TotalEnergies Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
October 31, 2024

There are 15 speakers on the call.

Operator

Ladies and gentlemen, welcome to the Total Energy's Q3 2024 Results Conference Call. I now hand over to Patrick Pouillanae, Chairman and CEO of Jean Pierre Braille, CFO, who will lead you through this call. Sir, please go ahead.

Speaker 1

Good morning, good afternoon, everyone. Patrick Pouillanae here together with Jean Pierre. Nice to be with you again after seeing you many of you in person at our Investor Day in New York earlier this month. Just spent the last 3 weeks in roadshows. I would like just to share with you that we got a constructive feedback from the investors on balanced strategy.

Speaker 1

And the level of understanding of our growth profile on both pillars, oil and gas with the quality and depth of our upstream portfolio on one side, but also on the other side, the integrated power is now, I would say, better understood on both sides of the Atlantic. As discussed at the Investor Day, the clarity, consistency of our strategy must remain our priority. Discipline on cost, keeping a low breakeven portfolio and a strong balance sheet supporting attractive shareholder returns of fundamental principles, which allow the company to be resilient through the cycles, especially when we are entering into an increasingly volatile and certain environment like what we have seen during this Q3. I will not be longer and I will hand over to Jean Pierre to discuss the details of the 3 quarter financials, which I think are proving also the resiliency of our integrated model in a challenging environment for both oil and refining margins. And then we'll be happy to answer to your questions during the Q and A.

Speaker 2

Thank you, Patrick. Good morning, good afternoon, everyone. This quarter, we faced a more challenging environment with refining margins sharply deteriorated with the European refining margin market down by 66% quarter to quarter, lower than our breakeven at $25 per tonne. Regarding the upstream environment, brands decreased by 5% quarter to quarter to average $80 per barrel, while the company average LNG price decreased by 6%. In this context, the company reported adjusted net income of $4,100,000,000 on the quarter and of $13,900,000,000 over the 1st 9 months of the year.

Speaker 2

Profitability remained robust with return on average capital employed for the 12 months ending end of September at 14.6%. Moving now to the business segments, starting with the 1st pillar of our balanced strategy, the hydrocarbons. First, regarding oil and gas production. During the Q3, production was 2.41 1,000,000 barrels of oil equivalent per day, within the guidance range of 2,400,000 to 2,450,000 barrels of oil equivalent per day. We continue to see good performance from project ramp ups, mainly in Meru II in Brazil, which partially offsets unplanned shutdowns in Ichthys Energy and security related disruption in Libya.

Speaker 2

In addition, during the Q3, we achieved 1st oil at the high margin Encore project in the Gulf of Mexico in the U. S. And 1st gas at the Phoenix Field Offshore in Argentina. We expect production for the Q4 of 2024 to be between 2,400,000 to 2,450,000 barrels of oil equivalent per day, benefiting from the end of security related disruption in Libya and yesterday's start up of the Meru fleet project in Brazil that compensates for several planned shutdown during the Q4 2024. Exploration and production performance continues to be strong.

Speaker 2

We reported adjusted net operating income of $2,500,000,000 stable cash flow of $4,300,000,000 and an attractive return on capital employed of 15.6%. On the project side, earlier this month, the company and its partners sanctioned Grand Moru projects, a large 220,000 barrels per day FPSO located offshore Suriname with estimated recoverable oil reserves of more than 750,000,000 barrels. These low cost, low emission developments were sanctioned 1 year only after the end of appraisal and is designed to accommodate future tie in opportunities to extend the production plateau. Grand Morgu is a company 6th major oil and gas FID of 2024, all of which derisk a medium term production growth objective of 3% per year through 2030, which ultimately translates into growing shareholder risk distributions. Exploration and production IC 932 of exploration equipment remain best in class at $4.9 per barrel for the 1st 9 months 2024 compared to our objective to be below $5 per barrel.

Speaker 2

Moving to Integrated Energy. First, on the results. Hydrocarbon production for LNG decreased 7% quarter to quarter, primarily linked to unplanned maintenance from increased LNG. On the other hand, LNG sales increased by 8% quarter to quarter in the context of seasonal inventory replenishments. Integrated LNG adjusted net operating income was R1.1 million dollars in the Q3.

Speaker 2

Results primarily reflect lower LNG production. And in addition, gas trading did not fully benefit from markets characterized by low volatility. Cash flow was $900,000,000 due to the timing effect in dividend payments from some equity affiliates of around $200,000,000 Looking forward, given the evolution of oil and gas prices in the recent months and the lag effect on price formulas, Total Energy anticipates that its average LNG selling price should be around $10 per mEON in the Q4 of 2024, slightly higher than the $9.9 per mEON in the Q3. During the Q3, Total Energy strengthened future cash flows by signing several medium term sales contracts in Asia, bringing total LNG contracts signed year to year to 4,000,000 tons. In addition, we enhanced integration along the gas value chain by supplying low cost upstream dry gas supply in the Eagle Ford in Texas.

Speaker 2

Moving now to Integrated Power. As a result, the company continues to deliver on its targets. For the Q1, adjusted net operating income remains close to $500,000 and cash flow above $600,000 Year to date, adjusted net operating income totaled $1,600,000,000 up 21% year on year and cash flow totaled $1,950,000,000 up 35% and in line with annual guidance of more than $2,500,000,000 contributing to the resiliency of the company. In addition, we have extended our traffic return with return on average capital employed for the 12 months ending end of September close to 10%. Total Energy achieved several milestones during the Q3.

Speaker 2

First one being the startup of 2 giant solar farms in the U. S. With battery storage in the fast growing aircraft market in Texas, where we already have all the necessary building blocks that define our differentiated integrated model. We closed on the strategic CTV acquisition located in the deregulated UK markets that complements our existing intermittent renewable assets. And lastly, we strengthened our partnership in both India with Adani and in Germany and in the Netherlands with RWE in offshore wind.

Speaker 2

In downstream, 3rd quarter adjusted net operating income totaled $600,000,000 and cash flow totaled $1,200,000,000 with marketing and trading activities partially compensating for the very sharp decrease in global refining margin in Europe, down 66% sequentially and rest of the world. In Refining and Chemicals, the company's European refining markets fell to $15 per tonne in Q3 due to normalization of trade flows after the Russian ban and ample supply related to recent capacity increase. Currently, it is close to $25 per tonne. This indicator of $15 per tonne is lower than our breakeven at $25 per tonne and we suffered as well with some incidents in some of our refineries. For the Q4 2024, the company anticipates refining utilization rates will remain above 85% with a turnaround planned at Loyola Refinery in October.

