Earnings call transcript: TotalEnergies Q2 2025 misses EPS, revenue beats

TotalEnergies SE (TTE) reported its earnings for the second quarter of 2025, revealing a mixed financial performance. The company’s earnings per share (EPS) fell short of forecasts, posting $1.57 against an expected $1.67, marking a 5.99% miss. However, the revenue came in strong at $44.68 billion, surpassing the forecasted $39.85 billion by 12.12%. Despite the revenue beat, the stock experienced a 2.74% decline in pre-market trading, closing at $60.67. According to InvestingPro analysis, TotalEnergies maintains a "GOOD" financial health score and is currently trading below its Fair Value, suggesting potential upside opportunity.

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Key Takeaways

• TotalEnergies’ EPS missed expectations by 5.99%, while revenue exceeded forecasts by 12.12%.
• The stock fell 2.74% in pre-market trading following the earnings release.
• The company announced a 7.6% increase in dividends to €0.80 per share.
• Upstream production grew by 3% year-on-year, with significant LNG portfolio enhancements.
• TotalEnergies plans divestments worth $3.5 billion in the second half of 2025.

Company Performance

TotalEnergies demonstrated robust revenue growth in Q2 2025, largely driven by strategic expansions in its LNG portfolio and upstream production. Despite this, the company’s EPS was below expectations, reflecting challenges in managing operational costs and market conditions. With a P/E ratio of 11.11 and an attractive dividend yield of 4.69%, TotalEnergies maintained a competitive edge with its diversified portfolio across oil, gas, and power sectors. The company has consistently paid dividends for 49 consecutive years, demonstrating strong financial stability.

Financial Highlights

• Revenue: $44.68 billion, up from the forecasted $39.85 billion.
• Earnings per share: $1.57, below the expected $1.67.
• Adjusted net income: $3.6 billion.
• Cash flow from operations: $6.6 billion.
• Return on equity: 14.1% over the 12 months ending June.

Earnings vs. Forecast

TotalEnergies’ EPS of $1.57 fell short of the $1.67 forecast, marking a 5.99% negative surprise. This contrasts with the company’s historical trend of meeting or exceeding EPS expectations. However, the revenue exceeded forecasts by 12.12%, indicating strong operational performance despite the EPS shortfall.

Market Reaction

Following the earnings announcement, TotalEnergies’ stock price declined by 2.74% in pre-market trading. This movement reflects investor concerns over the EPS miss, despite the positive revenue performance. InvestingPro data shows that five analysts have recently revised their earnings estimates upward for the upcoming period, and the stock generally trades with low price volatility. With a market capitalization of $138.15 billion, TotalEnergies remains a prominent player in the global energy sector.

Outlook & Guidance

TotalEnergies projects continued upstream production growth of over 3% for the full year. The company anticipates net investments to range between $17 billion and $17.5 billion. Additionally, refining utilization is expected to be between 80% and 85% in Q3 2025. The company remains focused on share buybacks, targeting up to $2 billion in Q3.

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Executive Commentary

CEO Patrick Puyani emphasized consistency as a key theme for TotalEnergies, stating, "The keyword of Total Energy is consistency." He also highlighted the company’s strategic focus, noting, "We are in a commodity business. We don’t control the markets." These comments underscore TotalEnergies’ commitment to maintaining stability amid market volatility.

Risks and Challenges

• Market Volatility: Fluctuating oil prices and European gas price decreases pose ongoing challenges.
• Operational Costs: Rising upstream operating costs, currently at $4.9 per barrel, could impact profitability.
• Petrochemical Overcapacity: The sector faces overcapacity issues, particularly in China and the U.S.
• Regulatory Changes: Potential restructuring of the European refinery portfolio may be required.
• LNG Market: Caution is advised regarding potential oversupply in the LNG market from 2027.

Q&A

During the earnings call, analysts inquired about the company’s approach to the anticipated LNG market oversupply and its exploration of biofuels and co-processing opportunities. TotalEnergies’ management expressed optimism about U.S. renewable energy investments, while acknowledging the need to monitor and potentially restructure their European refinery portfolio.

Full transcript - TotalEnergies SE ADR (TTE) Q2 2025:

Conference Moderator: Ladies and gentlemen, welcome to Total Energy’s Second Quarter and First Half twenty twenty five Results Conference Call. I now hand over to Patrick Puyani, Chairman and CEO and Jean Pierre Breaert, CFO, who will lead you through this call. Sir, please go ahead.

Patrick Puyani, Chairman and CEO, Total Energy: Good afternoon or good morning, everyone. Before Jean Pierre goes through the details of the second quarter financials, I would like to make some few opening comments. We are facing an unstable geopolitical and macroeconomic environment, which has been dominated by during the quarter by Israel Iran twelve days war and also the tariff war between The U. S. And some commercial partners.

In this context, oil markets have been volatile during the second quarter with price broadly fluctuating between $60 $70 per barrel, an average of $68 per barrel. We have a short and ultimately modest increase during the Iran crisis with crude prices reaching $81 per barrel at the highest point. We could consider in our view that this is quite a limited price response to this major crisis. And somewhere, it is a signal that the whole market is well supplied, in particular fueled by OPEC plus decision to unwind some voluntary production cuts and also facing a weaker demand linked to the global slowdown of economic growth. In such a context, Jean Pierre will detail that in a few moments, this quarter Total Energy is once again demonstrating the company’s robustness, thanks to its balanced and consistent strategy, but also thanks and it’s more important to its differentiated and unique energy production growth profile, both in Oil and Gas and in Electricity, and that drives cash flow growth as well as attractive and is a basis for attractive shareholder returns through cycles.

So starting first with our first pillar, Oil and Gas. The first half twenty twenty five production was up more than 3% year on year, demonstrating that we are well on track to achieve our 2025 Upstream production growth guidance of more than 3% versus 2024. And as you know, it will be even longer up to the end of the decade, this 3% growth. And it has been supported and it’s also very important by startup of high return projects such as the Balimo field in The U. S.

Or Merufo in Brazil, which by the way was one quarter ahead of schedule. And now Begonia and Clough free in Angola just came on stream to further feed the Q3 and H2 growth. As I said, importantly, this production is coming from this new project is accretive, increasing the Upstream cash flow CFFO per barrel by around $1 per barrel as an average during the quarter, which is, in fact, quite impressive given all our production base. We are also continuing to manage this portfolio, focusing on our projects on those who meet our low cost low emission criteria and divesting some non core higher cost projects. And during Q2, we consistently with this strategy, we divested nonproitin indirects in non core higher cost projects in Nigeria, Bonga and Brazil Gatudomato.

During the second quarter, we have also reloaded the exploration portfolio by acquiring exploration permits in The U. S. Gulf, in Malaysia, in Indonesia and Algeria. On the LNG front, the big news of the second quarter that we continue to strengthen the portfolio by signing a 1,500,000 tonne LNG offtake agreement from Rio Grande LNG Train four. We will become shareholder of this train as well.

And we have also taken, I would say, an option potentially on the future projects located on the Pacific Coast Of Canada, which give access to Asian markets and will benefit, by the way, some very cheap gas Canada, in Alberta, Canada. On the second pillar, as you can have observed, our Integrated Power continued to deliver solid results and solid cash flows to close to $600,000,000 and is on track to achieve also its annual guidance. In line with our strategy, we also continue to unlock value in our Power business by progressing farm downs. We have sold during the quarter 50% of our 600 megawatt portfolio of renewable assets in Portugal, and there is more to come in the second half. The Q Downstream results benefited from a positive seasonal effect of marketing and services activities, which have done very well, which impact our stronger with stronger results year on year.

Despite near term improvements in refining margins, to be honest, it’s a small improvement in the second quarter, refining and chemicals are still facing some headwinds either on the operational side. Through refineries, we are not at the optimum, I would say, efficiency, dormant and port offer. And also on the market side, it’s more for the Polymer business, which is facing overcapacities in the market. Moving to CapEx. During the first half of twenty twenty five, net investments totaled $11,600,000,000 including $2,200,000,000 of net acquisitions, in particular the acquisition of VSB.

I confirm today that for the full year, we anticipate the net investments will be within the $17,000,000,017,500,000,000 guidance range, given the disposal program planned for the second half of this year, which is already well engaged. In Upstream, beyond our stake in Bonga, Nigeria, as announced, we have fact, this last week approved some binding offers for our unconventional oil license in Argentina and for two other E and P assets, which will represent globally $1,000,000,000 of cash flow. We are also working and the E and P team is working hard to close our divestments of onshore Nigeria before year end. This represents next to $1,000,000,000 In Integrated Power, we are very well advanced for the farm downs of the 1.5 gigawatt portfolio in The U. S, a two fifty megawatt portfolio in France and a 400 megawatt in Greece.

