is our business role. I did not mention that during my speech as a strength of the company. because it's difficult to argue when you have results which are not so strong. But in fact, so you could have a sort of effects where you would have less on one side, more on the other side. $50 per ton. I hope my refineries are running full and they capture the $50 per ton these days. So I would say, again, it's not the $1 billion which will make any difference on our global framework that we gave you in January, but you captured well the issue. Sorry. Chris. No, look, on the growth, renewables, we are on the way. It's not only renewables, it's integrated power. I mentioned to Anna during an answer that we are looking a lot also not only on renewable flexible assets, because it's integration which makes money, in fact, and we need both. At the end, we sell to customers 24-7 power. So, yes, I observe that others are more under pressure. Maybe they're really... easier to capture some licenses over and again. That's possible. But again, our model, we are quite clear on what we want to deliver. We are targeting some countries. We build on it. So, I mean, it's not a matter of net zero world for me. It's a matter of demand. The news of 24, when you look to the results of what happened in 24, electricity has grown by 4% in 24. The global demand, the demand, not the supply, the demand has grown by 4%. And all the strategy of the company is fundamentally driven by moving part of the company, remaining, of course, strong on oil and gas because This is the energy of today. This is where we can deliver accretive growth, et cetera. But moving part of the company to a market which will show clearly some good perspective for demand, all these tech companies, the data centers, AI is driven, is driving this increase of electricity demand. And by the way, it's good because this, again, as I mentioned in my answer before, electricity is not linked to oil. So it's another way as well in our company to have a certain resilience, not the same upside, but it's like marketing and sales. You have a resilient business. So for us, the fact that all those competitors maybe have more pressure, less competition, that means access to assets might be better, easier. But we are, it's not a matter of net zero oil, it's a matter for me of again, comforting the total energy business portfolio in the future, delivering growth and in a resilient way and in a profitable way. That's what is driven, what are the drivers of this strategy.
Chris, thank you.
The next question is from Jason Gabelman of TD Cohen.
Hey, thanks for taking my question. The first one is on the integrated LNG business. And I, you know, it's difficult to see the benefit from the Sapura OMB acquisition quarter over quarter. I know you've said in the past that that production's linked to global gas prices, and given where they are, I would have expected to see a step up in earnings from that new production. So can you just talk about kind of what that contributed within earnings if it's masked by perhaps lower trading quarter over quarter? And then somewhat related to that, one of your large peers noted this morning that the trading environment is a bit more difficult given the new macro risks that the market is dealing with. And I'm wondering if you're seeing that in your own oil and gas trading books as And for the duration that the tariff risk kind of remains, does trading become a bit more difficult? Thanks.
Okay.
Well, let's see. It's – so, for our acquisition, it's delivering some results, obviously. The teams, I don't have that in mind today. I mean, I don't have the details. We don't give the details asset by asset. It's easy to find if you want. You look to Woodmac one year ago, which was isolated, and you will find some figures, you know. But the teams can come back to you on this one, but I'm not able to. And I think, Jean-Pierre, you can, or you cannot as well. So we look to the global one, but it's contributive. And in fact, You will see, I mean, we are working today to capitalize on this position in Malaysia to move to more assets. And it's not only one asset, it's a larger story that we are trying to build and we are willing to build today together with Petronas, which is a strong strategic partner of the company and with whom we work. So, I mean, that's the point. On trading, I understand the comment. I mentioned it. I think the macro environment makes it more complex. All traders told us it's very difficult for them, you know, to – the fundamentals of tomorrow, which they think could be hit suddenly by some comments or could have an impact or reverse impact. So it's a difficult market to trade. There is some volatility, but difficult to anticipate trade. So it's true, but for traders, it's not the best way. It's not the easiest environment. And I can only, I would say, trust them. I'm trusting them. I know their business. I know what they can take, the level of risk they can take. It's up to them. We are not guiding them on this one. We trust them to do it. Honestly, the whole trading has done well during... during this quarter. I remind you that the total energy trading is more trading around assets rather on the market. So we are valorizing our assets. We have a lot of positions with storages, inventories. So this is the way we trade, aging some assets, et cetera. So I think it's, again, the oil trading has done very well during the quarter, so I can say. And the gas trading has done well. The LNG part was very positive. Gas won only Because of this reverse trend, we are on the right position, again, bullish on it, a long position. Suddenly, we had to reverse it, a bearish project, because of the political comments on Russian gas, whereas I think the market has overreacted to something which would take time, as I mentioned. So yes, it's true. Having said that, again, I think through quotas, we trust the teams to deliver some strong results. And so I'm not, I mean, if I'm coming back to the guidance we gave you at the beginning of the year, what has been taken as coming from more different trading, because it's not only oil, because we have power trading, which has done well as well, which is part of integrated power. We are in line with the contribution of trading to global guidance for the year.
