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TOTAL SA (NYSE:TOT)Q1 2020 Earnings CallMay 5, 2020, 9:30 a.m. ETContents:
Questions and Answers
OperatorLadies and gentlemen, thanks for standing by and welcome to the Total Q1 2020 Results Convention Name. In the present day, all contributors are in a listen-most efficient mode. This day, there will be two shows. Total’s first quarter results and 2020 action opinion exchange, followed by a ask-and-acknowledge session. Then a presentation on Total’s native climate ambition, followed by yet one more ask-and-acknowledge session. [Operator Instructions] I have to recommendation you that this convention is being recorded nowadays.And I’d now rob at hand the convention over to Mr. Patrick Pouyanne, Chairman and CEO of Total. Please skedaddle ahead, sir.Patrick Pouyanne — Chairman and Chief Govt OfficerGood afternoon, all americans. Welcome to our Q1 convention name. And let me open by saying that I am hoping that each and each of you and your households are stable in front of this pandemic, which is COVID-19, and that you just may perchance be also very effectively be coping effectively in these phenomenal occasions. I truly deem that the word, phenomenal is the ideally righteous word, actually sense, I’d snort. None of us by no methodology thought we would perchance maybe journey such macro ambiance, such oil tag crisis at the a linked time.So we have a variety of floor to duvet this afternoon for this name. So that’s why I joined Jean-Pierre, not to skedaddle away him alone and to duvet the a variety of crisis that we are going through. We’re going through all yet again this healthcare crisis and our priorities are the effectively being of all our other folks and the continuity of our operations. And I’d rob to correct to claim, to pay a tribute to the entire efforts and commitment and responsiveness of all our groups around the sphere, who’re working together to be sure that the continuity of our operations staunch throughout the crisis, truly they are doing a enormous job. So thanks to them, all of them.The 2d crisis is the oil tag crisis, or not it’s unheard of, I’d snort. I had — in my speech, I for all time snort there is volatility and we experienced volatility is complex. I know that the oil exchange would rob to gaze a stable world. I deem we are completely unable on this exchange to stabilize something. We can approach motivate on it and it has surely some that is — which is financial framework of our company and we are able to approach motivate on it with the exchange of the action opinion.Nevertheless I correct would rob to repeat you, that surely for the like a flash previous five years, we have bolstered our steadiness sheet, we have excessive graded our asset injurious, we have reduced our breakeven and so essentially, and I may approach motivate on that, we have in ideas that Total is amazingly effectively positioned to climate this storm. I’d even add that myself I develop staunch into a outdated-favorite of keen occasions. I took my draw in 2014, correct ahead of the first downturn started. So we open to have some staunch recipes to face the discipline and essentially in what we factor in, is that priority have to peaceable be given to self support. Right here’s I deem is the sense of the entire plans we are able to most smartly-liked to you.Nevertheless at the a linked time, as you realize, we are also to prepare the medium and lengthy-length of time with money drift, but we have this prompt and short-length of time challenges and which methodology, surely, the evolution of the energy landscape and the native climate coverage. So that’s sure that we have work, and together, nowadays by the intention, I deem or not it’s a staunch image, but at the a linked time, we focus on in prompt channels and action plans and likewise medium and lengthy length of time, we have issued a renewed native climate coverage, which is a result of pretty a bit of labor with the Board of Administrators and including the engagement with some investors of the Climate Action 100+ coalition, I may approach motivate on it. And so I may take care of that train as effectively in the 2d share.In snort to preserve away from the combo of the Q&A, we proposed to have two diversified session. One, after Jean-Pierre has equipped the Q1 results and myself the exchange of the action opinion, we’ll have the first session and then we’ll skedaddle to the medium and lengthy-length of time on narrative of I’m troubled if we mix both, the entire questions will be extra on the short length of time than the medium and lengthy length of time. Nevertheless I deem or not it is for all time well-known to have some time. So I rob to dedicate around one hour and 50 minutes for the first share and Forty five minutes for the 2d share.So now I may skedaddle away the floor to — ahead of there used to be P2, now or not it’s JP2, so I’m P1 and JP2, so I want to give him nickname as effectively. So JP2 gives you the entire Q1 results.Jean-Pierre Sbraire — Chief Financial OfficerThank you, Patrick. So, as you realize, the first quarter ambiance used to be marked by a 30% fall in oil and gas prices, a 20% decrease in European refining margins and a give intention in projected quiz in step with the COVID-19 crisis. In this context, Total, however reported earnings and results. The debt adjusted money drift used to be $Four.5 billion, down 31% year-on-year and the adjusted find earnings used to be $1.eight billion, a decrease of 35% year-on-year.Let’s transfer to the production. So the upstream production used to be Three.1 million barrels of oil a linked per day staunch throughout the first quarter, a upward push of 5% when put next to a year ago and stable when put next to the outdated quarter. So we continue to learn from ramp-ups, mainly for the most well-known offshore fields in the North Sea, Culzean, and Johan Sverdrup and Egina in Nigeria, as well to our LNG giant fields love Yamal and Ichthys. So, the contribution of these ramp-usawere partially offset by the safety discipline in Libya, the redevelopment of the Tyra Field in Denmark and natural decline [Indecipherable] Three% per year.Our Integrated Gasoline, Renewables and Strength section, so IGRP, reported all yet again solid first quarter results. Adjusted find working earnings used to be $zero.9 billion, a upward push of greater than 50% year-on-year. As effectively as to greater volumes, this solid results reflects the resilient pricing of LNG in our portfolio. Particularly, the contract gross sales. It judge as effectively the price of world integration including the elevated exhaust of European regas capacity and the solid efficiency of LNG shopping and selling. Renewable actions elevated their contribution as effectively staunch through this quarter.As you realize, we are committed to procuring superb increase for this IGRP section, which is distinguished to the energy transition and to extra diversifying our built-in mannequin, particularly into low-carbon electricity. And I know that Patrick will approach motivate on that later. The stability and sustainability of the IGRP contribution strengthens our efficiency, in particular for the reason that low-carbon electricity exchange is out of doors of the oil tag cycle. Within the first quarter, we continue to broaden IGRP along your entire built-in gas and low-carbon electricity chain.LNG sale elevated by 27% year-on-year, near 10 million ton in the first quarter. Because of this of the ramp usaof Yamal and Ichthys, as well to the open-up of the first two Cameron LNG trains in the US. Progress installed renewable energy technology capacity elevated by nearly 70%, low-carbon electricity technology elevated by 10%. We continue to develop our buyer injurious rapidly at 9% in the quarter and we announced nearly 6 gigawatts of new initiatives.Let’s transfer to E&P section. So this section generated adjusted find working earnings of $zero.7 billion in the first quarter, down from $1.7 billion a year-ago. So, how will we be conscious this $1 billion decrease is due mainly to the price ambiance surely and the deterioration of the oil and gas prices that has negative affect of about $1.2 billion. And these effects used to be partially compensated by the elevate in quantity, mainly from the ramp-up I mentioned already. Critical I deem to existing that E&P preserve continuity of customary operations staunch throughout the quarter. We had no virus-linked stoppages and well-known offer chain points. We’re making development on the most well-known initiatives below construction and we announced by the intention two discoveries in Suriname, plus one in the UK, North Sea.Refining and Chemicals generated $zero.Four billion of adjusted find working earnings, down 50% when put next to the a linked quarter final year. R&C used to be impacted clearly by the 20% decrease in refining margins reflecting feeble product quiz and by the reduction in refinery utilization to Sixty 9%. The Feyzin refinery in France, the Satorp refinery in Saudi Arabia were both shutdown for plant maintenance in the first quarter. And as you realize, the distillation unit at Normandy remain shutdown after the fire incident passed off final December. Petrochemicals is lot better than refining, benefiting from the decrease feedstock costs. Steam cracker utilization used to be above eighty%.Advertising and marketing & Services and products generated $zero.Three billion of adjusted find working earnings, a decrease of 12% when put next to the first quarter 2019. M&S, Advertising and marketing & Services and products, used to be also plagued by low project quiz, particularly in China staunch throughout the quarter on narrative of of COVID-19, but also in France in March. Sales were down 10% year-on-year, pushed mainly by eleven% decrease in Europe.For the community, the first quarter adjusted find earnings used to be $1.eight billion when put next to $2.eight billion in the a linked quarter final year. And