Speaker 2

Marketing and services result remains strong for the Q3 with adjusted net operating income of $200,000,000 and cash flow of $600,000 At the company level and to wrap up, in the Q3, we reported $1,100,000,000 negative adjustment to net income related to impairments. These impairments being linked to 2 events: the first one, the Chapter 11 bankruptcy filing of SunPower in the U. S. And the exit on Blocks 11B, 12B and 567 in South Africa. After the build reported in the Q1, the first working capital release was reported during the Q2 and the new release of $400,000 was reported this quarter.

Speaker 2

And we anticipate that working capital will continue to reverse in the Q1. The new release of $2,000,000,000 is anticipated for the Q1 2024. As I was saying in the introduction, profitability remained robust with return on average capital employed at 14.6%. Capital discipline is strong. We confirmed 24 net investment guidance of $16,000,000 to $18,000,000 Lastly, we continue our track record of strong shareholder distribution.

Speaker 2

Buyback are consistent with the company set to execute yet another $2,000,000,000 in the first quarter, in line with the objective of $8,000,000,000 for the full year 2024. Dividend growth is healthy with a fair interim dividend, up nearly 7% compared to 23% and up 20% compared to pre COVID levels. With that, Patrick and I are available to answer your questions.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. The first question is from Lydia Reitnwerth from Barclays. Please go ahead.

Speaker 3

Thank you and good afternoon and thank you for the presentation. Two questions if I could. The first one on cash flow. If I look at the cash flow in the quarter, it's just under $7,000,000,000 ex working capital. And at an oil price of what was effectively $80 that's not actually enough to cover CapEx dividends and buybacks.

Speaker 3

So is that just a specific quarterly feature? Or is cash flow actually starting to lag behind your expectations? And then secondly, very different topic, but we have started to see some transactions in the Vaca Muerta in Argentina. Can you talk through what your plans are for Argentina and what you think the opportunity there might be? Thanks.

Speaker 1

On the cash flow, I think Jean Pierre mentioned in his speech that there was equipment. We had a lag effect on some SMEs between the results and the cash dividends, mainly LNG SME. So it's why it's affecting the integrated LNG cash flow in Nigeria and Qatar. But I think this is not something which should be reversed. In fact, there is no fundamental reason to have such a difference.

Speaker 1

It's just a quarterly effect. So but I would say no more no specific point behind this one, I would say. On the second question, yes, I learned that. And we have quite a lot, as you know, of accuracy in Argentina. We know that we manage that quite cautiously.

Speaker 1

We just recirculated CapEx cash flow. We would mainly produce gas. We have some Accurage exactly like Exxon in the oil window, which until now we did not develop. In fact, it's a question of CapEx. We know it's there is a question mark by the way in our company to know if we move from allocating CapEx more on the oil window and less on the gas, But that would require some investments, so we are evaluating proportions.

Speaker 1

Having said that, we do not intend as long as I would say Argentina is a specific country where you cannot repatriate dividend freely. So as long as it remains the same, as I explained to the Argentinian President when I met him last month, we want our money back. So if we will not invest more as long as we don't see the freedom to repatriate dividends. So again, we have a large portfolio. We are evaluating the options in that country, but that's what I can tell you.

Speaker 1

And we will, of course, analyze the different options we have in that view.

Operator

The next question is from Michele Della Vigna from Goldman Sachs. Please go ahead.

Speaker 4

Thank you very much. I had two quick questions. The first one, I was wondering if you could update us with progress with your Uganda project, one of the giant startups we've got in the relatively near term? And also in Mozambique, we've had the elections. Does this effectively bring you one step forward to restarting that project?

Speaker 4

And then secondly, I was wondering with COP29 coming up in Baku next month, if you had any expectation of what you think could be some of the low hanging fruit or some of the wins in terms of changes to the global policy there? Thank you.

Speaker 1

Okay. Thank you, Michele. Uganda is progressing as per plan. We intend to start the production by mid-twenty 26. The drilling is positive, I would say.

Speaker 1

I mean, the news from the reservoir point of view, globally, I mean, positive in fact, we have no so I would say it's progressing. And the pipeline itself is being started to be built and late. So I would say we are on the way to deliver this important project, as we said, not only in terms of production, but also in terms of cash flow for the company. It's quite sizable investments. So that's where we are on Uganda.

Speaker 1

On Mozambique, I would say we need to I mean, again, as you know, we have there are different aspects in Mozambique. One of them was the security. On the security side, I would say we are it has progressed. Of course, the fact that there will be a stable political power in Mozambique is important for us. So we are following the different news from there and we intend to visit the country when it will be ready.

Speaker 1

But I think it's of course positive. There is the more your stability in the country will come, the better it is for all of us. Having said that, we are more focused on our side on Cabo delgado. Island Cabo Delgado is a good news from the election process, but it was quiet. There was no events during that period.

Speaker 1

So I would say, from this perspective, for me, it's positive. But the assessment there on the security side, fundamentally, that we could restart those projects. With the contractors we worked hard, everybody is there. But as I told you, I think last time, the last point on which we are working, and I hope we have good news, is that we are working with the different on the financing of the project. As you know, there was a big project financing package, which was signed, in fact executed in 2020 2021.

Speaker 1

We began, by the way, to execute it in 2021 before the 4th measure. All the credit export agencies have done the due diligence on the projects. And technically, it's okay. Now we are waiting for the different green lights, in particular from, I would say, some G7 Credit Agencies. And we are working for them.

Speaker 1

So from my perspective, I would say, we are on the right track. But of course, this is fundamental to have all the financing in place before we restart the project. So that's the last point on which we work. On COP 29, honestly, I don't see a lot. I mean, I will myself be there because I am one of the 3 champions of the oil and gas decarbonization charter, together with Sultan Al Jaber and Amin Nasseh.

Speaker 1

So, we have an event there. I would say, by the way, it's an interesting collective move for the industry. We have engaged with 52 companies, a lot of national oil companies. And it's an interesting, I would say, moving forward to put in place with these national oil companies the same type of reporting framework as the one we have. And so, we're to progress to share also a lot of experience.

Speaker 1

And short of experience in terms of abating methane emissions, which is one of the objectives. So I think that is positive. On the COP29, I'm not partly I mean, I'm not myself, we are not, I would say, part of the discussions. According to the news I got, we don't expect much new things. One of the key chapter on which we'd like to see progress is on this the caution of the carbon credits, if I may, Article 6, how can we because it's important in order to invest in this type of credits to have a sort of strong framework, which would be validated by the UN and the Global Community International Committee would be good, I think, in order to make these investments in the stronger investments in that field.

Speaker 1

So that's, I would say, the main expectations on our side.

Speaker 4

Thank you.

Operator

The next question is from Matt Loftinga from JPMorgan. Please go ahead.

Speaker 5

Hi, gents. Thanks for taking the questions. 2, if I could, please. First, just coming back to your earlier comments on cash flow generation in the quarter. I mean, obviously, CFFO can fluctuate and there can be phasing effects quarter on quarter.