Great, thanks for those answers.
The next question is from Alejandro Vigil of Santander.
Yes, hello, Patrick, for taking my questions. Related both questions about the downstream business, you have flagged some improvement in refinery margins in the short term, but I'm more interested in your thoughts about the medium-term outlook for this division. And the second question is about marketing. We have seen some weakness in the first quarter, probably just seasonality, but you can comment on that.
Thank you. Oh, the seasonality is quite easy. People are less driving in winter than in summer. It's true in Europe. It's true everywhere. So, in fact, there is no surprise, in fact, because maybe you don't take attention, but the results of This first quarter is in line with the first quarter of 2024. Even we have lost some, but it's in line, 260, 240, I mean, million dollars. There is no, it's just seasonal. And then there is marketing reserves are higher during the year. So for us, it was, I see some comments this morning, but for us, it was not a surprise. So I'm not, I think the marketing and services is on the contrary, a very resilient division. Generally, when they announce that they will deliver on the year 2.2, 2.3, 2.4 billion, they deliver their cash flow. So it's less volatile than others. So it's more a question of just less drivers. You don't drive as much, but just consumption. On the first one, make it by the downstream. It's true, and I come back on it, because there was an important announcement by the company, which was not commented until now, which is we have announced we will shut down one cracker in Antwerp, which is quite an important decision, you know, when you decide to shut down a cracker in a big unit with a lot of people involved. It's true that European refining and European petrochemicals are under pressure, and even from different, the consumption is going down. The pressure from petrochemicals from other areas is quite strong, including from the U.S., unless there are some tariffs there, but also from Asia. So I think for us, it's true that we have to medium-term outlook. It's more to question, to monitor, I would say, this decline of the markets or this pressure on the margins. And it's true that from this perspective, we contribute to the restructuring of petrochemicals by taking the decision that this cracker in amber will be off the market by 27, so it took three years to execute it, but we'll do it. And we are looking to that, in fact, to other assets if we know it. So this is a point. But we have to do it properly, including the social responsibility, and that's important to me.
Thank you.
The last question is from Enritar of Berenberg.
Thanks for squeezing me in. My question comes back to Russia, actually. And in the event that we do see some sort of peace deal with Ukraine, how do you see your sort of interests in the country and how you might sort of look to approach that? Thank you.
It will all depend on the condition of the peace deal, which I don't know today. I think that we have a very strong asset, which is Yamal Energy, which I consider as a prime asset, and which we continue to work on it, and which is the anchor of the position. This one is a long-term asset. For the rest, I think it's just difficult to make some forecasts on geopolitics, you know, in this world. So I cannot comment more than that. I think I told you where we are. Okay, thanks.
And this was the last question. Mr. Pouyonnais, I'll turn the call back to you.
So thank you for your attention and to all of you. I think the company, again, has very strong fundamentals, which gives me a lot of comfort, again, to weather the storm and not to overreact. And I think through these results of the first quarter, we demonstrated some of the strengths. In particular, again, our E&P division has done well delivering the growth on cash flows, which is the core of the company. Integrated power is in line, and the others, we face some more difficult, I would say, downstream environment, but the teams are mobilized to run the assets and to capture better margins for the mobile car. So thank you for your attention, and see you soon, all of you.
Ladies and gentlemen, this concludes the conference call. Thank you for your participation. You may now disconnect.