as already explained, this reflects the affect of decrease oil prices, decrease refining margins and decrease calls for. The community debt adjusted money drift used to be $Four.5 billion when put next to $6.Four billion in the a linked quarter final year. This $2 billion decrease used to be pushed mainly as soon as extra by the fall in the oil and gas prices, roughly $1.5 billion carry out and the decrease in downstream money drift for an carry out of the $zero.6 billion. As effectively as, dividends from equity associates were decrease year-on-year attributable to the environments and timing effects.Let’s transfer to investments. So find investments staunch throughout the first quarter were $Three.7 billion, natural capex at $2.5 billion, down 12% when put next to the first quarter 2019 and find acquisition were $1.2 billion in the first quarter. So $1.6 billion of acquisition mainly for Adani Gasoline Shrimp in India and the 2d tranche on Arctic LNG 2 in Russia and asset sale for $zero.5 billion, mainly the Block CA1 in Brunei that we sell to Shell and interest in the Fos Cavaou regas terminal in France.For the reason that open of 2019, we sold $2.5 billion of property and we announced a further $zero.7 billion, that are peaceable to be closed. Nevertheless given the less ample context of asset gross sales, in particular for upstream property, we are refocusing the asset gross sales program to infrastructure and true estate.The steadiness sheet remains solid with 21% gearing at the pause of the first quarter. Gearing used to be negatively impacted by the working capital builds in the first quarter of $2.7 billion. This working capital builds is especially attributable to seasonal or short-length of time effects. And I may give you three factors that contributed to this working capital builds staunch throughout the first quarter.So first, our gas and electricity B2C exchange generates extra receivables from our customers in iciness time when consumption is greater. The 2d part of this rationalization is at as soon as linked to the environments, the tax liability of our subsidiaries, in particular in Advertising and marketing & Services and products segments were diminished in Q1, and on high of that we had our shopping and selling entities that we are building the shares to learn from the contango in the markets to prepare the lengthy bustle, and we hope that, surely, that this could maybe also furthermore be finished in extra results in due route.Having said that, as the working capital is a excessive part for Neighborhood’s money, we have establish together an action opinion specializing in working capital free up and we made the chance by how one can incentivize our manager on their efficiency relating to the working capital. By year pause, in the $30 per barrel ambiance, we await $1 billion working capital free up.Let’s transfer to our find liquidity. So this find liquidity at the pause of the first quarter used to be $21 billion. So it is $9.5 billion of find treasury. So I mean, the money minus the debt that has a maturity less than 12 months plus $eleven billion of undrawn credit traces. And in April, we bolstered this liquidity by adding — sorry, $10 billion of extra funds, so we train greater than $Three billion of lengthy-length of time loans in the marketplace at competitive phrases and we drew $6 billion out of a newly negotiated credit traces.So, summarizing the first quarter results, our exchange segments were resilient in a weaker ambiance and the solid steadiness sheet, the low money drift breakeven, puts us in a unprejudiced correct draw to manage with the challenges ahead.And I skedaddle away the floor to Patrick to clarify the intention ahead.Patrick Pouyanne — Chairman and Chief Govt OfficerOkay, thanks JP2. We’re staunch love the implications, which were pretty resilient on this complex ambiance. Nevertheless the Q1 results, let me make certain, can be the better of the year and we kind not know where we skedaddle, but I will await that the Q2 results will be a lot decrease on narrative of the truth is in Q1 after we watch to the affect of the COVID-19 it used to be mainly for exchange in China and M&S staunch throughout the first two months. And I’d snort since March 6, for the comfort of the Neighborhood, so or not it’s roughly one month, I’d snort, which has been truly impacted plus some inventories carry out by the pause of the quarter. Nevertheless I deem Q2 will be extra complex and or not it’s why by the intention we made something nowadays, I may kind something nowadays, which is pretty irregular, which is to give you further guidance. Nevertheless all we can gaze the year to be upright, shouldn’t be a really staunch easy voice on narrative of with phenomenal conditions are characterised with a variety of uncertainty and the intention we can, the economy can exit — European economy — US economy will exit from this particular length of confining, will be as like a flash as in China or not, a variety of ask marks. Nevertheless I deem it used to be staunch to give you further guidance and to correct a sure quantity of anticipation when put next to what we instructed you in February.So first I may you make exhaust of few slides. The major crawl is surely to repeat you that we are going through with all groups of the Neighborhood around the sphere, this COVID-19 project and priority being surely the effectively being of all our other folks and all yet again the continuity of our operations in stable — in a stable intention. So a variety of other folks and likewise our workers are working from home and it truly works. I’d snort the IT programs of the Neighborhood are also resilient. We form of have greater than 20,000 other folks working same time from distance, or not it’s working effectively. Now we have also, surely, reorganized the entire operations on the floor with a extra rotating groups in snort to be sure that that they kind not defective each and each diversified. Now we have taken some measures to place by the utilization of protective equipment, masks are indispensable in the company, you may perchance not enter into any space of Total with out having, have to you may perchance even have a temperature which is irregular and we rob the temperature of all americans coming, so, and surely we dispatch company sanitizer gel and we also reorganized, we are by the intention in nowadays in France, reorganizing the entire offices and on diversified web sites in snort in mumble to preserve a social distance between the other folks, which is, I’d snort what’s required by the effectively being authorities. So here is surely good us to procure new ways to work, but it appears to work, and thanks to the efforts of all americans.Operations we have finished some exchange continuity opinion, which methodology that we have in our subsidiaries tiny workers to what’s indispensable. Folk taking a watch to if we can kind sure all yet again the entire production of the web sites and the entry — maximizing the provision. We preserve watch over, surely strictly the entry to the web sites on the entire offshore platform. There are some — if we deem there is a risk of PCR testing, we establish the other folks in quarantine ahead of they skedaddle offshore, so actions were done in snort to kind sure continuity.Potentialities can be well-known. Our retail network is open at ninety five%, which is pretty excessive. And unfortunately, to be upright, when I for all time would watch to the statistics, the exchange shouldn’t be at that level. In France, we have, we have misplaced nearly 70% of the exchange in marketing, in Germany or not it’s around 35%, forty%, but our other folks are there and we have reorganized there to preserve the social distancing. We continue to provide gas and electricity and we rob care surely of our communities as a lot as we can. So we are providing some masks in some of our nations and after we include some of masks, we give one of the indispensable crucial masks we include to our communities. Now we have establish in place some particular program in converse in France, but in diversified nations as effectively in snort to make free gasoline to about a healthcare consultants, or not it’s a solid, solid transfer in France, 1.2 million other folks healthcare consultants have obtained a card containing EUR30 of gasoline and they luxuriate in loads. So or not it’s solid, or not it’s staunch to be conscious that, I’d snort the harmony that will toughen on this complex occasions, or not it’s a price of the company and we have to be conscious it with our communities around us. So that is the COVID-19. All over again all americans is on board and we are on the first line of this battle.Then surely following crawl. The oil market, here is a crisis we face. I may not kind you a broad quantity of classes you already rethink. What I’d correct snort is that, surely, you realize that we are going through a sure over production. Now we have truly in our exchange a anxiousness to adapt our production capacities and our production stages to the quiz. Now we have even done the contrary staunch through one month, growing the provision as a replacement of reducing it. I deem [Indecipherable] producing nations, have very a lot considered the dramatic carry out on the oil tag and have determined to rob actions by organising some quota not most efficient the OPEC plus nations with nearly 10 million but diversified nations have gotten a member of the Neighborhood, including by the intention a nation love Canada, will approach motivate on the Total case where clearly, nowadays, it makes itsy-bitsy sense to make oil whenever you happen to would perchance maybe have a negative margin on variable costs.And so, but we, the exchange goes throughout the discipline. Obviously, I met a journalist this morning who used to be telling me, when put next to ’15, I instructed him or not it’s a lot extra an unheard of discipline on narrative of in ’15 we were going through