These three farm downs will represent net divestments of CapEx of around $1,500,000,000 The gearing stood by the June at 18%, increasing quarter to quarter, primarily due to net investments being weighted towards the first half of the year, in particular because of the disposals proceeds, but it was anticipated. And working capital is more built on first half sorry, and working capital built on the first half. Excluding the seasonal effects of working capital and the investment base, normalized gearing is 15%. I will conclude my remarks with the shareholder distributions. The message of the Board is clear.

We maintain shareholder distribution at high level, I would say, as a payout could stand around 55% in 2025, which is, as you remember, quite above the guidance of more than 40% full cycles. First on dividends, the ordinary dividend is our number one capital allocation priority. We continue our track record of attractive growth. So Board of Directors approved a second interim dividend of 2025 of EUR $0.08 0 per share, which is an increase of 7.6% compared to EUR 24 and is up 25% versus pre COVID. I would like to underline that in U.

S. Dollar terms, considering the evolution of the U. S. Euro exchange rate, this increase of more than 10% and it was 8% in 2023, 8% in 2024. So U.

S. Shareholders have the benefit of that. I would like also to underline that this dividend yield or dividend yield is the best amongst the majors. We are comforted by the ability of the company to reach its 2025 underlying growth objective, in particular on energy productions on both sides, the Upstream, which continued to deliver good results quarter after quarter and also Integrated Power, while maintaining a strong balance sheet, the normalized gearing at 15%. The Board has decided to continue share buybacks for up to $2,000,000,000 in the third quarter.

The Board will continue to monitor the buyback on a quarterly basis, looking to the evolution of the macro environment, but also on possible anticipations on the oil gas refining petrochemical petrochemical markets. We intend to give you more colors on the buyback scheme at our investment at our Investor Day September. And now, I will turn the call over to Jean Pierre, who will go through the details of second quarter financials.

Jean Pierre Breaert, CFO, Total Energy: Thank you, Patrick. So I will start by commenting on the price environment in the second quarter, which was overall weaker quarter over quarter. Brands averaged $68 per barrel versus $76 per barrel in the first quarter, so down 10%. TTF, the European gas market, averaged $11.9 per million meter per versus $14.4 per million meter in the Q1, down 18%. And the average LNG price also decreased to $9.1 per million BTU versus $10 per million BTU in the first quarter, down again by 10%.

For refining, the year end, so European refining margin, slightly improved to $13.5 per tonne during the second quarter, but as mentioned by Patrick, still remained at low level. In this context, the company reported robust financial results, demonstrating the strength of our business model and of our operations, with adjusted net income of $3,600,000,000 and cash flow from operations of $6,600,000,000 for the second quarter, which were supported by effective production growth. Profitability remained strong with return on equity for the twelve months ending June at 14.1%. Now moving to the business segments, starting with Hydrocarbons. As anticipated, second quarter production was slightly lower than the first quarter due to plant maintenance.

However, on a year over year basis, the second quarter marked yet another increase in Upstream production, which amounted to a strong 2.5%, thanks to new project start ups and ramp ups. On the cost side, the company continues to be a leading low cost operator, with upstream operating costs at $4.9 per barrel for the first half of the year. Looking forward, we expect hydrocarbon production in the third quarter to increase by more than three percent compared to the third quarter twenty four. Turning now to exploration and production. So this segment generated second quarter twenty twenty five adjusted net operating income of $2,000,000,000 and a cash flow of $3,800,000,000 Importantly, our Project Q is delivering new low cost, low emission oil and gas that is accretive with an average of CFFO per barrel equivalent that is roughly 2x the base portfolio.

In fact, during the second quarter, production from the new projects improved the upstream CFFO per barrel equivalent by around $1 per barrel equivalent, generating something like $180,000,000 more than if they had come from the base portfolio. On a cumulative basis for the first half twenty twenty five, the extra CFFO generated by new projects totaled close to $300,000,000 On Integrated LNG business, our sales were stable at 10,600,000 tons for the second quarter, and the company achieved $1,000,000 of adjusted net operating income and cash flow of $1,200,000 for the second quarter, reflecting the 10% increase in the average LNG selling price related to declining crude price as well as low market volatility for gas trading activities. Forward, European gas prices continue to be sustained at around $12 per million per day for the first quarter and for twenty fivetwenty six winter period due to storage replenishment in Europe. Given the evolution of oil and gas prices in the recent months and the lag effect on pricing in Sommilers, the company anticipates an average selling price of $9 to $9.5 per millimetreu in the third quarter. On Integrated Power, the net power generation increased 28% year on year to 11.6 terawatt hour due to growth in renewable sources and the impact of the 1.3 gigawatt CCGT acquisition in The UK closed in 2024.

Integrated Power adjusted net operating income was close to $580,000,000 up 14% year on year and cash flow was $562,000,000 First half twenty twenty five cash flow totaled $1,200,000,000 and we are on track to achieve the annual cash flow guidance. Lastly, we are progressing on the company’s fundamental strategy, which optimized, as you know, capital allocation. During the second quarter, the company sold 50% of a 600,000,000 watt portfolio of renewable assets in Portugal, and as Patrick mentioned, there is more to come, with the 50% thumb down of a 1.5 gigawatt portfolio in The U. S, 400 megawatt in Greece and two fifty megawatt in France. Moving now to Downstream.

Although refining margin improved during the second quarter to $35 per ton, overall, we remain in a global weak price environment. In this context, Downstream reported second quarter adjusted net operating income of $800,000,000 and cash flow of $1,500,000,000 The result benefited from positive seasonality in Marketing and Services business, with results higher year on year. In Refining, utilization rates increased in the second quarter due to improved efficiency and low maintenance, but the result suffered from some operational difficulties at PowerTure and those refineries as well as weak petrochemical margins as the Polymers business is facing a global glut of new capacity in China and in The U. S. Looking ahead, we anticipate refining utilization in the range 80% to 85% in the third quarter 2025%, which reflects scheduled maintenance at Onver, Porature and HTC in Korea.

In terms of downstream environments, in petrochemicals, we see continued pressure on pricing from the record incremental production capacity that was placed in operation in 2022 and 2023. And in SAF business, imports to Europe have significantly increased, pushing prices down and likely impacting Bayer margin for the rest of the year. Moving now to the company level. On working cap, the company reported 500,000,000.0 increase in working cap requirements, mainly due to the unfavorable effects of declining prices on tax liabilities and payments during the quarter of the capital gain tax from divesting the German distribution networks to Alimentation Gustaf. This was partially offset by the seasonal release on gas and electricity supply activities in Europe after a strong build in the first quarter.

Note that the increase in the first half twenty twenty five working cap requirements of $4,900,000,000 is essentially at the same level that was reported one year ago in the first half twenty twenty four. Looking ahead, the company expects that most of the seasonal working cap builds that was observed in the 2025 should be released in the second half of the year. On net investment side, so net investment totaled $6,600,000,000 in the second quarter, which notably included the closing of the GSB acquisition for €1,600,000,000 and $11,600,000,000 for the first half of the year. We anticipate full year net investments to be within the guidance range based on planned disposals during the second quarter half of the year as Patrick mentioned. That means that the gearing by June is impacted by something like $2,600,000,000 $2,800,000,000 CapEx.

With that, Patrick and I are now available to answer your question. And now we can open the line. Thank you.

Conference Moderator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Please go ahead.

Michele, Analyst: Thank you very much. Two quick questions on the LNG market actually. You continue to grow it very strongly with both long term contracts and new projects. I’m just wondering, at what point do you think that it will become really difficult to sign new long term supply contracts with customers? It feels like we are starting to build a bit of an oversupply for the coming years and that the oil linkage is probably approaching that 12%, which starts to become less attractive.

Just wanted your view there also because it would be interesting to see at what point we start to see a slowdown in new FIDs. And then related to that, in The U. S, how do tariffs impact the cost of building new LNG plants? There’s various elements. I think the steel tariffs probably are the most relevant ones.

And does that make you be more cautious to do an FID on a new LNG project in The U. S. Or that’s actually manageable in the context of your portfolio? Thank you.

Patrick Puyani, Chairman and CEO, Total Energy: Thank you, Michele. You are right, there is clearly a big an increase of LNG supply, which will come on stream, as we said, 07/2829. For me, ’26 still will be quiet because these projects are always a little difficult to ramp up, I would say. So project in Qatar is more or on time. The first train we expect from NFE is mid-twenty six, then every six months a new train.

So ’26 for me will not be so much impacted by this new capacity. From ’27, you will see clearly an impact. That’s why we since last year, we decided to move to a clear strategy, which is to sign some medium, long term contract linked to Brent because I’m more optimistic on the Brent oil price than on the, I would say, TTF and GKM spot gas price. And we continue to have some success on that. We have announced quite a number of million tons with last year and will continue.