Speaker 5

I just wonder if you look at year to date, sort of the 9 month performance, can you talk about underlying cash generation over the course of 2024? And perhaps how it compares to your beginning of year expectations on an underlying basis? And then secondly, the capital frame was made very, very clear in the beginning of October with the Investor Day. Given though short term macro volatility to the downside as well as the upside, could you talk about where the threshold sits in terms of when TotalEnergies

Speaker 6

would look to activate some or all of

Speaker 5

the EUR 2,000,000,000 CapEx flex that you talked about? Thank you.

Speaker 1

Okay. First, on the cash generation, I would say on the cash flow after 9 months, we are at $23,000,000,000 next to French 3. So, it means we are today at the 3rd last Q4 was around $7,000,000,000 So it's between $30,000,000,000 We could land at the end of the year, which is in fact we are more in line. We were at $31,000,000 $32,000,000 higher expectations on the one side with the refining margin. So, for me, we are in the ballpark.

Speaker 1

And I would say from this global perspective, it does not change all the guidance we gave you on the last CMD in New York, including on the share buybacks. I would say I'm comfortable we are comfortable with we are on the track that we were anticipating. So I see no impact from this perspective. So let's consider we are there at around $30,000,000,000 Can you talk to CapEx? Well, the CapEx for me is $2,000,000,000 It's not at $70 but we'll change our strategy.

Speaker 1

Our policy from this perspective is $70 When we speak about short term short cycle CapEx, it's our CapEx, which at $70 will give us a payback, which is quite quick in fact. And so for me, the change, it's only if we are going to $50, dollars 60 per barrel, but we could consider activating part of this flexibility and arbitrating some of these short cycle CapEx because the payback from these additional wells will be longer. So I see no difference from between $70,000,000 $90,000,000 The market today seems to be down to 70. But again, from this perspective, the guidance we gave you at the last CMD, you can consider them good. By the way, I remind you just to correct slightly, Jean Pierre, it's $17,000,000,000 $18,000,000 not $16,000,000 $18,000,000 for the year $24,000,000 And for next year, we told you it will be in the range of $16,000,000 $18,000,000 and you have the $18,000,000,000 of organic CapEx.

Speaker 6

Super. Thank you, Patrick.

Operator

The next question is from Irene Himona from Bernstein. Please go ahead.

Speaker 7

Thank you very much. Good morning. My first question on refining, obviously, a very weak quarter. Patrick, you have said before that you're not positive on the business. But do you see grounds for optimism that as OPEC plus starts returning 2,200,000 barrels a day to the market, margins could strengthen meaningfully from the current $25 which I believe is your breakeven level?

Speaker 7

And then my second question on LNG. Recently, Total was quoted in the press as expecting the next wave of capacity to be delayed by 2 years, which is obviously very material. You're a key participant to that global increase through your strategic focus on LNG. Can you share with us where you see the delays, which big projects are driving this view? And in that delay scenario, where would you expect ETF next year, please?

Speaker 7

Thank you.

Speaker 1

Okay. I don't know what is I mean, first, refining. Refining, the average margin on you can take different metrics is around $35 per ton on 2013, dollars 23. And by the way, this is the planning assumption we use internally on the long term is $35 per ton, which is higher than the $25 today. And that's why we are working hard to have this breakeven going down to 20 $5 per ton.

Speaker 1

You know that I'm moderately optimistic about these events. I think we benefited from 2 years where during COVID 2021, there was a huge acceleration of some shutdowns of of refinery in the Atlantic basins on both sides, by the way, in particular on the Americas side, in the Caribbean Islands, in the U. S, a lot of conversion to biorefinery. Then we had the dislocation of the market because of ocean flows, which has added, I would say, some dislocation and some pushing the margin up. I think since, of course, like always, when price margins are good, people stop continuing to restructuring, in particular, in Europe.

Speaker 1

We've even seen some few small refineries, which were supposed to be a shutdown, which was maintained. And then on the top of it, you add some new refineries, which have started in particular in China, which have added an additional capacity. The Chinese were supposed in their policy to shut down some what they call the tippets, the old small refineries, but the tippets are still cooking, I would say. And that means that you have quite a lot of supply at the same time. So and today, in fact, we are also facing in Europe the fact that some flows are coming, some products are coming from the U.

Speaker 1

S, which can because the Russian products go to South America, U. S. Coming to Europe. So and Europe, last point last but not least, as you know, the industry demand in Europe is not very strong today. So that means that we are back, I would say, to the traditional SYS cycle where I, we stopped, I mean, we, not totally necessary, but the industry stopped, I would say, restructuring to capture the good margins.

Speaker 1

And I think our times are just there to come back fundamentally. What was true before is still true today. You have too many small refineries in Europe and everybody has to do its job, I would say. One way, as you know, is to transform this refinery in biorefineries because at the same time, in Europe, we benefit from a bit from regulations which push biofuels for having a better demand for biofuels for regulation. So I would say that's showing me optimism.

Speaker 1

I'm moderately optimistic. I will be more optimistic if I see more, I would say, announcements about shutting down refinery, but it takes time. It takes time. So let's see, the $35 per ton are for me a good long term plan and then it's volatile. So I hope we will capture more in the future.

Speaker 1

But like for oil price, it's difficult to be there to guess about it. LNG, I don't know who has said 2 years. No, I think we were very clear. I was very clear in New York CMD. I told you that we were thinking that the wave will begin not 26, but 27.

Speaker 1

I think nobody had never spoke about 20 25. I think we don't see a bigger additional supply in 2025. It was never mentioned. There was a debate between 2026 and 2027. And we are just reading the news.

Speaker 1

And we have some projects in the U. S. Which have been delayed for different reasons. So I would say, on my view, we stick to there is no additional comments to the one we have done. The wave of additional capacity, 10% per year during 3 years will, for us, begin 20 6, but 20 7, 20 8, 20 9.

Speaker 1

So for 2025, I would say we are expecting TTF. It's seasonal. So it's the average on the year. The average today on TTF is around I think $10 $12 Now today we are more on $12 $13 I have the NBP of 12.4 dollars TTF must be more or less at the same level of an NBP. So we anticipate for $25 something in the same range, I think, I would say around an average around $12 per 1,000,000 Btu because again we don't see in $25 any additional capacity, which would suddenly change the fundamentals of, I would say, a market which still is in the tension.

Speaker 1

And then, we'll see by 2026. And of course, we will follow carefully all the news of start up of delays along the year 2025. So again, I'm not sure to 1 year, 20 27, yes 2 years, no and 2025 should remain in our view. The same type of environment that we have benefited in 2024. So positive for Total LNG as a big LNG player.