inventories growing from Fifty eight days to 70 days. This day we have jumped to Ninety days. And here is surely the most complex share for all of us is that not most efficient we would perchance maybe face scarcity of inventories but extra essentially which methodology that this could maybe rob time ahead of in mumble to decreases these inventories, which methodology — and by the intention, I was — in the announcement by the OPEC Plus nations on April 10, what used to be attention-grabbing used to be not most efficient the quota of 10 million barrel per day at as soon as, but it used to be a truth that they manage to pay for to preserve quotas till the pause of 2021, 6 million barrel of oil per day.And surely, here is a truth that rechanged truly resulting inventories, which establish stress on the price. All over again complex to await, but here is an outdated feeling we have. Right here’s why all yet again we took a variety of discipline and March 23, we equipped to you and we communicated at as soon as our first action opinion, that we have to toughen nowadays.Subsequent crawl. So on the subsequent crawl, motivate to fundamentals, that will you — I want to remind you on narrative of or not it’s indispensable, each and each company is coming into into this crisis with diversified, I’d snort predominant. Ours nowadays are a lot better to climate the storm than the ones we were going through in 2014. Low gearing, except for lease around 17%, and for extra essentially a money breakeven, which is below $25 and $22, $23 per barrel and the action opinion we are able to confirm in place, we are able to decrease this breakeven. So these two fundamentals on which we were — I was insisting as being earlier the core approach of the company are giving us nowadays competitive advantage and this time surely to exhaust this advantage when put next to diversified opponents.I’d also snort that corresponding to you gaze this stable, but our capex nowadays, our natural capex are the ones which were there. We have also some classes realized, which used to be to preserve some flexibility. Our flexibility in our capex and what would be most smartly-liked you is if we can instant deem to slash the natural capex is on narrative of all yet again natural capex share of that we are versatile and or not it’s around $Three billion, but we can counseled instant. And we can counseled them, on narrative of we had the contracts designed in mumble to counseled, so we can discontinue some rig contracts in snort to discontinue to kind infill wells in Angola, or in other areas in the sphere. So this used to be the classes realized from 2014-’15, which has been finished in the company in a disciplined intention, that we can leverage nowadays.Nevertheless the crisis is there and the chart on the left — on the ideally righteous of the crawl be conscious that or not it’s even, or not it’s pretty a enormous gap by the utilization of money. In March, after we made our first action opinion, we evaluated the pure tag affect. Now we have taken an assumption and they’re substandard surely, however the everyday of the approaching 9 months is $30 per barrel. So we took the first quarter, which used to be around I deem $50 plus a — so a price coming quarter at $30, so or not it’s an average of $35 per barrel. In March, we most efficient evaluated the price affect metrics, I’d snort the sensitivity. So it used to be around $9 billion, taking into narrative the decrease refining margin, gas tag. So we gave that figure to kind a opinion.What we have done since after this action opinion, we have asked groups to rebase the budget. So there used to be an intense work to be done at some point of the place in the company. I have to thank all our groups for this laborious work, however the root used to be surely for them, one, to absorb the price actions plans on opex and capex to deliver our first opinion and to place it in the figure, in mumble that it is shared, and you may perchance not save all of it. Nevertheless also to higher evaluate the affect of the crisis on clearly the activity, on the production on one facet, on the refining on the diversified facet, and the marketing and gross sales. So, and these came, they came motivate to us and nowadays with the assumption we took with evaluated gas gap not at $9 billion but around $12 billion. Right here’s why we have to toughen our action opinion nowadays.So the subsequent crawl. So by the utilization of production, you had a guidance in February that we would perchance maybe elevate our production by 2% to Four%. The 2% — between 2% and Four%, I remind you, that it used to be linked to the closing of the Anadarko property. This day, we are evaluating all these guidance on production. We snort 2.ninety five million to about a.00 million barrel per day. This may perchance occasionally also furthermore be the kind surely of the intention that the OPEC nations will implement with discipline their quota. I will make certain, as a coverage of Total, my instruction in the neighborhood is, we apply the quota at some point of the place or not it’s required by the nation. It is our interest the truth is, and surely, we have some nations where this could maybe hit Total love Abu Dhabi, Iraq, Nigeria, Angola, Kazakhstan. Much less, not so many, the truth is, whenever you happen to notice at the list. So we have the quota OPEC Plus, we’ll have — we are voluntarily reducing our production in Canada to give out our operators on dividing extra [Phonetic] by two, a lot extra on with out a doubt one of the indispensable fields.Nevertheless I deem that’s share of the contribution. We had also an carry out which used to be by the intention taken into narrative at Q1 production already the Libya battle where we have two discipline, Ashara and Waha, that are closed down, shutdown, most efficient the offshore production is producing, and a few affect on some gas native quiz that we can gaze on narrative of of the COVID-19 as effectively. So we give that guidance of two.ninety five million to about a.00 million. Truly, if the entire quotas are truly effectively finished, it’s going to peaceable be next to 2.ninety five million rather than Three.00 million, but or not it’s complex to luxuriate in or what’s going to happen staunch throughout the approaching 9 months.2d crawl by the utilization of affect of activity at downstream. So there all yet again, clearly we have an affect of the decrease quiz. That is upright, but all refineries had some, I’d snort train — availability points staunch throughout the first quarter, love in overall what used to be mentioned by Jean-Pierre that used to be misplaced on narrative of of the fire at the pause of ultimate year. We had also some turnaround in some of our vegetation. Nevertheless nowadays the truth is, our refineries are working in Europe, but I’d snort around 60% roughly. And we have one of the indispensable crucial refineries, love Grandpuits, which used to be going out of the turnaround, we determined not to restart it for the time being, love Feyzin as effectively.And so after we watch to, surely, the quiz will approach motivate when other folks — and the exchange, the economy will wake up all yet again after this, I kind not know, we snort confining presumably, the other folks are nowadays closed in the — they’ll’t truly work. So the quiz will approach motivate, we said quiz it. What we await is a utilization rate of our refinery rather around 70%, seventy two%, Seventy five% when put next to what we had done final year, around Eighty five%. So or not it’s a decrease of I’d snort at around 15% of utilization rates, which surely will affect the money drift from refining.Quite the opposite on petrochemicals, we have clearly a higher news, I’d snort, or not it’s extra resilient exchange for 2 causes. One, the truth is, the quiz shouldn’t be so impacted. Are looking ahead to for plastics, for food and for hygiene are pretty solid nowadays for obvious causes. And also petrochemicals, we have some versatile crackers and we motivate in that exchange from, I may snort, an economical naphtha or cheap ethane. So we have a capacity to have a sure resilience and the implications are dazzling and are staunch. So that’s a staunch news, which we compensate given not fully since the dimensions of companies shouldn’t be the a linked, but that’s a staunch part.On the marketing and services and products, clearly, we are struggling not regularly nowadays staunch throughout the 2d quarter in converse in Europe. M&S is especially around for retail network around Europe and Africa. And in Europe we peek, I’d snort we deem around the quiz diminished by 50%, as our fastened costs and variable money margins is around 50%. That methodology that have to you lose 50% of your revenues, that you just may perchance additionally haven’t any money drift out of this exchange staunch throughout the quarter. So that’s why we have an affect roughly we evaluate around $600 million. So all in all, after we watch at the guidance we give you for the downstream money drift for the year is around $5 billion to $6 billion. I remind you in February, it used to be $6.5 billion. I deem, we gave you $6 billion to $7 billion, so or not it’s $1 billion of distinction. We’ll gaze presumably we are itsy-bitsy pessimistic with the $5 billion, but or not it’s complex to await and I deem or not it’s staunch to give you such a higher vision of where we skedaddle for the subsequent — for the comfort of the year.So then, so which methodology that we have to establish — to toughen, I may snort, to exchange and to toughen the response to the ambiance. In Total, we strongly factor in or not it’s a philosophy that we have to support ourselves, so we have to rob actions by ourselves. Perchance that you just may perchance additionally have noticed, but I was with out a doubt one of the indispensable first CEO in France to claim that we’ll not inquire something, any support from the speak, no kind. I deem, or not