The question is why the customers behave like that. I think the customer, they have been, I think, caught in 2022 by some hike. We are in a world which is honestly quite volatile. The geopolitics play a game in the market more than ever. It’s not just supply and demand.

But by the way, not easy for traders today to manage this geopolitical risk, even if, I would say, all traders within Total Energy have done very well in the second quarter despite this environment. So that’s true. But I think the buyers continue to look at it as a way to hedge themselves. They want to yes, it’s true. It’s better to sign at 13%, but at 12%, I fully agree with you.

But by the way, when you have a long term contract at the end for company like Total Energy, it’s not only percentage which counts, it’s also all the functionalities, because we have a large portfolio and then we can do you have the capacity to redirect the cargoes to that’s a lot of things which are also important for us. So around the medium, long term contract, there is more value to extract than just a pure formula. That’s why it’s important to be a portfolio company. And I think, in fact, in one of the advantages of the position of Total Nets is when we meet these buyers, they see us as a portfolio company and not just as a point to point, I would say, seller and buyer. It’s not Project One.

But we are today marketing P and G Papua LNG, sorry, marketing Papua LNG. And we have some good results in some Asian countries because of the location. So these dynamics still there, and we continue to work on that. U. S.

Tariff, I have some good news for you and for us because we have a real figure. We know we are just we are not far from approving sanctioning, but not us Rio Grande next decade. It’s not far from sanctioning the 24 or maybe 25. So there have been some, I would say, EPC contract discussed with Bechtel. And I will say, I would tell you, Michele, I was a little afraid of where do we land with this tariff impact.

Finally, the of course, there is some inflation, but it’s less than 10%, would say. So it’s very reasonable. And so for me, again, an XDK wants also to commercialize its LNG, so it’s more a question of marketing. I think 24% is full, 25% is not yet, but things are moving on and it’s their job. But fundamentally, from this real case, I would say that we manage.

And I think it’s also the dynamic when you have a very good EPC contractor, we see some advantage. I think Rio Grande LNG is a success story, Train one, Train three. If we are able to continue on Train four and Train five, then there is also some synergies there. So your answer to you, would say, this specific case, we are comfortable. We don’t see much impact on the tariff.

We would see more impact on the tariff, think, on topics like batteries because batteries, you have to import most of the cells in the world are manufactured in China. So even if you build the modules in The U. S, you have to import cells. So this type of business might will be more impacted. But from this perspective, I think my colleagues who are drilling U.

S. Shale oil are probably more impacted by the increase of tariff on the steel because they understand they are using some specific steel. Most of this steel is impacted. So probably the cost of the well in U. S.

Shale is more impacted by our own business in The U. S. Today.

Biraj Borkhataria, Analyst, RBC: Thank you, Patrick.

Conference Moderator: The next question is from Biraj Borkhataria, RBC. Please go ahead.

Biraj Borkhataria, Analyst, RBC: Hi, thank you for taking my questions. The first one, just on working capital. And if I look at these quarterly changes in working capital over the last few years, it looks like the magnitude, both up and down on a quarterly basis, has been feels looks like it’s increasing over the last few years. And I’m thinking about the periods of 2017, 2018 to now. Just trying to understand if that’s something we should expect going forward, whether it’s the growth of the Power business or something else?

Or is there any particular reason for that? And the second question is just on a quick one on the buyback. In Q1, said that you’re up to 2,000,000,000 buyback. I noted you did EUR 1,700,000,000.0 this quarter. Was that just a timing issue on liquidity or a conscious decision to do a bit less there?

Anything any color on that would be helpful. Thank you.

Patrick Puyani, Chairman and CEO, Total Energy: Second question, it’s easy. You have found the right result. It’s more a question of timing. We have the €2,000,000,000 have been bought It was a question of liquidity.

So no message for the EUR 1,700,000,000.0, we will catch up according to the guidance of the Board. Okay. So we are working on it, but easy to answer the second question, it will be low insurance on that. On the first one, the quarterly look, I think Jean Pierre told you told you I made a remark. If I’m looking to at the end of the first half of twenty twenty four, first half of twenty twenty five, we had both years built of around 5,000,000,000 In 2023, it was around €4,000,000,000 or €3,500,000,000 So there is an increase because we are the more we develop this B2C business in Gas and Power, which is growing in the company, the more we have a seasonal effect, which is that, in fact, the people are using us I mean, somewhere are burning a lot of using electricity consume, sorry, consume electricity and gas during winter times.

And as their bill is spread about twelve months, we have a working capital effect, which is we catch up. But that’s increasing a little. Having said that, just to be clear with you, last year at the end of the last year, we told you in our working capital, the gearing went down to 7%. We made a modification. We told you, be careful.

There is an exceptional, I would say, positive elements of around €1,500,000,000 So for me, what I’m expecting between today and the end of the year is the €5,000,000,000 built of the first half should be, in fact, erased by 3,500,000,000.0 I would say. If I don’t have any overexceptional. Normally, we should like we’ve done the previous years, Jean Pierre has explained has shown as a nice graph in front of us. Maybe one day, we’ll share it with you with the month’s rate, the seasonality. So and we, of course, presented back to the Board, and we are comfortable with the type of metrics I just gave you, to give you more insights of what happened.

Okay. Thank you. And so that’s also why, to be honest, when we put together to the Board, and I’m just repeating what I said, this working capital analysis plus this, I would say, CapEx, which have been more weighted on the first half because of the disposal and because as I try to I mean, I hope you convinced, I gave you a list of all the disposals, which we are committed to and which we are really binding offers on which we are now translating that in SPA. The Board considers that all these elements give him confidence to maintain this buyback at $2,000,000,000 Knowing that as an average for the year, are at $70 per barrel, like, by the way, we’ve made a presentation in February at $70 per barrel, giving you some guidance. And so the $70 per barrel has been the average for the year.

Today, when I’m looking to see, I’m at $70 And about people can say low bearish on demand supply, but at the end of the day, this is a market, and so we keep trust on that.

Conference Moderator: The next question is from Irene Himona, Bernstein. Please go ahead.

Irene Himona, Analyst, Bernstein: Thank you. Good afternoon. Patrick, you told us before that the $2,000,000,000 quarterly share buyback is affordable at $70 and at reasonable market conditions. When you look at the balance sheet with the current 15% normalized gearing, what is the normalized gearing range, let’s say, that you would see as reasonable? In other words, how high would that normalized gearing have to go to remain acceptable in a $70 environment?

And then my second question on integrated gas and LNG, the CFFO in the division declined about 6% in the first half year on year. Are you confident in the cash flow guidance you provided for that division out to 2028? Thank you.

Patrick Puyani, Chairman and CEO, Total Energy: To be clear, at $70 we told you at the beginning of the year that the target guidance for the gearing was around 12%, 13%, if I remember well. There were some acute assumptions in it. So in particular, there was the idea that the Downstream could target a cash of $7,000,000,000 To be honest, today, we’ve done 2,500,000,000.0 in the first year. We are we think the Downstream will improve because the margins first the third quarter margins on refining are always better. As is the case, we have margins today above $60 per ton.

It’s good. Second, I’m really confident that the performance of the two assets I have mentioned will improve. Teams are working hard. So I would say, maybe not seven down three maybe 6%, but we are not so far, so I have one. On the you have some so I would say, for me, at the end, we are still targeting 14%, 15% gearing by the end of the year.

So the normalized gearing for us at 15% is a good guidance, and the Board is comfortable with 15% at $70 This is a message I think we delivered to you. So again, it’s not only the gearing, the balance sheet we have we know that there is volatility, it’s more we observe the markets. And today, as I said, and there are some pros, some cons. We not only look to the oil markets, the gas markets, I would say, are quite confident for next year, but also the petrochemical markets, downstream markets. There are some good reasons to think that the diesel spread is quite strong, in particular, with all what happens around Russia.

So it’s a good approach that we take. But let’s say, at $70 15%, we are comfortable to maintain this buyback level. Then the second question, and I understand your question, why. But I mean, we will, of course, give you more information by September, September investor meeting. We come back traditionally with the data of our five year business plan.

So we’ll, of course, update you on both the growth for Upstream, the LNG part as well. I can tell you, but I think last year, we gave you some guidance, which were something like $6,000,000,000 or $60 $7,500,000,000 of $80 And the figures that I read recently from our five year business plans are confirming this guidance. So we we’ll give more color by the September, but I’m confident we can do that. Honestly, the small miss that I observed as well, to be clear, it’s not so big. It’s linked to in the gas, in fact, there is in fact, gas markets are where in Europe, but they were quite they have no volatility.

You’ve seen quite a good volatility in the oil price, from $60 to $70 even $81 And our traders were really able to capture that during the second quarter. So congratulations to that. On the gas, when you look to the gas price in Europe, the TTF, I think, was moving from 11% to 12%, maybe a little 12.5%. So there was little volatility. And by the way, again, it’s true.