Operator

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

Speaker 8

Thank you very much. Good afternoon. Just two questions on renewables, please, for me. I want to double check, Patrick, if you could give us a little more detail on how you feel the current market sits. I think since we saw you in New York, you've farmed into an RWE project.

Speaker 8

Is it easier to farm in these days? How much more difficult is it to find partners for farm downs that you're looking for in parallel on other projects? And maybe related to that, please let us know what you think of making a corporate acquisition as Equinor did, becoming a 10% shareholder of Orsted and whether you would contemplate anything similar for Total? Thank you.

Speaker 1

The first one is quite easy. We had an option which was negotiated with RWE because as you've noticed, we made a farm in in the Dutch offshore wind in connections with our well to decarbonize our Zealand refinery for green hydrogen. So that was part. We negotiated an option. LWE was efficient, I would say, and successful to get access to flow and licenses with a low cost of entry.

Speaker 1

So it would be strange from us not to exercise our option, because obviously so they worked well. We benefited from it and it's good for us. That could let us of course to as you know we are trying more to be willing to scale these offshore wind licenses. By the way, working closely with LWE is also a good upfront for us and for them globally because we need 2 main players. So I think driving down the cost will be by, I would say, scaling up these developments together.

Speaker 1

That's something we can't unplace. And for us, I would say, we have more options of when Germany. And so, we will see in which order we must develop the different package. But again, it was a good opportunity and the answer from this perspective was obvious to us. On to be I don't like to comment the move of my competitors.

Speaker 1

I respect each everybody has its own strategy. Our Norwegian France are very focused on off road wins, so they are probably good answers. What is clear is that in my view, just to comment and know we have been consistent to become a minority shareholder of a competitor without on our side an industrial strategy. We never done it. And so when we went to Vivadani, yes, we are minority shareholder

Speaker 2

of Panelli Green, but we developed

Speaker 1

the same size. Shareholder of an Eddy Green, but we developed at the same site some GV to have access to some industrial assets. So, that's the way I see this type of leverage. It's probably, I don't know, I did not study carefully the case of Orsted and Equinor, but I think I respect their decision. And again, on our side, we think that we can develop organically some efficient offshore wind assets.

Speaker 1

And that's why we have done it why we I would not have considered such acquisition, but again I respect their decision. Understood. Thank you.

Operator

The next question is from Martin Reitz from Morgan Stanley. Please go ahead.

Speaker 9

Hey. I wanted to get back to the question that Irene also asked about, which is refining margins specifically in Europe, Because there are it's quite a lot of sort of indication that there are some economic run cuts in the European refining system. But looking at the data that you reported today and also the guidance for utilization in the 4th quarter, seemingly not in the Total portfolio. So I just wanted to confirm, margins have declined quite a bit, but they're not low enough for you to consider any economic run cuts, right? That was the first I wanted to ask.

Speaker 9

And the second one is about the balance sheet. Last quarter, gearing 10% during the earnings call, you talked about the sort of underlying level of about 7% to 8% if you cleaned up for a few noisy items. We're now at 12%. What explains the difference between the sort of 7 to 8 that was mentioned last quarter that we're now at? And how do you expect that to develop over the next 1 or 2 quarters please?

Speaker 9

Thank you.

Speaker 1

Okay. On a refining margin, honestly, I'm not sure we are big enough to consider our self funding cutting runs just to please our competitors. That's a type of strategy, which is there is not an OPEC of European refiners. So, I mean we are today at the breakeven. And I think it's something which because when you have quite high fixed costs and so I compare that more on the variable it's more a question of variable do we cover our variable costs?

Speaker 1

Breakeven is calculated in terms of fixed plus variable costs. As long as we are the margin is better than the variable costs, it's better to run the refineries in order to cover part of your fixed costs. So we are largely covering our variable costs. So that's a simple economic theory. But so no, we are not there.

Speaker 1

The question will be more for us, more structurally. And as you know, we have already transformed some refineries and biorefineries in 2015, in 2020, as we have been obviously that we are working on the follow-up of this one, just on one side to capture the opportunity of the European biofuel market on the other side, because except the last 2 years, generally, it's economically marginal. So this is the most important question for me. Our instructions to our teams is make the best use of your assets. And as long as you cover your variable costs, obviously, you have to run-in order to capture cover part of the fixed costs.

Speaker 1

2nd question, no, I mean, let me be clear, we are I don't know if the 7%, 8% last year. We are more you know that we have explained to you there is in the gearing of different aspects. It's a little high today. I think we should be back in the range that you mentioned 10% to 12% by the end of the year for different reasons. For this quarter, as you've seen, there is we still have and I think Jean Pierre was clear in his speech, we anticipate a working capital lease of €2,000,000,000 for the next quarter, so which is in line with what was the guidance we gave since the beginning of the year.

Speaker 1

We had a big cash I mean working cap cash out at the beginning of the year, more than €4,000,000,000 if I remember. €2,000,000,000 were perfectly linked to exceptional events of last year of taxation events on 2023. And over €2,000,000,000 should be coming back in the balance sheet before year end. So I know that all the businesses are working on it. So I would say this is part of it.

Speaker 1

Then the other part of it is that some of you have noticed probably the CapEx were high because this quarter we have more acquisition than sales. The inorganic was high, but it will be rebalanced. It's a question of again of phasing the divestments. And as you know, we are expecting some renewable divestments because it's part of the model, which should be concluded. And in this type of business of M and A, there is a lot of things rushing, lastminute.com, the last quarter.

Speaker 1

And I don't we don't push them necessarily just to finalize all these close the deals before 30th September. 30 was 1st December. But it's not only TotalEnergies, it's a common practice. So I would say, my view is that we should get come back to something like around 11%, 12% by the end of the year. This is what we can anticipate on if, of course, we remain in this type of environment price environment of today.

Speaker 1

That's what I can tell you. But again, I know you're Martin, this type of gearing was anticipated at the Board level when we discussed about shareholder returns and we gave you the guidance for next year, about €2,000,000,000 per quarter for share buyback and dividend increasing at least by the buyback of 23%, which is at least by 5%. It was anticipated this type of gearing level.

Speaker 9

Wonderful. Thank you.

Operator

The next question is from Doug Leggate from Wolfe Research. Please go ahead.

Speaker 10

Good morning, everyone. Patrick, I know you've been asked extensively about refining this morning, but I want to ask the same question a little differently. Some of your peers have started to consider shutting refineries when they have a major capital event like a turnaround. And as we appear to be coming into an extended downturn, let's assume for refining for the time being, how do you see the portfolio today? I understand the breakeven is $25 but are there any assets you would consider rationalizing at this point if this weakness continues?