it’s staunch to factor in to have this self-support, to preserve our independence and in mumble to since the company is solid ample, the predominant is correct and all of us know that we can add some resilience internally.So on the capital facet, the reduction we announced $Three billion in March, nowadays we are rising these capital financial savings by extra $1 billion. Obviously, we have activated there all yet again on on the natural capex and or not it’s around greater than $Three billion, I’d snort. All that used to be versatile capex, we have also stopped some few feed initiatives which were not presumably in a less priority nowadays. I’d also snort that — and I may approach motivate on it, but Occidental officially instructed us that we shouldn’t be going to include the Algerian asset. So that surely released share of the acquisition budget. Obviously on the a linked time, presumably we are prudent. Algeria used to be around $2 billion. We released with the all americans on narrative of we also know that I’d snort the divestment budget is a lot extra complex to realize. It is miles mindless to me and so that you just could investigate cross-take a look at to sell an asset love Bonga in Nigeria. It used to be public after we tried to — after we establish on sale, we stopped the sale on narrative of we kind not want to lose price on the upstream property and upstream property of superb love this one.So we are replacing it, we overwrite it, but it would perchance maybe rob time to understand it. So $1 billion extra is coming from, I’d snort, essentially the M&A, the find funding budget, the find M&A budget, find acquisition budget. And at the a linked time, all yet again, I repeat it, and its linked to my 2d share, we preserve our low carbon electricity investments at $1.5 billion to $2.zero billion. On the opex financial savings, we announced $800 million, we — complex to increase it loads but along with a bottom-up methodology coming from the groups, we have space a brand new aim to $1 billion. And to make certain, I announced this morning that I’ve proposed to the Board to decrease my salary by 25% and the Govt Committee has determined to follow this effort with me with 10% till the pause of the year. I deem or not it’s — for us or not it’s a message of exemplarity internal the company. We’re asking enormous efforts from all americans.All over again we kind not want to free up to — no thought to decrease the workers. Now we have freezed the recruitment, which methodology diminished the loss to be upright. We can roughly recruit in 2020 the level of those who we have recruited in 2015-2016. So we are motivate to these keen years but we have — we rob to, we have confidence those which would perchance maybe very effectively be nowadays in the company to realize the entire financial savings applications and we be conscious some exemplarity by making exhaust of this risk on ourselves. You would also gaze on the crawl that Refining and Chemical will profit from $1 billion of energy financial savings, that will be the truth is staunch for the margin which shouldn’t be so excessive on narrative of of the quiz but this could maybe support the Refining and Chemical — or refining exchange to face the discipline. So we kind not add this $1 billion as a sure saving on narrative of or not it’s share for me of the refining margin, the assumption of refining margin.And then we have shareholder return, on narrative of all yet again, we have to support by ourselves, but we are also to inquire to our shareholders some effort. So we are planning at $60 per barrel love we announced in February, a money shareholder return of around $9.5 billion, $7.5 million plus $2 million, roughly. You realize that we have determined on to discontinue the buyback in March. Now we have, and I may approach motivate on the percentage — our shareholder return with the mindset of the Board in at the pause of my presentation later. So I may not list it now, however the message that we have proposed a tiny one-shot skip option and I may approach motivate on it on the final quarter of the 2019 final dividend. Nevertheless at the pause, the pause result is that we’ll give motivate to our shareholder return $7 billion, as a replacement of $9.5 billion. $7 billion, have to you rob the crawl quantity Four, you may perchance gaze that the money drift from operation is around $15 billion, so it makes around Forty five%. So or not it’s not too injurious.So which methodology that we appraised loads and we save price to shareholder return despite these complex conditions.We came to next crawl. This one I may not comment it lengthy, or not it is the a linked crawl we venerable in ’15, ‘Sixteen, the four key phrases that are the motos of the company. HSE, offer, costs and money. Be unprejudiced correct-making an strive of what we preserve watch over. Everyone I deem around the company is motivated. H on narrative of of Health, COVID, S on narrative of Safety on narrative of, surely that’s a predominant, or not it has been extra predominant, when difficulties are there, not to have any accident, and E — and I may approach motivate and snort the diversified share is CO2. And all americans is mobilized on this project as effectively. Supply on narrative of or not it is the most efficient intention to generate money drift, so rising the provision the utilization of our property. The costs, I’ve already explained. And the money, no want to claim that or not it is the art of the battle. So, increase as the company and love, on narrative of of the money is a increase of the company, yes, we have determined to clearly reward other folks and our high executives on the capacity to free up this $1 billion of working capital on narrative of or not it is for all time share of what we have to space up in the company.So to summarize these, next crawl, the 2020 action opinion. Four, five key figures nowadays. Cash preservation $7.5 billion through our money financial savings, plus $1 billion working capital free up. Guidance, production guidance 2.ninety five million to about a.00 million. Downstream CFFO $5 billion to $6 billion. And liquidity, which clearly indispensable to what Jean-Pierre explained you, I deem or not it’s key. Now we have elevated it, we have taken actions as effectively. We by no methodology know where the financial programs would perchance maybe skedaddle. So we rob to have some money in our pockets, in our treasury rather than out of doors. So find, I deem or not it’s a find liquidity, which methodology or not it’s a sinful treasury plus undrawn credit services and products minus the short-length of time debt at the 12-month of $25 billion. And all of us know you realize that we attached some price to declaring our grade A credit shopping and selling, which we are — where we are nowadays.I’d rob to ahead of to the give the floor to Q&A, to kind some comment, next crawl, on what are the mindset and the discussions at the Board level, on the shareholder return. I’m sure, or not it’s clearly a debate that has been establish on the final public domain [Indecipherable]. And I learn a variety of papers staunch throughout the weekend, attention-grabbing papers. I’d snort the intention we watch at it we mentioned it. First, surely, the first responsibility of the Board is to rob the lengthy bustle of the company and that’s the reason well-known, but at the a linked time the Board has solid have confidence in the basics of the company. And I deem if nowadays we have the funding case in Total is referring two significant variations when put next to about a of our opponents, that are these low breakeven yet one more 25% and the low gearing below 20%. That methodology that we can exhaust our steadiness sheet to climate the storm and in direction of the shareholder return.And truly the discussion of the Board is that we are overjoyed that or not it’s a staunch time to be conscious the variation, and to exhaust our competitive advantage to be conscious why the funding case in Total is righteous to those equipped by some opponents. The 2d part of the controversy used to be, yes, at the a linked time, unheard of market condition, phenomenal conditions. So what’s the level of cautiousness but also no overreaction. And sitting at the Board, yes, we have a lack of visibility, but we have to peaceable not kind untimely risk and overreact. Let’s wait, we can face up to. We’re — we have some resiliency. Let’s gaze, with the visibility, presumably not Q2, by the intention, I deem or not it’s better by Q3, on narrative of Q3, we are able to gaze either US economy, European economy, the spin to recovery to extra fashioned level. We’ll have also better ideas of the intention that the OPEC Plus nations are truly implementing the discipline of implementation of the quota. So, a higher visibility as effectively on the oil market.So we deem that or not it’s — we have all yet again the steadiness sheet to face up to. So no overreaction on our facet. And I may also snort that in the timing train discussion, it used to make certain to us, but yes, we would perchance maybe furthermore be very like a flash in Total to kind some M&A offers. Nevertheless when it involves shareholder, or not it’s better to deem twice and we price the lengthy-length of time relationship. It is a matter of have confidence. We carry out have confidence with time, and all of us know we can abolish it instant. So I’d snort that is the point.So on cautiousness, surely there is a dose of a sure cautiousness as effectively, stopping the buyback I deem used to be obvious. You would also have noticed that we have determined that to give this scrip option for various superb and or not it’s a one-shot of scrip option, so 2019 dividend, final dividend to the AGM. You would also gaze that, so or not it’s all yet again, $1 billion of money financial savings. Now we have, by the intention, bought greater than $500 million in the first quarter. So or not it’s a steadiness there