I’ve seen some comments from one of our peers that in this type of market where sometimes we are the it’s not only supply and demand, it’s more political impacts. Traders are a little more cautious not to take direct directional position, which could be hit by a tweet. So it’s a little more difficult for them to analyze the market beyond the fundamentals, which is our job normally fundamentals to do. That’s the point. So no, there will be no change in the guidance.

Our LNG business will grow, will deliver the growth from Qatar from The U. S, and it will positively impact the CFFO.

Irene Himona, Analyst, Bernstein: Thank you, Patrick.

Conference Moderator: The next question is from Martin Rez, Morgan Stanley. Please go ahead.

Martin Rez, Analyst, Morgan Stanley: Yes. I wanted to ask you two. First, if I can pick you up on the point on refining because, of course, I read your outlook statement, which looks quite cautious on the outlook for refining, talking about long term structural challenges. But we have really quite encouraging refining margin on the screen. As of today, over the last couple of weeks, there’s a lot of strength in middle distillate.

So reading the outlook statement, what sort of was shining through was a clear belief, I think, that this is sort of temporary. And I was wondering if you could say a few words about in your mind what is explaining this recent bout of strength, but also how long this could last and how it could dissipate. We’re closing a lot of refineries in Europe this year. So I kind of thought that the remaining refineries of Total, at least in Europe, actually should have quite a decent 2026 as well. But I was hoping you could give a few thoughts on that.

And also, I wanted to ask if you could give us an update on Mozambique and the project there and what we can expect going forward?

Patrick Puyani, Chairman and CEO, Total Energy: Okay. Refining is an interesting question. I think, in particular, what is clearly today happened is that there is a diesel driver in the market to explain why refining margins are quite good. And we think that stronger diesel prices become a persistent feature on the global market. It’s linked in particular to all what happened around Russia flows.

In fact, the Europeans have banned have stopped buying Russian petroleum products early twenty twenty three. And that means that the source of diesel because Europe is fundamentally as a deficit of diesel, so we are obliged to import. So sulfur diesels are coming now from Middle East or for U. S. Refineries further away.

So it has increased the cost of all that. I would say the last decision of the European Union, which is to ban any imports from refineries even outside of Russia, but and targeting some refineries, I think, in India or Turkey, which would use crude oil Russian crude oil to be refined to make diesel, is impacting, again, I would say, increasing the scarcity of source of diesel for Europe. So it’s an additional signal which go in the same direction. On diesel as well, as you have observed, diesel is easier to produce from heavier crude oil than light crude oil. And in fact, the mix of the crude oil, the basket is lighter and lighter because shale oil.

So in fact, that means that it’s more difficult, more costly to produce diesel. So that’s another source, which is again, I would say and you have also more NGL in the when we speak about liquids. So NGL plus light oil, again, is not good for making diesel. That is, again, pushing diesel prices up. And I think that’s fundamentals.

If I try to analyze the diesel fundamentals, which are supporting this market. In Q3, of course, it’s a driving season, so there is more demand. But I think the news coming the people have underestimated this news from the EU banning import of products from non Russian refineries if they use Russian crude oil. That, of course, is pushing up. That is something for me more structural there.

Then it’s a margin business. It’s not like all, but this is a point. On Mozambique, I’ll be clear, we are working it’s a major project. And I would say we are working in order to ensure a very strong alignment between the government of Mozambique and the investors. And this is for me absolutely necessary before to reengage to have a very strong alignment between the Mozambican authorities and the investors.

Martin Rez, Analyst, Morgan Stanley: Thank you.

Conference Moderator: The next question is from Lydia Rainforth, Barclays. Please go ahead.

Lydia Rainforth, Analyst, Barclays: Thank you and good afternoon. Two questions, if I could. Firstly, just picking up on the downstream and the structural side. Can you talk about the potential you see from that the digital AI deployment that you announced, I think, was with Emerson? And how quickly do we start to see results on that?

And then secondly, if I can come back to the buyback. I mean, I get the idea that the rest of 2025 looks covered by divestments, that gearing doesn’t go up, that you can afford the €2,000,000,000 for the quarter. But as we but you did talk about the payout ratio being high at 55%. So I’m just thinking about as we go into sort of next year, how you’re thinking about that? Why you want to stick to that $2,000,000,000 buyback?

Is it just because you’re seeing the value in the share price? Or just really why you still think that’s the right level? Thanks, Patrick.

Patrick Puyani, Chairman and CEO, Total Energy: Okay. First question, thank you for the question of AI and digital. We are now moving going, I would say, from words to action. And this is these announcements with Emerson on data digital is quite fundamental. In fact, we have decided to invest in, I would say, real time data platform.

We need to structure all these data. It will be done not on a pilot basis, but on a worldwide basis. For all our assets in Downstream and refineries, also in Upstream. So the same platform, which is the Genmation platform, which behind the platform, we are developing with MSM some softwares, which the objective is to, I would say, enhance the value we can extract from the assets. And there are two programs, one on Advanced Process Control and Upstream.

Advanced Process Control is technologies which are used in refineries for long, which we are not used in Upstream. So we’ll use them on our Upstream assets. And we think since my upstreamers have discovered it, they are a fan of that. So this is a smoke. And we are also working on the downstream to going beyond advanced process control in order to make more developments on software based on data with AI.

So it is really for us, and I’m a believer that AI is not only cutting costs, that’s for, I would say, General Services, it’s enhancing the value of the assets because we could better monitor these machines. So this is a rule of purpose. No, for Total Energies, it’s action. And we are also, by the way, working with another company, and there will be an announcement soon to another additional AI platform, which will come on assets. So that’s good because digital for me, it’s clearly is a source of future competitiveness in our operations.

We are also establishing, by the way, within OneTech, a full digital line in order to it’s not a question of IT people, it’s a matter of business, business people to put it at the heart of the technology of the assets. And the digital line will be established within OneTech with strong teams. So that’s for this one. On the second when we think about buyback, firstly, why do we buy back just a fundamental? It’s just a matter also of good management of the money of Jean Pierre.

What I observed is that today, Jean Pierre has been able with his teams to make a bond issuance at in euro recently again at around 3.5%. So we borrowed money at with debt, it’s at 3.5%. At the same time, but I hope it will not be for long, but considering the share value share, we serve the cost of the capital, if I say the dividend over the share value, is around 6%. So why do I make buyback? It’s not because it’s just you can demonstrate to anybody.

But I’m saving some money from one side, and I’m borrowing at the lower side. But the fundamental, there is no and on the top of it, when you buy back, as I said, it’s a base of increasing future dividend. So it’s a virtuous circle. So there are the two fundamental reasons. Then the question, we have we benefit from a strong balance sheet.

In the past, it was a 30%, 40% gearing. Today, people have questions because we moved from 10% to 15%. Okay. I’m let’s be clear. We should look at it in and I see titles in newspapers when I’m a little surprised as if it’s problematic.

No, I think we need to monitor that. For me, again, there is a point. I answer to a question, one, what is reasonable? I think I said 65%, 70% is reasonable. That means that at a certain point beyond, 60%, 65% is maybe not reasonable.

But we’ll see that. And I will come back to you because I know that, unfortunately, we will give guidance to all of you, want to always more color on it. So the reasonable guidance is maybe not enough for you. So September, we are working with the Board. We’ll come with you with, I would say, a more not fully detailed.

We’d like to keep some capacity to maneuver, but we’ll give you answering your question. In particular, because we are at $70 we are now more $80 Some people in the market look to $60 So I think it will be time to come back with you with a broader a clearer picture. Today, we stick to what we said. We have $70 for the first half, 70 on the market and the $70 we committed to $2,000,000,000 at the beginning of the year. And even if we have lower cash flow from the Downstream, it does not change dramatically.

It’s not missing a $1,000,000,000 miss will not change the full picture like that.

Conference Moderator: The next question is from Doug Leggate of Wolfe Research. Please go ahead.

Doug Leggate, Analyst, Wolfe Research: Thank you. Good morning, everyone, or good afternoon over there. Patrick, I think the working capital discussion has been fairly well discussed fairly well debated, but I’m wondering about the CapEx guide for the year. You’re running pretty hot, obviously, with the acquisitions year to date versus the GBP 17,000,000,000 to 7,500,000,000.0 guide. What visibility can you give us on disposals to get you back into that range in the second half of the year?

Patrick Puyani, Chairman and CEO, Total Energy: Okay, Chris. Duke, sorry. I think I gave you in my speech, I tried to give you a lot of more than ever I’ve done, I think. So I think it’s the first time because I knew that you will have to be secured with that because you but generally, I have when I say something, we execute it. So I know it’s a matter of credibility.