Speaker 1

Again, we've done it and we've done it with Lamed in 2015. We've done it with Grand Prix in 2020. And it's quite clear that when we do it, we try to look to the agenda of the shutdowns to avoid to spend a lot of money on the refinery and to shut down 1 year after. So that's part of the but you know, shutting turnaround of refineries, it happens every 4, 5 years. Some of them, by the way, in our case, are making turnarounds every 2 years.

Speaker 1

Some of them are more longer cycle, 4, 5 years. So, that is taken into consideration. But it's not because of the turnaround, which again we will avoid. We will make a decision before to spend it for sure. But I would say, again, more with the way we have selected Lamed or we are selecting Grand Prix is more in fact the structural, I would say, weakness or interest to transform them because of allocation or because of their markets, etcetera.

Speaker 1

So when we think to this type of we have 6, 7 refineries, I think today still remaining in 1, 2, 3, 4, 5, 6 refineries in Europe. We know each of these assets. We know their strengths. We show their weakness. And we will if we have and as you know, we have been consistently my view is that we need to transform them 1 after 1 and at each of these events is quite a big event in terms of not only reinvestments on the platform to transform, but also in terms of social impact.

Speaker 1

It's better to face them rather than to wait 2,035 and the decrease of the gasoline and diesel market in Europe, which will happen because of the decisions of the EU about the EVs and all that. So yes, we will continue to plan it. And of course, we will avoid to wait to spend the money on the platform to just after announce that we will shut down. So but again, that's for me, it's not because this strategic thinking is not linked to the low cycle of today. We have prepared it since we have launched Grand Prix.

Speaker 1

I would say we are preparing the next one. The question is then to what are the different opportunities and to be sure that we are and as the markets are moving from this perspective, including these biofuel markets in Europe is moving. Today, it's facing some oversupply. So it's all these type of thinking could affect us in North Canada. But so we will we are working on it.

Speaker 1

And but again, this is also important in my view. Normally in a market economy, you have what I would say the cost merit curve of different assets. And when the margins are low, the first ones to shut down are the ones with higher breakeven, I would say. So as we have good assets with low breakeven, I'm expecting others to move to shut down before us normally the way it works. Otherwise, so we'll see.

Speaker 1

And having said that, again, you know our ambition, I would say more on the opportunistic on the opportunity side, the positive side, you know that we consider that this bio fuel market, a soft market in Europe with a mandate of 6% is giving good opportunities for brownfield projects rather than for greenfield ones. So we exclude greenfield, so we'll and we have the ambition to continue to benefit from this market.

Speaker 10

Thank you for the full answer, Patrick. My follow-up is a quick one on Suriname. Obviously,

Speaker 1

you sadly, I was unable

Speaker 10

to be in person in New York when you presented the strategy update, but you did talk about Suriname sanctioned on a full year plateau, but with tieback opportunities. Since then, your partner has been suggesting the plateau could be extended as much as to 8 years. I wonder if I could ask you to offer your perspective on that?

Speaker 1

We are the operator of the project.

Speaker 10

So what's your view on the long term plateau?

Speaker 1

I stick to what we told you. We are the operator of the project. We said that this plateau is designed for 4 years. We also explained that we have selected quite a high plateau level because we consider that Gran Morgu could be the hub of more tiebacks. I'm unable to quantify it because most of these tiebacks have not yet been drilled.

Speaker 1

So let's drill them before to speak about the duration.

Speaker 10

Terrific. Thanks so much.

Operator

The next question is from Biraj Vorkharthala from Bank of America. Please go ahead.

Speaker 2

Hi, thanks for taking my question. I just had one related to going back to the CFFO again. At the start of this year, you gave CFFO guidance, which looks like it's something close to 34%. And the macro environment that you showed then versus what we've seen is not that different. Obviously, refining has been weaker.

Speaker 2

But is it possible to help me bridge the gap between the €34,000,000,000 that you maybe originally envisaged and the €30,000,000,000 or so that you mentioned today? Any moving parts there would be helpful. Thank you.

Speaker 1

I don't remember $34,000,000 I had $32,000,000 in mind. But I would say, clearly, along the year, the gas price was lower than expected during the first half of the year. I think we have been clear. We went down under $10 per 1,000,000 BTU during the first half. So European inventories were very completely replenished.

Speaker 1

It has a seasonal effect. We are back since this summer to $12,000,000, dollars 13 per 1,000,000 BTU more in line with our assumptions. So I would say there is €1,000,000,000 somewhere for me which is linked to this gas. The market has been less volatile and it's true that in a less volatile market our trading business has been a performance, which was very good, more than good, super good, excellent in 2022, 2023, benefiting from big volatility. When the market is quite stable, it's more difficult, I would say, there is €1,000,000,000 probably out of this €1,000,000,000 1,500,000,000 out of this gas trading and low gas pricing.

Speaker 1

The other part will come from this refining business. We also think we're losing, I would say, I don't know, I don't have the figures in my $500,000,000 $500,000,000 or less. I think the best for we will reconcile all that by the end of the year because the year is not yet finished in any case. So, I would say that's the main elements I have in mind. But what I suggest, Biraj, is that, again, I'm trying my teams try to calculate quicker than me.

Speaker 1

So, but they are a little slow. So, the best is that I think you can they will give you a call to tell you. But again, I don't have all the math here between the 34 and the 30. Okay. Okay.

Speaker 1

That's fine. Thank you. So, gas and refining. Okay.

Operator

The next question is from Luca Thirmann of BNP. Please go ahead.

Speaker 11

Yes, thanks very much. Nice to talk to you in a couple as well, if I might. I want to focus on Nigeria for a moment, if I might. Firstly, Patrick, can you just remind me where we are around the sale of the onshore assets to Chapal? Is that expected to complete?

Speaker 11

Where are things with the authorities? Just some commentary. And also, just on could you make any comment on Nigeria 7 and progress in terms of development and timing? And just generally on gas flows into Nigeria LNG and how those have been progressing through this year and may have been in place to your offtake? And then secondly, just if JP perhaps could comment at all on the write offs that you've taken this quarter, the €1,000,000,000 or so of asset write down, which looks very much as though it's really with SunPower.

Speaker 11

But just explain to me. That's it. Thank you very much.

Speaker 1

Okay. On the agricultural assets, I think we have progressed. There are some we received some approval from NNPC. I think recently the regulators said that we should have a green light. So we are working on it.

Speaker 1

And just we are not in the same position, but some of our peers because we are not operating and we are in non operating position. So I think it's easier for the authorities to evaluate the quality of the buyer because we are non operator. So we transfer and we have a limited share. We have 10%. So the 10% is limited share, non operated positions.

Speaker 1

So of course, in terms of evaluation by the regulators, it's easier probably to approve. And we have the our buyer by the way have been already approved recently in a deal on an offshore asset and an operated offshore asset. So, it's a buyer who is well known by a few authorities. So, I do not anticipate difficulties on it. And we have so, we receive various process to follow and we are following that carefully.