roughly. Having said that what’s well-known is that what the Board has determined as effectively, it used to be not in the chance, which methodology that we have rejected the root to give the scrip dividend for the corpulent year 2020 on narrative of we kind not have any risk and you realize in the French correct plan, or not it is the AGM has to deem a scrip dividend.So on the AGM of May presumably presumably 29, most efficient the scrip dividend for the final quarter will be equipped but not for the comfort of the year. All over again, on narrative of we are the basics and we are ready and the Board is sure what we can exhaust this steadiness sheet, leverage the steadiness sheet. I’d also snort in the — with the a linked thought, but the truth is, after we watch to the dimensions of the dividend of Total, around EUR7 billion, EUR7.5 billion [Phonetic] is dependent — or not it’s in euro, so it is dependent on the alternate rate, between $7 billion and $eight billion. When we kind our assessments, about $forty per barrel, there shouldn’t be any such thing as a project we can finance our investments, we are able to pay the dividends. And so we are happy, and all yet again steadiness sheet is up to climate the storm.At the a linked time, that’s upright, but then I truly have learn some papers, attention-grabbing papers from some of you, but there is a gap debate in our exchange, all of us have I’d snort a progressive dividend coverage doing diverse years. This day, there are some voices about have to peaceable we switch to extra precious dividend linked to payout coverage love some mining companies. I deem here is about a dialog we shouldn’t be going to that, which we have to share with our shareholders. All over again, or not it is well-known to have inputs and in the a linked intention that we have engaged with our shareholders about the native climate coverage, I deem or not it’s a lot extra well-known to rob with them at such a topic matter and to share it.So, however the mindset of the company of the Board and or not it’s why solid self assurance in the basics of company, we have — we rob to wait and to have a higher visibility of the macro ambiance on the oil markets and to rob and to have the inputs of investors, on narrative of if we have to face an extended crisis, if the price remain at $30 per barrel or below for lengthy, clearly, we would have to rob action, and that have to be shared with our shareholders.So I’ve been unprejudiced a itsy-bitsy lengthy on this one, but I deem now we can enter the Q&A.Questions and Answers:Operator[Operator Instructions]And your first ask comes from the street of Michele Della Vigna of Goldman Sachs. Please skedaddle ahead. Your line is open.Michele Della Vigna — Goldman Sachs — AnalystThank you. Thanks very a lot and congratulations on the resilient results in such a posh ambiance. I had two questions, if I will also. The major one is set LNG. We’re seeing a sure divergence between LNG prices and Henry Hub, that are leading to negative margins, at least this summer. I was questioning if a variety of these actions presumably have made you further wary by the utilization of accelerating the publicity to US LNG and have made diversified initiatives love the one that you just may perchance additionally very effectively be growing in Mozambique truly extra resilient and fewer unsafe from a basis standpoint?And then the 2d ask I wished to inquire you is, if imaginable, to give intention natural versus inorganic in the $14 billion budget and to account for on the Occidental Africa acquisition if effectively the 2d share of the transaction with Algeria and Ghana were canceled or correct delayed at this closing date? Thanks.Patrick Pouyanne — Chairman and Chief Govt OfficerOkay. Thanks, Michele for you questions, for all time very attention-grabbing and keen. I’d rob the first one on LNG first, that you just may perchance additionally have noticed that our LNG activity has been pretty resilient. Incidentally 2d quarter from this standpoint will be, have to peaceable be pretty resilient as well to a result of the truth is on a lengthy-length of time tag we have a form of six months of prolong between the oil tag and the LNG formulas. So or not it is the 2d half of of the year, we have to peaceable gaze extra affect of the decrease oil tag. It is sure that yes we face nowadays other folks direct lot about the oil market, however the gas markets are struggling loads. It used to be already on narrative of since final year. So we have an publicity to the space but sure, we are able to by the intention most certainly we are on how one can I’d snort execute one of the indispensable crucial of the LNG tankers staunch through summer season in snort to limit some losses.It is upright that we have an offside, I’d snort we have initiatives. We’re working peaceable on one project, the ECA initiatives in Mexico on narrative of or not it’s on the Pacific Wing and along with Sempra, we gaze a variety of price. You save greater than $1 per million BTU of correct the skedaddle back and forth to Asia. So this one — such a enormous project. So, this one I deem and I deem we are in step with Sempra and Mitsui, we have to peaceable transfer ahead coming months. Other initiatives, the acknowledge is, no. I will make certain, we aren’t in — I mean I’m not very — we aren’t, nowadays is a priority not to invest extra in merchant initiatives in the US.So clearly, we have the extension in Cameron. We’ll gaze with Sempra where we skedaddle. And a greenfield project love option we have with Tullow Oil, and I deem there shouldn’t be any such thing as a reason would be a pattern to transfer ahead on this one, and that’s the reason upright as effectively corresponding to you said. From this standpoint, the acquisition of the Mozambique LNG project is pretty — used to be a diversified nature. We for all time explained, but it used to be a project, which used to be developed by Anadarko, as we gaze in the outdated intention. Now we have lengthy-length of time contracts linked, most of them to grease prices, to — and in mumble that used to be the enormous interest for us on the Mozambique, not most efficient the dimensions of the resource, which is able to pause for various model but also the usual I’d snort, of the portfolio of values. And in mumble that’s, that’s with out a doubt one of the indispensable issues.So that’s upright, but we have already said, I deem in February, we have a variety of LNG in our portfolio. Now we have ample initiatives not time to it presumably the excess ECA. The situation of Oxy, presumably I may — as I instructed you on — no, nothing is canceled, let me make certain. There may perchance be an SPA, which is expedient and the lengthy discontinue date is one year after the Mozambique closing, which methodology, pause of September 2020. And you realize the train, the entirety is public, on narrative of all that has been disclosed to the SEC. So, yow will discover the entire contracts, however the Algerian sale, Oxy notified us that they’ll’t bring in direction of the Algeria asset, on narrative of of the draw of Algeria authorities, we want to preserve — we wish the truth is essentially to preserve the operator as it is nowadays. So, Oxy will remain as an operator.And they also didn’t approve the truth is the commerce of preserve watch over of Anadarko to Oxy, and they licensed it, but correct to — below the condition not too to sell it. So which methodology Algeria would perchance maybe not be done, unless Oxy finds a technique to approach motivate motivate to us essentially essentially based on the contract. And on the Ghana, or not it’s — issues are transferring on, and all yet again we’ll not clarify extra on it, on narrative of or not it’s — we have a contract with Oxy and so we’ll — or not it’s between the two companies that we have to deem the intention ahead.So natural versus M&A, I’d snort in the $14 billion, — I’m undecided to have the figures, most certainly something love $10 billion to $eleven billion, and $Three billion to $Four billion. Yeah? All correct. $eleven billion and $Three billion. $10.5 billion — I kind not have precisely the figure, but correct to give you some vary.Michele Della Vigna — Goldman Sachs — AnalystThank you.OperatorThank you. And your next ask comes from the street of Jon Rigby of UBS. Please skedaddle ahead. Your line is open.Jon Rigby — UBS — AnalystThank you. Yeah, correct a follow-up on those two questions. Is it imaginable — there is clearly a variety of transferring factors in iGRP and results held up very effectively in 1Q. Assuming the entirety else is held flat, what would you estimate will be the carry out on 3Q or 4Q results from the fall in oil prices in 1Q, I bellow as a approach of you being ready to kind that estimate correct arithmetically?And then also correct to follow up on the feedback you made about Ghana, is that deal peaceable alive even with you not being ready to entire on Algeria? And in particular, I bellow with the entire diversified issues which would perchance maybe very effectively be happening that were not conceived of in the usual contract, it would appear to me is that what that you just may perchance additionally very effectively be making an strive to name — what Oxy will be making an strive to entire on, is a really diversified transaction to the individual that you just thought you were going in barely a itsy-bitsy over a year ago? Thanks.Patrick Pouyanne — Chairman and Chief Govt OfficerOkay. On iGRP, the percentage of the reserve, which is linked to the LNG vegetation — LNG property is around — out of the 900, is around four hundred roughly. So this share will be impacted. And you may perchance be ready to factor in that if the oil tag divided by two, this could maybe also furthermore be impacted in a approach, which have to be evaluated for extra proportionately. I kind not have precisely the figures. Ladislas will approach motivate to you, but roughly, the snort of