But what I told you is that we had already Bonga, which has been divested. I told you that we have approved the executive committee, so we’ve taken some binding offers from other assets, in particular, own conventional oil license in Argentina with a good offer. And two other assets that I cannot disclose because it’s not yet public, but it will come. So it’s represent EUR 1,000,000,000. We have another 1,000,000,000 coming from closing the Onshore Nigeria divestments, which was announced last year in Nigeria.

It’s always longer, but we are working on it. And then, of course, we have all the farm downs on the integrated power, which will represent 1,500,000,000 So when you make the math, it’s one plus one plus 1,500,000,000.0 means $3,500,000,000 So and it’s more or less the guidance of the year for CapEx was a net between acquisition and divestments of zero, which is what I told you at the beginning of the year. And on the, I would say, organic CapEx, we are in line. To be honest, I have signed even a small challenge to my team, them that 17%, 17.5% is within the range. It would be better to be next to 17% than next to 17.5%.

It’s a challenge. I’m not sure that we will manage, but we are working on that.

Doug Leggate, Analyst, Wolfe Research: It’s early here. I guess I missed the details. Sorry, but thank you for the

Patrick Puyani, Chairman and CEO, Total Energy: Sorry, I give you again, you should benefit of it because I’m not sure I will do it again to give more visibility.

Doug Leggate, Analyst, Wolfe Research: Okay. My follow-up is a little detailed. You bought or you took the 25% of Sepsa’s block or share in Block 53 in Suriname. And our understanding is that from one of your basically your FPSO providers that things may be moving a bit faster there. Can you offer any insight on the timing, your latest thoughts on Grand Morgue and what Block 53 means for the resource recovery and perhaps the plateau production

Patrick Puyani, Chairman and CEO, Total Energy: line? I mean on Grand Morgue, honestly, I don’t know who is telling you, but I’m moving faster. I would be very happy if we deliver the first oil by beginning first half twenty twenty eight that we committed. No, I think they are moving. I recently went to KL to Kuala Lumpur where I met my teams.

There was good news and some a little more cautious news. So I need to take all that. No, honestly, we are for me on there is no reason to change, no reason to accelerate. But then Block fiftyfifty three, there was a small discovery there, I mean, we’re in the range of 50,000,000 barrels. So we had the opportunity to capture it for quite a decent amount, quite very reasonable ones.

Sebstar wants to exit from upstream. So we were the obvious buyers. So it’s we’ll connect it. We have I think we have the plateau of Grand Mogul is at 220,000 barrels per day. These machines, generally, when we were designing them for two twenty, they can easily go up to two forty.

It’s not 10% is generally the case. So if we can connect these type of things, it will give more value. But for me, as I always told you since we sanctioned Grand Morgue, like Grand Morgue, there is a lot of hydrocarbons, including around we made other discoveries that we put behind. So there will be a planning. We are discussing we are trying to look to come back on some and to appraise some of the previous discoveries.

So I’ve asked my teams because there’s even if there’s maybe not enough to make a second FPSO, but for sure, the objective is to have to extend the plateau and to make a higher plateau to create a lot of value from this infrastructure. So it was a very good opportunity for us to make things. And being inside will smooth all these type of unitization stories. We’ll be a partner of it. It will help a lot with our colleagues to in order to move these results quicker.

Doug Leggate, Analyst, Wolfe Research: Thank you very much indeed.

Conference Moderator: The next question is from Christopher Coupland, Bank of America. Please go ahead.

Christopher Coupland, Analyst, Bank of America: Hi, there. Thanks for taking my questions. Just two quick ones, please. On FX, can I ask, your dividend has become almost 10% more expensive since the start of the year in dollar terms? Is that still irrelevant in the greater scheme of things, Patrick?

As you said, 1,000,000,000 in downstream here or there, 10% of the dividend is less than GBP 1,000,000,000. How does that inform your take on the overall payout? And secondly, if I may, has the arbitration outcome between Exxon and Hess changed anything the way you are thinking about rights of first refusals in contracts? Thank you.

Patrick Puyani, Chairman and CEO, Total Energy: The question is easy, no, because I think clearly, I would say by the way, I don’t like generally too much the right of first refusal or right of preemption because generally, when you give us in a contract, you lower the value of the assets because, of course, so it’s more complex to monetize an asset when there is this type of right of preemption or right of first refusal. Right of first refusal, by the way, for me, it’s never been clear. Right of preemption, I understand what they have to do. Right of first refusal, you have always the debate, you are asking for something, but what is the right to say no? I mean, it’s always a source of confusion.

I think the outcome is good for the industry because this type of clause exists in many GOAs. They are standard AIP and close. And it would have been quite a problem if suddenly we had to review all these close in the whole GOAs. So I’m comfortable with the outcome. I don’t have all the details, to be honest, of the close itself.

But that’s for me the way I’m thinking. I prefer, honestly, right of preemption if I have to accept an error for always a little difficult to manage. On the ethics, no, I think, I mean, I’m working on the control of Jean Pierre. It’s not there is no real impact on 2025, because in fact 2025, first, we make quarterly dividends. So the advantage is that most of the dividends at beginning of the year, they were even lower.

I think one of them was lower than 1.06. So on the average of the year, there will be a very limited impact, maybe $200,000,000 or something like that. So it’s not sizable. There is an impact. Your question is more relevant, and that’s part of when I see the macro environment for the Board.

There is also this question of U. S. WRO exchange rate. We designed, I would say, dollars 17 when we say, in fact, the return to shareholder, you could translate it by $16,000,000,000 It was 8,000,000,000 of dividends plus $8,000,000,000 of buyback. Dollars 16,000,000,000 at $70 we are considering that it was a high return, but a return we could support.

Of course, if we engage and we have not yet enough, I would say, background on the dollar euro exchange rate, But if we consider the macro is going from 1,100,000,000.0 to $1,200,000,000 then the $16,000,000,000 could be done in another way. And by the way, the Board will think about it. If we have to spend 10% more on the dividend, the $2,026,000,000,000 then we’ll have to adapt. Keep in mind that it’s a $16,000,000,000 in that case. But it’s too uncertain today.

Again, I’ve seen the dollar euro rate moving down to €1,060,000,000 at the beginning of the year, and today, it’s 1,160,000,000.00 So before to overreact, we are waiting to see what we’ll do be done, and we’ll have more clarity with quarter to come. But yes, it will be taken into account. I think it’s a Board consider that we are entering into a more systemic, I would say, euros 1,200,000,000.0 rate, then $16,000,000,000 could be done in another way, knowing that the dividend is always a priority for the Board.

Christopher Coupland, Analyst, Bank of America: Really appreciate that. Thank you, Patrick.

Conference Moderator: The next question is from Matt Lofting at JPMorgan. Please go ahead.

Biraj Borkhataria, Analyst, RBC: Thanks for taking the question. I wanted to just come back on the earlier comments on gearing in the balance sheet. If I understood right, I think you were saying this 12% to 13% gearing year end of $70 from February is now more in the range of $14 to $15 It sounded like downstream cash flow at around €1,000,000,000 is a part of that. But I guess the margin assumptions, the 35 looks okay versus where we sit today. So could you just add a bit more color around sort of where the delta is there on gearing and perhaps within the downstream piece, the sources of those moving parts, but perhaps more through asset performance than the margin?

Jean Pierre Breaert, CFO, Total Energy: Thank you.

Patrick Puyani, Chairman and CEO, Total Energy: Yes. But no, but I’ve been clear. No, I was not honestly, there is a miss on the first half, I will not on the Downstream part. And partly, it’s leading to the performance, in particular, of two assets that I mentioned on in the second quarter. The bad performance of, I would say, Port Arthur and Dodge costed us almost $200,000,000 There is another element two other elements in the Downstream today.

One is the biofuels market in Europe. There is another supply today in Europe. On the biofuel market, the SAF the famous SAF market today. Europe and airline companies are so afraid there is a miss, but Europe is importing from all over the planet, and it has crushed the margin. There is little difference today between the biodiesel and the diesel margin.

So it has spread again. So that’s not that’s a low signal. And then petrochemicals. And honestly, on the Polymer side, we did not comment that too much, but about several quarters where we suffer from it, in fact. And it’s not only Europe, it’s also Korea.

It’s more in fact, today, you have and we have to think about it. There was a lot of capacities put on stream in The U. S, plenty of crackers, not because of the domestic market, but for export markets, exporting to South America or to China. But in the meantime, at the same time, Chinese have built a lot of petrochemical capacities, which, by the way, are supplied by NGLs coming from The U. S.

So it’s a little funny all that. But this and this created in fact, the Chinese have followed a policy of, I would say, almost self supplying in petrochemicals. They have tried to secure they are obsessed by this idea of security of sovereign economic sovereignty, economic security. And so today, in fact, when you look, even the Chinese are complaining, by the way, because most of their petrochemicals are on NAFTA, and they are complaining. I met the Chairman of Sinopec, I told him, yes, but you are a little yes, you are.