Speaker 1

So, that's the point. On 27, as you know, we have been working hard for the last year in order to obtain the good right terms to be able to develop some new gas projects in order to fill this Train 7, because it's as you know, we have already some difficulty to supply all the gas through the first six trains. So, I've been quite clear myself, but I think my colleagues as well or peers as well with the Nigerian authorities that it's time to accelerate the sanctioning of gas projects in order to fill these trains. We have got some improvements, in particular, on the transfer gas price between the upstream and the downstream. Ourselves, we have sanctioned the first project, Uberta, which has been sanctioned this year, which is dedicated to fill this 7.

Speaker 1

So TotalEnergies will be in line with its commitments in terms of supplying the first seven trains. We are working on another one, which is called EMA, which is a small, very quite low cost gas fill very next to Bonney Islands. So we are working on it, trying to sanction that in 2025. So, it's a good opportunity to monetize gas reserves. The authorities have enhanced, I would say, the global package to valorize fiscal leave these gas reserves.

Speaker 1

So, things should be aligned. Again, Nigeria is not an easy one, an easy country, but at the end we managed to make good projects and profitable projects. So I would say I'm positive on that. The write off, I think Jean Pierre has said it's clear. There are 2 parts.

Speaker 1

1 was linked to SunPower. SunPower, the company went to Chapter 11, so we had to write off what was remaining because of the capital employed. And another part was linked to the decision about South African assets where we made some discoveries, but the monetization of these gas discoveries was too difficult. In fact, there is no gas market. The gas infrastructure is very limited.

Speaker 1

The possibility to go from gas to power is also very complex, because you can read in newspapers the situation of Eskom in South Africa. So at the end, we decided that it was the effort and we had some contractual commitments. So either we were moving on the development or we were stopping losing the assets. I would say that was also a question of time line, which led us to take bad decisions. And it's true, but by the way, just to remind you a long story on the South Africa, when we took these licenses, it was not to discover gas.

Speaker 1

It was because we are looking for oil. Like today, we are looking for oil in the licenses we have in South Africa next to Namibia. So, it's clear that oil is easier to monetize in this in South Africa and gas. So, in particular, when gas is not located next to customers and most of the industries in South Africa are not on the coastline south of the country, but they are more in the northwest of the country, so a little far away. So it has never been easy with the gas market there and that's the conclusion.

Speaker 1

So that's the two reasons why we make these two write off this quarter.

Speaker 11

Can I just push you a bit more on Nigeria? If I think about your start up of Train 7, what's your latest commentary on when you might expect that to happen? And secondly, I mean gas prices used to be nominal, so or nominal, very low, exceptionally low in Nigeria. Just some sense of what you're actually able to or what price should I say what price do you need in order to justify an adequate return on the investment you're making?

Speaker 1

So Train 7 is expected to start up by 2026, probably end of 2026. That's part of the ones which are not to come back to a question that I had before. That's one of the trend which probably will not be in advance to be clear. Okay. Okay.

Speaker 1

So you can push it more to 26 to 27 rather than 26 to be clear. And by the way, as we are also developing the gas, we don't need to have the train ready. And so we try to, I would say, spend the CapEx according to also the free gas. Okay? Yes.

Speaker 11

And price on gas that you're managing to get from the Nigerians to agree or NLNG to agree?

Speaker 1

No, it's done. We have an agreement with them. We have increased and all the partners of NLNG have agreed that the gas transfer price from the upstream to the plant will be higher, which is normal because initially, historically, when it started in 1997 or 1998, there was a big alignment between the supplier and the shareholder, the foreign shareholder and the shareholder in fact. You had 60% in MPC and then you had the 3 major players, Shell, Total Energies and E and I, which were on both sides. So in fact, the transfer price was an issue for the only JV, which was not participating to LNG, which was in fact by that time the Conoco JV.

Speaker 1

But along the years, as you noticed, and that was why it was so critical to solve it, we had different views, different partners of NLNG have different views on their commitments to develop upstream gas. So there was a point where as soon as you don't have an alignment, we don't see why Total Energy should develop more gas than its share for the benefit of other partners in LNG. That was not very fair. So that was the discussions and we solved it collectively in the interest to drop more gas upstream. And of course that means that part of the margin is transferred from the downstream to the upstream in order to finance the developments.

Speaker 1

That's quite clear. As we are on both sides, we are somewhere neutral, but it's not the case for everybody. Super. Patrick, thank you. JP, thank you.

Operator

The next question is from Kim Fusier from HSBC. Please go ahead.

Speaker 12

Hi, thanks for taking my questions. I've got 2 please. First on the outage at IXYS LNG. You've talked for some time about preventive maintenance to try and minimize any unplanned outages. Is there a way that this issue on the heat exchanger could have been avoided in any way?

Speaker 12

I also understand that Ichthys is expected to restart fully by mid November. So should we expect a similar financial impact in Q4 as in Q3, so around $100,000,000 And then secondly on net financial expenses, I've seen them tick up over the past few quarters. Could you talk about how your cost of debt is evolving as you refinance debt at presumably higher interest rates? Thank you.

Speaker 1

Tim, I'm sorry, but I'm not in charge of all the exchanges of the company. And by the way, we are not operating Ichthys. So something happened there. It has been solved. That's the point.

Speaker 1

And I think my people in charge of operations are drawing the lessons about to avoid these type of issues. It's a big machine. It can happen. And I'm sure that our operator and my teams who are in Australia are working their best, doing their best to avoid this type of unplanned events. Life, I would say.

Speaker 1

Financial impact on Q4, I think it has been sold, I think. I think it is as we started, if I according to my informations. So it should be impact should be it's not only $200,000,000 I don't know why you mentioned $300,000,000 or $300,000,000 I'm not sure it was so big as an individual because there were different impacts on the cash. It's not only Ichthys. Ichthys is part of it.

Speaker 1

I don't have the idea. You have an idea, Jean Pierre? No, I don't have the idea. Debt and interest rates, I will let Jean Pierre is the expert of all this debt management. Yes.

Speaker 2

For the time, I have a very good portfolio in terms of costs, below 4% globally. So I do not see the reason why I should risk that, refinance. What we did, we made 2 insurance in the U. S. Market, 1 in April and 1 in September, very successful because it was largely oversupply and with very low maturity.

Speaker 2

So the strategy we continue to implement is to try to have longer maturity, 30, 40 years at that sacrifice. But once again, I'm sorry, it's very competitive bond portfolio.

Speaker 1

Okay. Just before we take this next question, I would like to answer to Biraj a little clearer because in the meantime, the teams have worked. So if Biraj is still online, he will be happy. You are right, the 34,000,000 was expecting. We are more today at 30,000,000,000, dollars 31,000,000,000 expecting by the end of the year.