magnitude. So or not it’s not so enormous, the truth is, but there will be an affect, mainly on the implications of the LNG property on the 2d half of of the year.On Ghana, I deem I correct answered to you all yet again, a variety of issues have changed, including the new ambiance. So we are working with Oxy on it. And as I said ahead of, I deem all that can be linked to draw of the Ghana authorities and likewise linked to the ambiance. Nevertheless you knew and you realize very effectively I deem that the first — the attractiveness of Total in Ghana used to be not at the a linked level in the diversified property on narrative of or not it’s non-operated asset. And so we have less appetite for this one than we had for the diversified one.Jon Rigby — UBS — AnalystOkay, that’s sure. Thanks.OperatorThank you. And your next ask comes from the street of Irene Himona of Societe Generale. Please skedaddle ahead. Your line is open.Irene Himona — Societe Generale — AnalystThank you very a lot. Loyal afternoon. I had two questions, Patrick. Before the entirety, if oil were to average not $30, but around $25 for the comfort of the year and given the shortcoming of visibility and in snort for you the ambiance to avoid losing [Phonetic] yet one more $2 billion, $Three billion, what’s the approach of introducing a further dividend scrip? Would you name an phenomenal meeting? And why not rating authorization now given the uncertainties correct in case it is mandatory?And then my 2d ask, correct by the utilization of short-length of time guidance in the 2d quarter. What is going to we await for the community tax rate in Q2, in the most smartly-liked ambiance when put next with 30% you had in Q1, please? Thanks.Patrick Pouyanne — Chairman and Chief Govt OfficerOkay. I may skedaddle away the 2d one to my CFO, professional in tax. And for the first one, now lets make certain, and I’m very sure. We know the negative affect of the scrip. We know that there is a dilution that our institutional investors attain not find it irresistible. We know that we have venerable it from 2015, 2017, presumably by the intention, we preserve it too lengthy. I know you rob some classes from the previous. And by the intention nowadays at — when the price, the percentage tag is around EUR42 or EUR40 per share, the dilution carry out is even greater. So, or not it’s not for us the ideally righteous instrument. So make certain, the chance is sure. We shouldn’t be going to convene any particular AGM to introduce the scrip. So or not it’s why it has been very sure. And clearly, the truth is for us, or not it’s not the ideally righteous instrument if we have to face a greater storm, corresponding to you described.Nevertheless all yet again, we deem that the basics of the company are staunch — solid ample, and we are happy with what we said. I deem we have diversified flexibilities love the one we mentioned correct ahead of about M&A, which would perchance maybe technique to support the company if we have to support extra the company. So, I deem — in mumble that’s clearly for me, it has clearly been a negative risk from the Board about this ID, on narrative of all yet again we — the dilution is simply too extraordinary and has as a negative carry out. And by the intention, you — the truth is, at the pause, you borrow money at eight% or 9%. So I mean — so or not it’s pretty pricey. So, no, or not it’s not reorganize the shareholder returns.On the tax rates, Jean-Pierre?Jean-Pierre Sbraire — Chief Financial OfficerI’ll rob the tax rate ask, Irene. So at $30, $35 per barrel, we would perchance maybe quiz community tax rate around 15%, taken into narrative E&P tax rates in the vary 25% to 30%.Irene Himona — Societe Generale — AnalystThank you very a lot.Patrick Pouyanne — Chairman and Chief Govt OfficerAnd correct to increase, Irene, you realize that in France, after we establish a risk, or not it’s not an option for the Board, we are obliged to exhaust it. So its complex. So or not it’s why we kind not want to be tricked to be trapped. We correct preserve for one year, on narrative of as soon as or not it’s voted in France, we shouldn’t be going to deem not to exhaust it, or not it’s not love some of our colleagues in UK, have the authorization in option, but we kind not have it love that.Irene Himona — Societe Generale — AnalystThank you.OperatorThank you. And your next ask comes from the street of Biraj Borkhataria of RBC. Please skedaddle ahead. Your line is open.Biraj Borkhataria — RBC — AnalystHi, thanks for taking my questions. Two, please. The major one is on one of the indispensable crucial small print you equipped. So thanks for the entire feedback on the levers that you just may perchance additionally very effectively be pulling. One in every of the enormous ones is clearly the steadiness sheet. So you may perchance be adding to debt over this era. So I was questioning the intention you suspect about the upper limit on the steadiness sheet. I deem internal your compensation scorecard, there is a 30% ceiling on your find debt ratio. So have to peaceable we have in ideas that as a laborious ceiling? And then the 2d ask is on production volumes. Regarding the shut-ins that you just referenced in the near length of time, are you able to touch upon what this means to your production capacity into 2021 and the intention a lot you lose there? Thanks.Patrick Pouyanne — Chairman and Chief Govt OfficerOkay, staunch, sure. I deem, if the Board puts this — no, or not it’s not the ideally righteous time to commerce the variable pay of the CEO, to be upright. So these criteria, we have establish in place about a years ago when I took my job on the gearing, incentivizing the administration to rob to concentrate to that level of debt. So 20% most, 30% zero. All over again, I’m not — so, I deem the target used to be clearly below 20%, we attain our — or perfect to be below 20%. And I deem we are some distance from going to 30%. I truly have some — we have some room to maneuver there. I deem in the simulation with what we said about the working capital free up and despite by the year pause, at $30 per barrel, we have to peaceable be around 21%. I deem here is what we have simulated, so presumably greater than that. So yes, 30% is greater than our feeling, but with my non-public aim is to preserve it decrease than that.Nevertheless all yet again we kind not rob risk and the Board doesn’t rob risk most efficient linked to with out a doubt one of the indispensable criteria of the CEO. When we came to exhaust the steadiness sheet and on this unprecedented conditions, we are ready to to rob selections independently of the criteria. Manufacturing guidance, I deem, yes, there will be some impacts, the truth is, that we whenever you happen to to deem to not to drill some short cycle wells but we kind not have the motivate final year, so or not it’s most certainly around I kind not have the figure, I deem I learn something around 50,000 barrel per day. Nevertheless all yet again, we noticed short cycle, so if we want to reactivate them we are able to be ready to understand it as effectively. So, that’s sure, but this could maybe presumably have an affect let’s snort around 50,000 barrels per day to give you an thought.Biraj Borkhataria — RBC — AnalystOkay, thanks very a lot.OperatorThank you. And your next ask comes from the street of Lydia Rainforth of Barclays. Please skedaddle ahead. Your line is open.Lydia Rainforth — Barclays — AnalystThanks, and staunch afternoon, all americans. Loyal one like a flash ask. In phrases of the methodology that you just may perchance be also very effectively be taking around [Indecipherable] also the digital recruitment going. Are you able to correct focus on the intention you with out a doubt seeing that, whether or not that’s altering by the utilization of the exchange that you just gave this morning? Is the draw peaceable to preserve those two companies largely unimpacted? Thanks.Patrick Pouyanne — Chairman and Chief Govt OfficerAgain, yes, new energy capex, which methodology, what I name low-carbon electricity and or not it’s essentially or not it’s either renewables or marketing — marketing B2C or B2B exchange love the one we have invested in India. Now we have a budget, which used to be announced between $1.5 billion to $2.zero billion. I will give you, most certainly this could maybe also furthermore be nearer to $2 billion, than from $1.5 billion, this year in 2020, on narrative of we have already done some offers and with out a doubt natural. Furthermore it is inorganic, we are building a exchange. So we have to peaceable be eager about it. I deem or not it’s share of the lengthy bustle of the company. So we’ll preserve that. And all yet again, we have to peaceable be around $2 billion, on narrative of we have done already these investments in at any. The major quarter has been very energetic whenever you happen to learn the — have to you learn the significant info of the click free up, there is extra key info on the farm than on the comfort of the company. I deem 2 gigawatts in India, 2 gigawatts in Spain, 1 gigawatt in Qatar, 1 gigawatt in France.So yes, we deem is share of the approach and this one is — would perchance maybe very effectively be regarded as as versatile, but we kind not have in ideas it as versatile, on narrative of we are building the broader energy company that TOTAL desires to change into. So or not it’s — and by the intention, I’d add yet one more part, which is well-known. Within the event you watch to this form of exchange, I know that we have a reputation not to give the a linked profitability. After I gaze 10% of return, which is what we are ready to realize nowadays after in our decrease capex mannequin whenever you happen to realize we invest in 100% of an asset, renewable asset and then we sell 50% of it and we leverage from this, I’d snort, farm-down share of the profitability. This model of property 9%, 10%-plus when put next to an upstream asset which is unstable at $30, or not it’s staunch to have this form of property as effectively in the exchange.So essentially, I gaze these new low carbon energy, low carbon electricity property are bringing to the company and to the community a form of extra stable steadiness of earnings. This may perchance occasionally rob time ahead of this could maybe also furthermore be at the dimensions that will impact essentially the realm exchange mannequin. Nevertheless — so, that is the entire the rationalization why we intend to stay to this funding. So which methodology that if we kind $2 billion by the intention this year out of $14 billion, it makes something love thirteen%. So other folks deem [Phonetic] — so we are slowly growing the funding, the percentage of investments on this exchange unit.Lydia Rainforth — Barclays — AnalystOkay. Thanks.OperatorThank you. And your next ask comes from the street of Christian Malek of J.P. Morgan. Please skedaddle ahead. Your line is open.Christian Malek — J.P. Morgan — AnalystHi, thanks. And thanks, Patrick. And also I am hoping you and JP2 are staying wholesome, in particular with the stress navigating company through this crisis. So about a questions, first, regards to the capital frame, the logic of sustaining dividend at these stages in the context of CFFO. And the 2d ask is on the affect of the capex cuts in due route oil production.So relating to the level of the dividend now your dividend truly CFFO is on the very best seemingly, it appears that the European oil is correct below forty%. Without reference to the affect from this most smartly-liked crisis, attain you suspect here is a fairly excessive level and it limits your potential to voice extra energy transition and your oil increase as some of your associates have argued that slicing the dividend is a key enabler. The 2d ask form of hyperlinks into that which is to luxuriate in how a lot oil production has been deferred on narrative of the capex cuts this year and have to you were to correct elevate capex, so flipping it around if oil strikes greater, would you allocate into new energies or oil? Are you able to give us a approach of the intention you form of reallocate that marginal increase in capex? I’m correct searching out for to luxuriate in on whether or not the up to this point energy transition coverage comes at the expense of decrease market share and oil, over the medium length of time? Thanks.Patrick Pouyanne — Chairman and Chief Govt OfficerI deem by the intention nowadays, all yet again, we have to as I said in my — in my presentation, we are very happy. We know that in oil and gas company, we’ll have some volatility and we have to accept a sure bet this time to exhaust to leverage its steadiness sheet in snort to preserve a sure level of returns to shareholders. At the a linked time, all yet again as I said is barrel at the $30 for longer, for terribly lengthy, there is a sure limit to what we can attain, you realize, but at $forty per barrel, the money drift technology, if in a stable activity I’d snort is around $19 billion per year, $19 billion, $7 billion of dividend, I truly have $12 billion for investing. I deem we are dazzling with that. Now we have — which methodology yes, we have to kind some picks. And from this standpoint on the 2d ask, I deem $1.5 billion to $2 billion as an average we are dazzling to develop it gradually. This morning you peek most certainly in the — I may approach motivate on it in the native climate commentary that we said, that we reached 20% of our capital allocation by 2030 or sooner, which methodology we have time to develop it. We deem that there is known as a sure level to carry out. Is it — so I kind not deem that these and I perceive completely the ask, but we — but these dividend at this level is impairing the execution of our approach.The capex cuts affect on this year projection are truly minimum. I mean whenever you happen to would perchance maybe have a capex program of infill wells that you just cater to the 2d quarter and nil.33 quarter, the production would perchance maybe make is I deem matter of 10,000. Incidentally, this could were done in nations love Angola, where that you just may perchance additionally have some quota. So I deem our risk used to be correct presumably looking ahead to OPEC’s [Phonetic] risk, so I deem or not it’s nearly very tiny affect the truth is for next year. For next year, it has a greater affect.Where have to peaceable we allocate capital if we have extra money? All over again, I deem, to make certain, we kind not — we have a roadmap of growing gradually these low carbon electricity exchange, if we rob time, we have to learn, we have to establish the ideally righteous alternatives, there shouldn’t be any such thing as a gallop. We’re releasing the roadmap for native climate till 2050 with some steps. And I may approach motivate on it in my next presentation. So I kind not truly feel that nowadays we have — we have the necessity to free some money from the dividend to transfer it on rising the capex of this exchange unit.Nevertheless if we have extra, I deem, priority will be to allocate the capital to where we have the greater return. And so if my short-length of time wells in Angola are pretty by the intention, they’ve a staunch return, 20% or something love that, providing the price approach motivate to an acceptable level. We can reactivate this versatile capex. As share of the exchange mannequin we have outlined to have a form of flexibility of the capex we allocate also to the upstream share.Christian Malek — J.P. Morgan — AnalystThank you very a lot.OperatorThank you. And your next ask comes from the street of Martijn Rats of Morgan Stanley. Please skedaddle ahead. Your line is open.Martijn Rats — Morgan Stanley — AnalystYeah, whats up. It is Martijn Rats of Morgan Stanley. I had two questions as effectively. I wished to inquire about the downstream guidance. This figure of money drift of $5 billion to $6 billion for the year. Final year, I deem both the a variety of downstream divisions together generated $7 billion. And this year, we peaceable have multi-millions of barrels a day of quiz destruction. I know love 2Q used to be in particular feeble, but at some point of the year it appears love a really small fall for the dramatic occasions that have correct unfold, which I hoped you may perchance presumably form of be conscious that to us, why shouldn’t be the downstream weaker given the level of quiz destruction? In 2009, we noticed very, very feeble downstream results at some point of the exchange and that used to be in maintaining with correct 1 million barrels a day of quiz destruction. Truly I in most cases form of kind not fully know the intention that works. So have to you may perchance be ready to be conscious that, that will be a lot appreciated.And secondly, I wished to inquire JP2, what his estimate is of the quantity of headroom that exists internal the most smartly-liked credit ranking? That is also very priceless.Patrick Pouyanne — Chairman and Chief Govt OfficerOkay. So on the downstream. I deem downstream is a mixture of diversified money flows. As you realize, we have refining, where clearly we’ll have decrease money drift, a decrease utilization, which is at as soon as impacted by the decrease quiz. The M&S exchange, you realize what we peek in China is one month after the pause of I’d snort the corpulent closure of the nation, we have reached stages of exchange, that are around eighty%, Eighty five% motivate to the normality. So if we are motivate to that level or coming motivate instant in Europe, which is why I instructed you, after we deem that we would perchance maybe, I’d snort we are producing in overall yearly around $2.5 billion of CFFO, we give you that we would perchance maybe lose 600. So presumably we are missing thereby 100, 200, but not extra. Petrochemicals would perchance maybe attain staunch very effectively. I mean, so we are optimistic on it. And kind not neglect that in refining and all these exchange downstream are also merchants. The shopping and selling exchange, the shopping and selling exchange loves occasions whenever you happen to would perchance maybe have a variety of volatility and contango, by the intention they’ve borrowed some money to the Neighborhood. Section of the elevate of the working capital is linked to our merchants. We’re storing. So I’m extra optimistic than JP2. I deem that working capital of nowadays will be a enormous advantages of the the next day ahead of year-pause. So we have to bring. So all in all, my glance Martijn is that to be, to provide the corpulent myth, I was the one who pushed five to 6, my downstream other folks are itsy-bitsy extra optimistic, they watch extra to the six to 5, but I’m itsy-bitsy corresponding to you, but I’d be bowled over to have less than the guidance that we point out you.Jean-Pierre Sbraire — Chief Financial OfficerSo relating to credit ranking, as Patrick mentioned to you, surely, having a staunch credit ranking is amazingly well-known for us and to preserve A credit ranking is share of our priorities. What I peek is that despite the revised crawl [Phonetic] deck from both S&P and Touchy’s that used to be, this used to be revised in March or in April, we preserve our ranking. So that’s upright that our standpoint adjustments from stable, or sure to negative on both S&P and Touchy’s facet. It used to be — it used to be, by the intention the a linked for all our associates. So or not it’s upright that either the prices remains at $30 per barrel, I deem as our associates, we lose one notch most certainly, but or not it’s, or not it’s not what has been confirmed till now by the companies and so we are able to have to wait and gaze. At most smartly-liked time S&P, is minus trending kind makes calculation the utilization of $30 per barrel tag deck for 2020. That is would for 2020, ’21, they exhaust greater tag stake. So as soon as extra if we remain at $30 per barrel over a lengthy-length of time length, most