But so you have a lot of polymers, U. S, Middle East, China. And that today, this in a global macro, which is not so good, you have a global slowdown. And industrial activity in China is not as strong as it was before. And so this is clearly on polymers, there is an impact.

And I’m not surprised to see today, by the way. It’s good news, but we have just announced we shut down one of our cracker in Antwerp. But other crackers have been shut down, in fact, last year in France. And so crackers shutting down. So of course, these industrial tools in Europe begins to face the overcapacity that we have.

We are obliged now to streamline. And so it will take time when we enter into a low cycle because it’s, again, you have to take strong decisions to shut down a plant. So that’s the point. So that’s also why today we had, I would say, first quarter first half of the year, we had a miss of around $400,000,000 $400,000,000 globally, which I think we kind of reverse on the second half, not on the petrochemicals, but my refining margins, as I said, are better. This is all driving season, so $6,000,000,000 by Vivere.

Conference Moderator: The next question is from Lucas Herman, BNP. Please go ahead.

Doug Leggate, Analyst, Wolfe Research: Yes. Thanks very much. Two, if I might. One was just a follow on. Patrick, just going back to Mozambique, you talked about trying to ensure alignment between yourself and the government.

I wonder whether you can make any comments on where the misalignment lies. And secondly, staying with Chemicals, sorry, it’s an asset specific question or a business specific question, but Hutchison, just wondered how that asset has been performing and how your and to what extent you feel that, that business continues to lie easily within Total’s portfolio given the way that you’ve been pushing and directing the business? Thanks very much.

Patrick Puyani, Chairman and CEO, Total Energy: Mozambique, I think I made comments. Is no don’t misunderstand it negatively what I said. I made a positive comment, which is to start up a lot to restart a project, we need a strong alignment, and we are working on a strong alignment. So don’t try to interpret my words. It’s just that we are working on it.

We speak about large projects, 20,000,000,000. So we need to be sure. And again, we have been obliged to stop, to restart. I need to have all the strong alignment between parties, security, everything, I would say, it’s important. And we are working on it.

And again, I said summer, so summer ends September 19, so give me time. Chemicals, no, I mean, again, I think in the chemical business, we have some strong assets, which I would say are the ones which are fundamentally on cheap feedstock and the ones which are historically on NAFTA, which are not so competitive. Most of European assets are on NAFTA and you have and the domestic market in Europe is not growing for polymers. It’s more the global there is no big growth in Europe, and that’s the point. So by the way, it should stay within TTE portfolio, there is an integration between refinery and crackers, which works.

It works if we have integrated platform. But why did we stop deciding to shut down one cracker in Anwerp? It was not integrated at all in our portfolio. We had a cracker, and all the ethylene was, in fact, sold to ExxonMobil, which was making polymers. ExxonMobil decided to shut down their own polymer plant, so no more integration.

I will not keep alive and running a cracker with ethylene with no outcome. So integration is key. It’s another demonstration. It’s who are the same. So if we have the as long as we have some integration, it works, then it’s better to make again to produce these type of polymers in Saudi Arabia or in Qatar with cheap feedstock than with NAFTA, which is more expensive in Europe.

So by the way, maybe you have an idea to whom I could divest, but I’m afraid that you never make a good business when you sell at a low cycle. You prefer to buy at a low cycle. But I will not buy assets in chemicals. That’s true. It’s not that don’t be afraid.

Don’t be afraid. Luca, there is no message. I’m not there. No, I think it’s part of the as long as they are integrated to the refineries and strong refineries, it’s okay. Again, when we have weaker assets, we take a decision.

And on Antwerp, it has been possible and we accelerated the decision, by the way, because on the same time, the refineries is doing well, so translating some people. We have a lot of more and more people going in pensions in Anwerp because of retirement age. And so we moved people from the cracker to refinery. So it was a good way to manage this shutdown. So that’s where we are.

Doug Leggate, Analyst, Wolfe Research: Sorry, Patrick. The question was more on Hutchinson itself. Hutchinson, you

Patrick Puyani, Chairman and CEO, Total Energy: should ask your question clearly. But Hutchinson is not a chemical business, it’s a manufacturing business. And by the way, Hutchinson performance is very good.

Doug Leggate, Analyst, Wolfe Research: Yes. On the other side of it was to what extent and it still fits very comfortably within your portfolio.

Patrick Puyani, Chairman and CEO, Total Energy: Oh, you know, it’s I don’t spend much time, I can tell you. One hour per quarter. Okay. For a good business, that’s fine. But if you find a good buyer, no, no, no joke.

Honestly, it’s a company which works well. There is no problem. It’s not I have other more interesting, I would say, M and A to do for the company, for the future portfolio of the company in oil and gas or in integrated power, not to spend too much time and to have problem issues or worries about this type of it works well, so I’m comfortable that’s where we are. Have return ideas for the future of Total Energy and no problem with it should sound being in our portfolio.

Doug Leggate, Analyst, Wolfe Research: Thank you.

Conference Moderator: The next question is from Kim Fustee, HSBC. Please go ahead.

Patrick Puyani, Chairman and CEO, Total Energy0: Hi, good afternoon and thank you for taking my questions. I had two please on the Upstream. The first one is on your portfolio activity. You’ve been very active in recent months and you’ve done a lot of deals to replenish your Upstream and LNG portfolio for the post 2030 timeframe. I’m thinking of deals like Algeria, U.

S. Gulf Of Mexico and Malaysia. I just wondered if that signaled a change in your view fundamentally on the prospect or the timing of peak oil demand. Are you effectively trying to extend your production plateau to sort of match the shape of global oil demand? My second question is on disposals.

Some of the upstream disposals that you’ve announced weren’t necessarily expected, thinking of Bonga or Argentina shale. Are these opportunistic deals whereby you’re sort of open to incoming bids? Or are disposals increasingly an important part of your cash flow cycle as a way of maybe generating cash to support your balance sheet? Thanks.

Patrick Puyani, Chairman and CEO, Total Energy: Okay. Very interesting question, Kim, both of them. Okay. In oil and gas company and in energy company and oil and gas in particular, have a natural decline. One of the objective of the management is to think long term and to not it’s not because we have a very large portfolio of opportunities between today and 02/1930, but life does not end in 02/1930.

So we must continue. And I think for the time being, it’s not a matter of history, peak oil, peak blah, blah, I don’t know, peak oil or peak demand or peak of price. Or duty is clear. We have one way to look to opportunities. If it’s first quarter, second quarter, which means less than $20 per barrel CapEx plus OpEx, low breakeven less than $30 per barrel, I’m happy to continue to provide these type of opportunities to the portfolio of Total Energy for the future because these opportunities will be profitable even during the February, even if you have a beginning of a decline of oil demand?

It’s possible. I don’t say no. So the protection that I bring to our shareholders is we are first, second quarter assets, and that means that we can continue to allocate capital to these assets because they will make money even if there’s decline of oil price. Decline of demand by the way, decline of demand does not mean necessarily decline of oil price. People have because if everybody is anticipating a decline of demand, you have less projects.

So it’s good to have some projects just to be there and to capture these good these opportunities. So yes, we continue to work. By the way, most of what we have done but it’s not so much oil and what we have announced, it’s more gas, in particular in Malaysia. The Malaysia story, we will come back on it. Some of you were probably surprised when we acquired Sapura OMV last year, why do we build this position.

And now you have this follow-up. We are very happy about the last deal we’ve done with Petronas, which is 12 blocks, not only exploration, because in the 12 blocks, there is a DRO discovered resource opportunity of three forty CF, which we will develop. So it’s giving, I can tell you, a good additional value to the fact that we have acquired this position. These type of things are very logic in gas. Gas in Asia, honestly, there is a bigger demand.

So it’s good to continue. Divestments. No, I think it’s very consistent about divestments. We told you we have a very broad portfolio. Some people even think we have too many opportunities, but I prefer to have a lot of opportunities and then to arbitrate.

Of course, look, these two opportunities, which were nonoperated by us with minor share, why allocating capital to even if the projects I don’t consider the project is not good, I just say we prefer to allocate capital to larger Suriname and to Block 53 to expand Suriname than putting some billions of the hundreds of billion dollars to finance the 12.5% share in Banga. So it just makes very sense. And Gatou Do Matou is the same. We have a huge portfolio in Brazil, Sepia 2, Ataputu, all that, Lapa extension. So it’s a matter of managing and to keep the discipline, I think, on the CapEx.

If I keep everything and so I prefer to arbitrate the non operated assets, which, by the way, in both case, have a higher cost than our $20 per barrel. So I’m not completely fitting with our metrics. That’s quite logic to divest them and to find a buyer, which in both case, by the way, is the operator. So it makes a lot of sense. And I think it’s part of what we have to do for keeping care of the allocation of capital for our shareholders.