Speaker 1

So my doubts on the gas, the fact that the gas price was lower, it's 1,000,000,000 dollars The lower gas trading gas and LNG gas is €1,000,000,000 so compared to the year before. So it's €2,000,000,000 on the, I would say, gas and LNG as a rule and it's €1,000,000,000 on the refining margins. The last €500,000,000 I'm not sure to have the figures, but just so I'm correcting, I can easily go from €34,000,000 to €31,000,000 let's say and then there is something which are different elements, but we'll come back to you next February with all the details just to be sure that the elements are shared with everybody.

Speaker 2

Henri?

Operator

Next question is from Harry Patrico from UBS. Please go ahead.

Speaker 6

Yes, everyone. Thank you for the update. Two questions, please. The first one, actually, just a quick follow-up on these comments around the CFFO generation in the year. I was wondering if I think the Chemicals segment is also an area where you've seen lower cash flow than expected versus what you had at the start of the year through a combination of the macro and maybe sort of ramp up of base or underlying performance elsewhere in the business?

Speaker 6

And then secondly, on the integrated power ROCE dipped below 10% this quarter. How quickly should we expect that ROCE to go back above the 10% level? Okay.

Speaker 1

The second one is quite easy. It's linked to the calendar of the farm downs. In fact, as I told you before, we have the farm downs when you make it under renewables have quite an impact because of course not only you in terms of capital employed, it has you will not only eliminate the share of the equity, but also the share of the debt. So it has a double effect. And so as the fund downs are planned by the Renewable Business Unit in the Q4, you can see some, I would say, a linear impact on the non linear impacts along the year.

Speaker 1

But we should reach the expectations. So again, 9.5%, 9.6%, 9.8%, not a big difference. But that's for me the main explanation is more on the capital employed linked to the agenda of the farm downs. On the chemicals, I would say, the chemicals you follow a list of chemical companies. We are only petrochemicals and polymers.

Speaker 1

The margins in Europe are low for quite a number of quarters. The global margins are not very big because again we face exactly like in refining more Chinese capacities I would say on one side. And as we had quite a number of key petrochemical projects in the U. S. In particular, there was a wave of the same cracker which was built from 2020 to 2023 and we are part of it.

Speaker 1

So quite a more supply linked to a low chip the same cost, which is there. But most of these capacities in the U. S, we are in fact invested to export. And at the same time, we've seen that the Chinese have been very active, in fact, to again be more self sufficient. And so of course, this is a point.

Speaker 1

So for me, margins are correct globally, but not very high. And so it's we are not in the high cycle. We are, I would say, in the middle, low cycle for chemicals products today. It's less critical than the refining dip. We are making some positive results, but it's not a beautiful market.

Speaker 1

But it's more I would say new chemicals is more we are more downstream and you have more of a global economic macro will affect them. So you can see the IMF expectations for the year are decreased quarter after quarter. So that impacts this type of businesses, I would say, in terms of demand. And so if demand is lower, of course, the margins are following. Thank you.

Operator

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

Speaker 6

Thank you. Good afternoon or good morning. Patrick, just curious that for the integrate power, can you give us some maybe better understanding the contribution in your earning or CFFO between the gas fired power portfolio and the renewable power portfolio? Thank you.

Speaker 1

Yes. And you forget end of customer portfolio because there are 3 segments of revenues or contribution. 1 is renewable power, the gas plant and the customer plant knowing that as again I'm repeating it's an integrated business. So will not make the money on the customer since I don't have the assets, but I'm making also additional revenue on the customer because I'm able to make this commercial business. I would say, it's roughly 3 thirds between the three parts.

Speaker 1

So, 1 third around renewables, 1 third about the cash plants and 1 third about the customers. So, it's just to give you a rule of thumb in the way the CFFO is split today.

Speaker 6

Great. And Patrick, can you give us an update where we are on the Papua New Guinea LNG projects?

Speaker 1

LNG, we have been very transparent in the market. We said that we interrupted the whole tender process because the CapEx was too high. We stopped and we have together with our partners, we have taken some to review. We have reviewed some, I would say, of the basis of design in order to streamline the projects. And we have also been to a larger pool of contractors, in particular, some Asian contractors.

Speaker 1

And according to my information, we have the re tendering has begun. That's since we have launched now the process to all the different contractors on the new scheme, which again most of the scheme has been maintained, but we have some optimizations together with the partner in order to simplify and to make cheaper parts, cheaper concepts. And we expect all that to be a process which is a little longer. So I'm expecting, I think, the offers by next summer 2025, I think, it's because it's a big process. And again, we have reengaged.

Speaker 1

But the good news, I can tell you, is that there was quite a lot of appetite from contractors from the Asian world. So maybe the Western contractors were not so keen. But on that side of the continent and either in India or in China, we can find some contractors. We had an appetite and which we are quite good to quite happy to be invited to contribute. And we have, of course, made all the qualification processes and the teams are working very closely with them in order to have some good and competitive offers.

Speaker 1

So it's on its way.

Speaker 6

And Patrick, if go according to plan, when is the first guess is going to be?

Speaker 1

I think it was written in our CMD booklet. So I don't have that in mind. It's 20, 28. No, I'm not sure. It was written in the slide on the booklet, so I don't know everything by heart.

Speaker 1

Maybe my team can help me on this one. I will try to find it 1 minute. 2028.

Speaker 6

Okay. Thank you.

Speaker 1

2028.

Operator

The next question is from Henri Dard from Berenberg. Please go ahead.

Speaker 13

Hi there and thanks for taking my question. I just have one left really. And that's just on the bio business, which I think you've referred to a couple of times. Europe is clearly incentivizing biofuel use, but there has been a lot of capacity that's been added. And if we see a lot more sort of brownfield conversions as well, are you confident that there's going to be sufficient demand in Europe and the U.

Speaker 13

S. To sort of soak up the available supply over the next 2 to 3 years? So clearly, we're in a little bit of a period of weak margins currently. Thank you.

Speaker 1

I mean, this is exactly why I was answering to one of your colleagues previously, but when we speak about this type of transformation, we need to appreciate also the demand and supply. This market in Europe is completely regulated. It's coming from regulation. So why do we have today lower margins? It's because 2 countries in the north of Europe, Sweden and Finland, which we are planning to have a mandate for biodiesel, which was above the minimum of Europe.

Speaker 1

So it was announced. It was planned. It was quite above. I think it was 30% instead of 10%. So some competitors have built some plans for making producing HVO, renewable diesel.

Speaker 1

And for HVO when you evolve diesel. And unfortunately, new governments came in and they modified the mandate to come back to be, I would say, standard by European mandate around 10%. So that created an oversupply and then the HVO margins have decreased. So that's the difficulty in that field. That's why when I was answering, of course, we are following that carefully because it's not it's a niche, but the niche could be full quickly.