certainly we’ll not be ready to preserve this ranking, but we are able to with out a doubt preserve A ranking. So that’s as soon as extra or not it’s with out a doubt one of priority.Patrick Pouyanne — Chairman and Chief Govt OfficerYeah, the A ranking has for all time been linked to the gearing and all these exchange. So or not it is well-known for us, but we have some room there to administer that.Martijn Rats — Morgan Stanley — AnalystGreat. Thanks.OperatorThank you. And your next ask comes from the street of Oswald Clint of Bernstein. Please skedaddle ahead. Your line is open.Oswald Clint — Bernstein — AnalystThank you very a lot, all americans. Thanks. Yeah, clearly, very complex to name quiz recoveries. Let’s deem about next year, over the subsequent five years, I bellow, and a few of your associates are finding it clearly very complex and a few of them have a bit extra consolation around the route for quiz recovery. So I correct wanted to know have to you as a workers have with your consultants and with your other folks on the floor have fashioned some glance of how quiz would perchance maybe get well from here. I mean, jet, gas, traveling, other folks flying, other folks traveling by vehicle and public transport, etc. That is my first ask.And then secondly, clearly, pretty impressive to gaze yet one more countercyclical acquisition here by the utilization of Uganda, or not it’s characterised as cheap barrels. I correct wanted to presumably take a look at that assertion. Is it truly cheap including transportation and pipelines? Is it — I mean, at least at the ahead curve, I seem like getting around 10% return. I correct wonder what I will also very effectively be doing substandard there or is there some form of expression of oil prices recovering doubtlessly motivate up to the $50 or $60 level, please. Thanks.Patrick Pouyanne — Chairman and Chief Govt OfficerSo recovery, I’d cherish in mumble to acknowledge to your ask, but share of the uncertainty. To be upright, I’m extra optimistic about vehicles and the Jets. The vehicles, have to you peek, in many — in China, is that the truth is other folks are the utilization of extra of their vehicles on narrative of they are troubled to exhaust public transportation than ahead of. So I deem as soon as extra, other folks are free to transfer and that’s the reason a ask tag. I deem, they’ll approach motivate to exhaust their vehicles and we quiz, I’d snort, the retail exchange to approach motivate motivate to sure normality. The jets, I’m extra troubled, but for me, as lengthy as we kind not procure a vaccine or I kind not know which medicines, I’m troubled the nations will close their borders and that there will be tiny — this could maybe also furthermore be complex to fly all yet again around the sphere. I mean, on narrative of every and each nation, each and each government will have a significant priority to safeguard the effectively being of their other folks. So I’m extra pessimistic about the jet gas exchange than for the gasoline and diesel exchange which is extra, I’d snort continental exchange than our oil exchange, but [Indecipherable] I’d cherish to have a true acknowledge to your ask.On the 2d one, yes, I mean there is a enormous giant amount of barrel, 1.5 billion to 2 billion barrels, so or not it’s onshore, or not it’s not very complex to make. Sure, there is a pipeline, or not it’s upright as effectively. We all know that, but all of us know that after we watch to this form of initiatives, we have some threshold and if we have done this acquisition, which is pretty staunch when put next to the outdated deal, we have done, we have divided nearly by two the price of acquisition. So it used to be we were like a flash to procure a acknowledge which is simply too low. If we have done it is on narrative of we quiz at least 10% return on this, even at a decrease tag.Oswald Clint — Bernstein — AnalystOkay, magnificent ample. Thanks.Patrick Pouyanne — Chairman and Chief Govt OfficerI will rob final ask and presumably we — after the 2d session of Q&A, we would perchance maybe rob the ones, but I’d rob to transfer to native climate. The final ask presumably.OperatorYes, surely sir. And your final ask comes from the street of Thomas Adolff of Credit Suisse. Please skedaddle ahead, your line is open.Thomas Adolff — Credit Suisse — AnalystThank you. Loyal one clarification on the dividend. I bellow the chance on the dividend nowadays, as well to about a of the commentary you made on the chance, recommend to me that your glance on the macro for the medium and longer length of time has not changed. So in most cases, what that you just may perchance additionally very effectively be saying nowadays is, let’s wait and gaze COVID-19 would perchance maybe not have any structural implication on how oil is consumed and I want to wait till presumably 3Q 2020, to gaze how economies get well and what the outlook can be for 2021, ahead of making a predominant risk on the dividend. Is that how I have to peaceable deem about the dividend and the dividend risk?And then secondly, correct going motivate instant on LNG and LNG or Integrated Gasoline contributed very strongly all yet again and it did so in the fourth quarter as effectively. I wished to know unprejudiced a itsy-bitsy bit extra about the US LNG, whether or not it contributed positively in the first quarter and the intention we have to peaceable deem about the comfort of the year? Clearly, whenever you happen to notice at prices nowadays or not it’s out of the money. Thanks.Patrick Pouyanne — Chairman and Chief Govt OfficerOkay. I mean Thomas, you didn’t listen the entirety what I said. I instructed you, that we have solid fundamentals and that we have time we can exhaust and leverage the steadiness sheet to preserve the dividend. I deem it used to be a extra predominant message that I delivered. I also instructed you that we deem that and Board deem, that or not it’s untimely to rob selections after we gaze nothing on narrative of you may perchance presumably, which methodology — doesn’t mean that we’ll rob, but we establish a ask tag on the dividend coverage on the Q3, I correct instructed you that we deem that we’ll have a higher visibility by Q3 and that it shared some predominant. I mean I’m studying love a variety of papers. All over again, it’s going to commerce the visibility and the price would perchance maybe remain as I said, on narrative of of our inventories at $30 per barrel, $forty per barrel, but as I instructed you also, $forty is amazingly diversified from $30. So or not it’s a ask of appraisal of how lengthy this could maybe rob to get well this oil tag.On the medium and lengthy-length of time, no, I deem, all yet again, what we said about oil, surely linked to the quiz, but you realize whenever you happen to kind not invest or your invest — the investments in E&P will all yet again be decrease than ahead of. The shale oil, which used to be how one can make certain that the production will be impacted and pretty instant. In response to our mannequin after we — have to you may perchance even have a decrease of shale oil production by 2 million barrel of oil per day this year, and other folks are roughly reducing their funding it would perchance maybe change into Four million barrel of oil per day next year. And so, it would perchance maybe gallop the skedaddle away out by the utilization of production. Obviously all that is linked to the spin at which quiz will approach motivate and that I kind not have a crystal ball.So we deem that all yet again this form of decisions we have, we have the capacity of our steadiness sheet and our low breakeven to be resilient to — and not to overreact, that for me is the first message and so there shouldn’t be any such thing as a, I didn’t give you a missing point in Q3 to repeat you we’ll rob yet one more risk than dividend, or not it’s not what I instructed you. I instructed you that we would perchance maybe furthermore be resilient and the truth that by the intention, we determined to give up on any scrip option for the approaching year is, I deem, a sure signal of have confidence in our fundamentals.On US LNG, I truly have — I kind not know if all of us know the acknowledge. We know we are short [Indecipherable] of our purchases symbolize 25% even supposing gross sales around 10%. I’d snort that for me despite what I know, that in IGRP I will repeat you, that in first quarter the shopping and selling of LNG has been pretty sure. And or not it is for all time linked to the capacity to have all these world network of sources of LNG in the US, in Australia, in the Center East. So or not it’s share of the plan that we have established. And what I peek is that quarter after quarter, they are bettering their results. So I deem here can be share of the exchange of arbitrations between the diversified sources of LNG, which is a exchange mannequin they want to make. So I mean we have some pluses and a few minuses, but what I peek is that all yet again and even you realize after we got the NGV gas capacity in Europe, it used to be regarded as as a burden. This day, we are corpulent at eighty%, and we kind money out of it with all of these form of property. So I deem the message around LNG and with out a doubt one of the indispensable strengths of what we have built is extra to have a world plan with productions and retail outlets and customers and regas capacities, which allow them to optimize it.Duration: a hundred and forty four minutesCall contributors:Patrick Pouyanne — Chairman and Chief Govt OfficerJean-Pierre Sbraire — Chief Financial OfficerMichele Della Vigna — Goldman Sachs — AnalystJon Rigby — UBS — AnalystIrene Himona — Societe Generale — AnalystBiraj Borkhataria — RBC — AnalystLydia Rainforth — Barclays — AnalystChristian Malek — J.P. Morgan — AnalystMartijn Rats — Morgan Stanley — AnalystOswald Clint — Bernstein — AnalystThomas Adolff — Credit Suisse — Analyst
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