Conference Moderator: The next question is from Alastair Syme, Citi. Please go ahead.

Biraj Borkhataria, Analyst, RBC: Patrick. Just one question on biofuels. The by observation, maybe I’m wrong, but European countries seem to be quite slow to legislate on Red three. Do you sense in your discussions that there’s any political debate about the cost of biofuels given that renewable diesel and SAF are still three times the cost of the fuels they’re meant to be replacing?

Patrick Puyani, Chairman and CEO, Total Energy: On the biofuels, no, I see most debate about what is around hydrogen and all these type of molecules. On biofuels, I don’t think there is a in fact, the biofuel business is more hit today by different elements, in particular, on the sustainable aviation fuels. There was a new regulation, which was issued in summer twenty twenty four, which allowed to make co processing in our refineries. We co process some used cook oil or some HVO that we produce in biorefineries to make sustainable aviation fuel. Of course, the cost when you co process in an existing flow, the marginal cost is almost nil, I would say.

So that clearly has changed some. And I think some countries begin to think what is the share we want to allocate to that compared to, I would say, the pure biofuels products. Of course, it’s very important for companies like us when we invest in biorefineries. I’m also a coprocessor, so I have both. And that we need some more clarity because it’s possible.

But today because, again, what happens in this debate and airline companies are very vocal, Everybody like always in energy, they want the cheapest possible product. They want the low carbon product, but the cheapest one. If it’s cheaper to make it by co processing, by making as a transformation in the biorefinery, they will favor the first line. And so for us, it’s clearly for me, so that’s true in our plan. We have done LaMed, we have done Grand Prix.

We are thinking to a third one. For the time being, we have postponed it because we said to the team, look, there is maybe a change there in this market. And let’s put because honestly, to make more coprocessing within Total Energies, it requires a few tens of millions. I mean, we are not speaking about hundreds. It tends less than 50,000,000.

We could produce more. So this is what we will do. So this is not this is slow to regulate. There are new elements of regulation. The lesson is that this biofuel market is a regulated market.

These molecules are regulated, heavily regulated. And all that and it’s a little true, what you said, HET free is a European directive, but then each country begins to make its mix. So we have to navigate for that and not to anticipate too much on what could be the regulation. But then we could make some misallocation of CapEx. So this is where we are.

So but the biofuels, I see, I think we will have I mean, we need to integrate this. There are some technological disruption, in fact, which is what happened. Because when I was asking to my refiners why don’t we co process five years ago, they were speaking about corrosion difficulties. In fact, we make some tests. There is no nuclear corrosion, etcetera.

So things are moving. Things are moving in all these new low carbon fuels. Great. Thank you.

Conference Moderator: The next question is from Henri Patricot, UBS. Please go ahead.

Biraj Borkhataria, Analyst, RBC: Yes, I want to thank you for the great touch on topic left, which is Namibia. I was hoping you could give us an update on Venice, the latest online and also whether the project could change if you get involved in the blocks in the block next door with the Demopane discovery? Thank you.

Patrick Puyani, Chairman and CEO, Total Energy: Next door is a little follow-up. Yes, Namibia, I know I told you that I visited I don’t know, I mentioned that in the I visited Namibia, met the new authorities. It’s a new government and very willing to, of course, to develop the oil industry. We are the first one there to with the project. So we have, of course, to tackle some issues with them.

I received a letter asking us to engage in the discussion. So I think there have been a team set on the Namibian side, reporting directly to the President of Namibia. It was her decision. And on our side, we are ready. So I think it’s a matter of we are working.

But again, I think we need to it’s a little like Mozambique. You have a new country to all industry. So it’s important to ensure the alignment, a good understanding. So I don’t want to have a dispute. We’re investing and then discovering a problem because Namibian authorities would have the feeling that we are not that they did not understood all the projects.

So I want everybody to it’s better to take time at the beginning, even if, of course, we are ready. And they are very motivated to they would like the oil to be produced before end of twenty twenty nine. So that means that we should take decisions this year before end of twenty twenty five, we want to meet the target. So this is what we explained to them. And then we’ll do it.

We’ll work we are working with them. I cannot tell you more. On the opportunities next door. Again, it’s not really next door. It’s a little far away.

We’ll see. I mean, we’ll see what will happen in this business. But again, it’s I’ll let the company working on it. Then what we do, by the way, our side, Namibia, it’s for me, it’s also the next news will be South Africa, because we have also some wells to be drilled. We have some attractive license just across the border.

And we have, I think, two or three prospects, and we’ll we are working in South Africa as a process to get all the authorization. It’s quite a little long, but we hope to begin to drill South Africa targets in 2026 from 2026. So that’s where that’s also Namibia is also linked to this one.

Conference Moderator: The next question is from Paul Cheng, Scotiabank. Please go ahead.

Patrick Puyani, Chairman and CEO, Total Energy1: Thank you. Hi, Patrick. Good morning or good afternoon. Two questions. First, in The US, we have a president that love to transit at maybe in the middle of the night, and subsequently that often time make a significant impact on the market condition.

Let’s say, in any shape or form that impact the way how you manage your trading operation, that because a lot of time that the Trist is going to insert an element of a predictability. You can’t really predict what he may or may not do yet at a particular moment. So how you guys will be impacted or that you say, okay, this is just part of normal operation, so I’m not going to impact by that. The second question, if you’ve been reducing your European refining and chemical operation for obvious reason. In the long haul, do you foresee that you may totally exit from refining and chemical in Europe?

Or that you think you ultimately are still going to have some position, you just need to strengthen it? So just how you view on those assets in the long haul position in your portfolio? Thank you.

Patrick Puyani, Chairman and CEO, Total Energy: Okay. I think on the first one, I commented it already. It’s true that traders have to be do not like too much to see I would say, they fundamentally try to trade around fundamentals to take position about analyzing the supply and demand and the different regions and the different optimizing logistics and all that. And of course, they don’t like too much to see this element of uncertainty with markets reacting very quickly to a tweet makes their position quite strangely. So yes, like Jean Pierre is just telling me, a nice sentence is volatility around tweets is not tradable.

This is what, by the way, that’s true. Volatility around tweets is not tradable and that’s what our traders told us. So they told us don’t expect us to make maybe they make very good results about the old business, old guys. We are completely in line with our expectations. But they told us don’t expect sometime we could expect more, but we can be reversed.

And so we are obliged to be a bit more short term, I would say. The consequence of that is that if you want to play three, six months, you could be suddenly your position, which seems to be good, could become not in the right direction. So that’s the difficulty of it. Having said that, again, they have our trust and our support, and they are, I would say, they are aware and I trust them. They know what they can do and what is tradable or not.

And so honestly, again, the old trading of Total Energy is as expected. So there is no problem. So on refining, okay, look, it depends what will happen. There are two different positions, but it’s linked. If Europe really goes to no more gasoline EV vehicles, light vehicles in Europe.

We don’t need to have refineries to produce gasoline. But I mean, I’m just so the question, it’s not 02/1935. 2035 will be stop commercializing if they really keep stick on this position. But by 2015, normally, there should not be a lot of gasoline cars in Europe. But I could think it will be a reality.

Then, of course, we have to think to this perspective. It’s still a long way, but we have to think to that. We have some very strong assets in Europe. So I would say the stronger ones are well known. It’s Amverb in particular.

It’s a very strong asset with integration. So the first quartile assets will survive. The third quarter, we need to think of their future. Their future might be to become biorefineries, like we’ve done for two of them. Or their future for a cracker, if we can do it shutting down the cracker in Anwerp because in Anwerp, we are able to we have taken the decision because we didn’t see how to maintain an isolated cracker in this context.

So I mean, will we keep the position? I think this position is a dynamic position, which will evolve according to the market, which is declining. Strengthen it, strengthening Hamburg maybe because it could be one of the last refineries in Europe. We cannot spend too much money on this one. And that’s one difficulty is that refineries, if you want to maintain good availability of refinery with high level of safety, which for us is fundamental, requires to have a maintenance CapEx, which is quite burning some cash.

So all that is better to have what we monitor there, I will tell you, is what is a global cash position net cash position on refining in Europe. And of course, if we begin to have a net cash negative, then we’ll have to be tougher on these ones. We know the issue. We are in Europe. It’s part as well.

That’s why you started you have a if you look to the narrative of it around energy in Europe, it’s more about more and more about energy security, security, energy security. And refineries are part of the energy security. You’ve seen the debate in California recently, where California people are very afraid not to have enough refineries. It’s quite funny because they have made regulation to shut down all of them. U.

K. As well, you’ve seen that two refineries have been announced to be shut down. So that’s where, by the way, governments will be an interesting direct debate with them. Because on one side, they give us a signal that they don’t need gasoline by a certain distance. And on the other side, some people will say, yes, but we need these tools just in case in the future.