Speaker 1

And I love the game of the airline companies who are pushing us up to produce more. In fact, they want us to have another supply and another supply to go down. It's quite easy. So they are complaining there is not enough staff. And today, maybe we are intentioned, but we might be on the other side.

Speaker 1

So we are evaluating all that because of course it makes little sense to invest and then to enter into another supply market. So we are evaluating that. And we are obliged now and think the lesson we draw is let's be cautious. All these guys are announcing higher mandates, voluntary mandates. I'm only trusting the minimum legal standard mandates.

Speaker 1

These ones are strong because I don't think we will modify them. But all these voluntary mandates are more questionable because again suppression of competitiveness for our customers. So this is exactly the process where we are to evaluate properly, I would say, supply and demand in Europe like you have to do it in the U. S. In the U.

Speaker 1

S, it's not exactly the same market because all the bios from the U. S. Cannot move to Europe because I would say the content and then as a regulation, so that's what we call the biofuel in our SAF in Europe, but in the U. S, it's not exactly the same. So that's more protection from this perspective.

Speaker 1

But that's part of the work on which we need to be serious before to move. There is also, as we told you in New York and other things to take into consideration is that there is some new aviation regulation, which allow to make some co processing in some existing refineries. So obviously, we have to evaluate. It's an opportunity for us first for our refineries to have better value from our existing assets. But we need to evaluate properly how much of this core processing could be used by the global industry in New York because it will be a competitor to any greenfield or brownfield projects.

Speaker 1

So we need that's also part of the equation that we have to take into account.

Speaker 13

That's great. Thanks for your answer.

Operator

The last question will be from Jason Gabelman from TD Cowen. Please go ahead.

Speaker 14

Yes. Hey, it's Jason Gabelman from TD Cowen. I had two questions. The first on Russia. And if we're in a situation where the Russia Ukraine conflict ends, I'm wondering how much cash is out there that you haven't been able to recover between Yamal and Novatek dividends that you'll be able to recoup?

Speaker 1

I mean, first, I hope you are right in your assumption. The war will end not only for TotalEnergies, but more for the peace in our continent. And by the way, I think it would be important for the global economic mood in the continent if there was this end with war was ending. So no problem on it. Now it's quite easy.

Speaker 1

The dividends of Novatek were representing around $600,000,000 per year. So they are stuck. Most of them are stuck in on the Novatek accounts, not on the C accounts because Novatek has kept this dividend on its own account for us in fact. So this represents around $1,000,000,000 more or less I would say. And then you have part of the Yamag dividends as well which was at the beginning we managed to get them and we are transparent.

Speaker 1

We are by the way publishing it. Today there is no publication because there is little, there are nothing, no dividends. So that means that you are probably another $500,000,000 So I don't know when it will end. So probably by the end of the year, it will be $1,500,000,000 to $2,000,000,000 of cash dividends, which are somewhere on overall accounts, just to give you a magnitude of it. And of course, it's not for the point.

Speaker 14

Yes. That's helpful. Thanks. And then just going back or turning to CapEx. And it looks like if you continue the pace of organic spending from 3Q that you'll breach the high end of guidance for the full year.

Speaker 14

And I know there's some inorganic acquisitions out there, SapuraOMV that hasn't closed yet. So just wondering as we are a month into the Q4, how comfortable you are with the current CapEx guidance and if some of these acquisitions close on this side of the calendar year, if you'll potentially breach the high end of the range?

Speaker 1

No, we will not breach. Okay. We told you we confirmed $17,000,000,000 $18,000,000,000 So we confirm it. In fact, just to be transparent with you, the organic CapEx by the end of September were around $12,500,000,000 So if I'm adding another $3,000,000,000 to $4,000,000 you will go to $16,500,000,000 There might be more M and A, more acquisition by divestment. So I'm fine.

Speaker 1

I think, again, we are today in terms of global net CapEx at $14,000,000,000 by the end of this September. So that means we confirm the guidance of $17,000,000,000 2018. So you make the difference between $17,000,000,000 2018 and $14,000,000 it makes $3,000,000,000 to $4,000,000,000 of CapEx, which is quite consistent with what we just said. And it includes to be clear, I included that the possibility that we close this Wembley acquisition in Malaysia. We'll see.

Speaker 1

I mean, it's a process which is not fully under our control, but this is where we are. So I think EUR 12,500,000,000 organic, you can calculate. We are not at the high end of this EUR 18,000,000,000 we mentioned for the year next year. We are far from it from this year in terms of organic will be probably around €16,000,000,000 Okay?

Speaker 14

Great. Thanks.

Speaker 1

Good.

Operator

Gentlemen, do you have any closing comments?

Speaker 1

Yes. We have some comments. So thank you for the attendance. Okay. Again, I think the quarter, of course, is lower than the previous ones.

Speaker 1

It's clear because we have been, I would say, in this refining margin. That's part of the integrated value chain. At the end, we are comfortable with the fact that we are on the right track to deliver. The global year will be in line with our expectations. We have confirmed with the Board return to shareholders and the strong return to shareholders guidance.

Speaker 1

Keep in mind that the year 2025 will also be positive. We told you in New York that we'll enter into a growth cycle, including on the hydrocarbon productions, more than 3%. And I can confirm you, we had a very good news yesterday afternoon. Meru 3 started up. So the ramp up will begin.

Speaker 1

We had Meru 2, which is going to its maximum. And so I can confirm to you that 'twenty five will have a production growth by more than 3%. So that also will help of course the resilience of the model. And so thank you again for your support and for having listened to us. And I hope we will have to meet you again in coming weeks.

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Key Takeaways

  • Despite Q3’s 66% drop in refining margins, adjusted net income of $4.1 billion and a 14.6% return on average capital employed underline the resiliency of its integrated model.
  • Upstream production of 2.41 Mboe/d met guidance, with first oil at Encore, first gas at Phoenix and the sanctioning of the Grand Moru FPSO to support 3% annual growth through 2030.
  • Integrated LNG volumes fell 7% but sales rose 8%, with Q4 prices forecast at around $10/Mbtu and 4 Mt of new medium-term contracts signed in Asia to bolster future cash flows.
  • Integrated Power posted ~ $500 million Q3 operating income (+21% YTD) and over $600 million cash flow, driven by the start-up of two U.S. solar + storage projects and key offshore wind partnerships.
  • Capital discipline is maintained with €17–18 billion of 2024 organic CapEx, a €2 billion Q1 share buyback (full-year target €8 billion) and a 7% rise in the interim dividend.
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Earnings Conference Call
TotalEnergies Q3 2024
00:00 / 00:00