So I think we have so our objective is, at the end of the day, to reinforce the first quarter assets and the others to find respected respectful evolution for our people.

Patrick Puyani, Chairman and CEO, Total Energy1: Thank you.

Conference Moderator: The next question is from Jean Luc Roman at CIC Market Solutions. Please go ahead.

Patrick Puyani, Chairman and CEO, Total Energy2: Thank you for taking my questions. It relates to the asset sales you plan in the second half in Integrated Power. Do you believe it will put back RoCE of this division back within your ten twelve percent target? That’s the first question. The second is about VSB.

Out of the portfolio of VSB, how much did into the went into the under construction tables and how much went into the under development project out of about, I think, 18 megawatt of projects that were mentioned in the press release of the acquisition.

Patrick Puyani, Chairman and CEO, Total Energy: Okay. The first one, no, I mean, sorry, there is an effort. We announced that we want to be at 12% by twenty twenty eight, two thousand thirty. So we don’t we will not reach 12% because of divestment of the second half. It takes more time.

We are still in a growing mood. So our capital employed are still growing, which is normal and accepted. So today we are more in the 9%, 10% range this full year. The 12% will require at a certain point to have enough capacity to stabilize all that and to continue to develop the integration, which is done. So no, I will be cautious this year.

We are still, I would say, targeting the 10%, 9% to 10%, that’s what we want, and this is where it will go, and I’m optimistic of that. But I don’t expect 12% in twenty twenty five percent. It’s not on the road map for my integrated power teams. They have a lot of challenges in front of them. I don’t want to add on this one.

So that one, maybe I disappoint, but it’s more pragmatic. On DSV, I’m looking to my friends to give me so what is installed? There was 500 megawatts installed, but the question you are asking is what is the split is what is under construction and what is more in development. So I mean, we I know that we have approved recently three projects on DSB. In the executive committee.

Jean Pierre Breaert, CFO, Total Energy: In less they

Conference Moderator: came

Patrick Puyani, Chairman and CEO, Total Energy: than two months. In less than two months, they came to us to approve three projects. So I’m quite I think I don’t have the answer to your question, Jean Luc, sorry, but I think Renaud and his team will come back to you. I mean I’ve seen the figure, but I don’t want to make a mistake there to give you a wrong figure. I think under I will come back to you.

Again, we have a but it’s been a while, just to demonstrate that we have approved around two three projects recently, which we are representing globally, I think, something like 600, 700 megawatts, and there is more to come. So yes, what we plan to develop yes, but I’m not sure. Okay. In the long term, but I don’t know what it is. Long term plan, that’s yes, we could see something like no, we will come back to you.

I think it’s around three gigawatt, but I will come back to you. I prefer to give you a wrong information on this one.

Patrick Puyani, Chairman and CEO, Total Energy2: Thank you very much. Very clear.

Conference Moderator: And the last question is from Jason Gabelman, TD Cowen. Please go ahead.

Patrick Puyani, Chairman and CEO, Total Energy3: Yes. Hey, thanks for taking my questions. I wanted to ask on Integrated Power in The U. S. Specifically.

Given some of the changes to the tax credits in the recent tax regulation that was passed, does that change your view on the pace of development in Integrated Power in The U. S, the returns and the ability to farm down assets there?

Patrick Puyani, Chairman and CEO, Total Energy: I will tell you, in fact, what they observed on the farm down on the contrary is because there was a there is a fear of scarcity of this type of assets, financial investors, which are in fact buying this farm down are even more aggressive on the valuation. What is more diluting the farm down is more the interest rate, to be honest. But today, the scarcity of assets or the risk of scarcity, there is some appetite, right? No doubt. And as I said, we are farming down 1.5 gigawatts, and we received very good offers in line with our expectations.

Then don’t misinterpret what has been the big beautiful bill for Renewables. In fact, when you look at the end of the process, tax credits, either PTC or FTC, that did not really change, providing that the project will be put into construction before mid-twenty six or 2027 mid-twenty twenty six, I think. And so we are working on that. You know what we call safe harboring. And we of course, the condition of safe harboring are important.

But when we look to our portfolio of projects, it’s for us. When we look to what we were planning to develop between today and twenty twenty nine, two thousand and thirty, we are there is not much impact on all that, if we can say further, of course, correctly and according to the rules. But I think we will come back to you on this one as well September. But the ITC and PTC quantum did not change in fact. And the capacity to, I would say, how do we say that migrate between the market for ITC, PTCs continue to remain.

What has been the tax partnership and all that remains. So most of the it’s just a matter, but it will lapse in time. So but what has been voted in CINATE, it’s possible to use that. It could have some impact. But there is one part which is more impacting, in fact, for me these businesses is more of a tariff, as I said before, because the tariff, we don’t have today in The U.

S. Enough manufacturing capacity to make all the projects. So this tariff, if it’s it depends on as the tariff are not the same for all the countries. Are, I would say, in a shadow today. We don’t know.

So of course, it will it could have an impact on us on diversifying our supply chains, finding new countries. I know that we stopped one project in April with a provider coming from China, but we managed to replace it with a provider from Vietnam. And by the way, this Vietnamese company wants to build a manufacturing plant in The U. S. So you will see some ways to I mean, this dynamic will come.

Finally, building a solar plant, manufacturing plant. The manufacturing plant for solar is not so complex. In fact, it’s but we see some trends. So again, I don’t tell you there will not be a form of slowdown, but this will not be dramatic. And again, for us, it’s value over volume, let’s be clear.

I’ve been very clear with my teams. Okay, you want to grow, but we will grow at a pace which will be allowed by the global framework. And so we need to digest all of these informations. And but the last news I’ve got now that the bill has been enacted are more positive than what we thought. There is one segment which has completely we put into, I would say, a sleeping mode is offshore wind.

This is completely sleeping now. Sleeping means nobody is taking we have reduced at the minimum any cost on this one. You know, integrated power is also gas fired power plant. On this one, I can tell you, we could make a lot of money by farming down part of the 1.5 gigawatts we have acquired two years ago in Texas. We could may find at the end, we want electrons.

We can move from to tolling scheme. So there are ways to mine to use these type of assets to get some money back. So there are good things as well in what happens in The U. S. On the electricity side, including gas to power, which is, of course, at the core as well of our business model, certainly renewables.

Our business model, in particular, in The U. S. Is gas to power plus renewable, but gas to power are very important.

Patrick Puyani, Chairman and CEO, Total Energy3: Yes. Got it. And then my follow-up, it’s probably fitting to end on a CapEx question given all the focus on that. So it seems like to hit the organic CapEx target, CapEx needs to slow by almost $1,000,000,000 from 2Q levels. Can you just give us some sense about where the activity is slowing down?

And also if Mozambique LNG, if that moves forward, is that already in the CapEx budget? Or would that be incremental?

Patrick Puyani, Chairman and CEO, Total Energy: If Mozambique LNG is moving forward, it would be externally financed. So the impact on the CapEx budget is quite limited.

Christopher Coupland, Analyst, Bank of America: Got it.

Patrick Puyani, Chairman and CEO, Total Energy3: And just more broadly on yes.

Patrick Puyani, Chairman and CEO, Total Energy: Thank you. Sorry, Jason, but I cannot give you I mean, I don’t have all the details of this one. No, but I mean, we know where we are going. We know why. But for example, I will tell you, this pipeline in Uganda, put in place a project financing in the around in the middle of the second quarter.

So it has a positive impact on the CapEx on the second part of the year. So the run rate of spending was higher on the beginning of the year than the second half. This is very pragmatic, this one. So when I told you that we will stick on the $17,000,000,017,500,000,000 I repeat it, you you can can believe me, no one is behind. Okay.

Thank you. Thank you. So I think we come to the end of the call. Do we have another one? No, it’s okay.

So thank you to all of you for this all this debate and questions. Again, I think the keyword of Total Energy is I know it’s little boring, which is consistency. It’s good, so boring, speaking consistent, consistent in the strategy. And again, keeping the return to shareholder on the high side, so I think it’s good news for our shareholders. Okay.

We are in a cyclical we are in a commodity business. We don’t control the markets. And today, there volatility from supply and demand side, but also from geopolitics. So it could be on one side and we go in the other way. What I’m sure is that we manage we have the flexibility, the agility in the company to manage all this hybrid volatility, and we are growing again.

And as always, the growth is delivering some additional cash flows, which is very important for the Board. The Board already monitor as well. Do you deliver what you said in terms of growth of productions on both sides in Integrated Power and in Oil and Gas. And I would be happy to meet all of you again in New York on September 29. I know it’s an annual one, so we will give you even more certainty about our business plans towards 02/1930.

And that I hope will I am happy to in advance to and enjoy to meet you there with all my executive committee. Thank you.

Conference Moderator: Ladies and gentlemen, this concludes the conference call. Thank you for your participation. You may now disconnect.

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