Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to today’s Total Second Quarter 2019 Results Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator instructions] I must advise you that this conference is being recorded today, Thursday, July 25, 2019. I would like to hand the call over to your speaker today, Patrick Pouyanné. Please go ahead. Patrick Pouyanné: Good morning, everybody. I am pleased to join the call today. Not every quarter, but it’s a special occasion for last conference call by P2, and as well for the first conference call with Jean-Pierre as well, our new CFO who is joining to start the transition. In fact, his transition has been organized and planned for quite a number of years, Jean-Pierre having been Treasurer before becoming deputy CFO. It’s also I think the time is also right for us and for myself to comment on the acquisition of Anadarko’s African portfolio, as the merger between Oxy and Anadarko is planned for August 8. So format today will be as the following P2 and Jean-Pierre will present the results. And then, I will comment on the Anadarko deal and then we will go to the Q&A session. Just a few words as of introductions, since 2015 we have taken broad steps to move Total to become best-in-class energy company and the second quarter results contributes in most ways to this with resilience, and more importantly, for all our shareholders, cash flow growth plus 10% with the same level of production as previous quarter. The Anadarko assets will contribute to replenishing our resource base and clarify the outlook for the coming years. And the way forward is no clear to us until 2025…

Thank you, Patrick. So let’s move to the Refining & Chemicals segment performance. So for this segment, adjusted net operating income was $0.7 billion in the second quarter that means the decrease of 5% compared to the first quarter. European refining margins were down 16% quarter-to-quarter. Operationally, our refinery in Germany, the Leuna refinery had to reduce throughputs due to contaminated crude from Russia. There was a shutdown at the Grandpuit refinery in France, and some normal scheduled maintenance as well. As a result, refinery throughputs sale quarter-to-quarter by 14% and capacity utilization decreased to 77% from 89%. Now Leuna and Grandpuit are back to normal. Despite the lower margins and lower throughputs, R&C generated $0.8 billion of cash flow from operations before working capital in the second quarter. First half cash flow was stable compared to last year at $1.9 billion. From Marketing & Services, adjusted net operating income was $0.4 billion, an increase of 23% quarter-to-quarter. Cash flow from ops before working capital for M&S was $0.6 billion in the second quarter and $1.2 billion for the first half, representing an increase of 12% year-to-year. So now for the combined Downstream, I mean, R&C plus M&S, cash flow from ops before working cap was $3.1 billion in the first half, an increase of 3% compared to last year, and ROACE was 24%. I will turn now to the group results, so at the level of the group debt-adjusted cash flow was $13.7 billion in the first half, a 10% increase compared to last year, as P2 already commented, this is a result of strong production growth more than offsetting lower hydrocarbon prices and lower refining margins. So we are on track to grow cash flow progressively year-over-year as our new projects continue to ramp-up. A few comments on…

Thank you. [Operator Instructions] The line of Irene Himona from Société Générale is now open.

Thank you. Good afternoon. And thank you very much, Patrick, for your support over the past decade and all the best in the future. I had two quick questions. So firstly on tax, group tax this quarter was particularly low. But then, there are different moving parts in there. So the tax rate in Marketing & Services in particular is quite high this quarter. And then, you continue to have tax credits in Corporate. I wonder if you can give us a sense of any unusual tax items this quarter and what should we anticipate for the rest of the year. And my question, you had mentioned before, I believe possibly at the Q1 stage, that you would give us some sensitivity to natural gas prices. I wonder if that is something you are able to do today perhaps. Thank you. Patrick de La Chevardière: Q, Irene, as usual, I have a question about taxes with you, so we were prepared to answer that question. Actually, tax rate was quite low this quarter, you were right. It is not only the fact that oil prices were lower than previous quarter, which is part of the answer. But this is not only that. In the E&P, we benefit from the Kaombo Sul startup, with large uplift mechanism, if you remember those mechanism in that country. In Downstream, we benefit also from $50 million capital gain on Wepec sale with no tax. But on top of that, June is the time for us to reconcile our tax estimate made end of the year. And the actual number that we have by end of June. And then, in the Downstream sector, we offload one provision that we add on the Downstream, provision on taxes, which was put in place previously. That’s my answer on taxes. Sensitivity to gas price, that’s a difficult question. 100% of our production, oil plus gas, 75% of it is linked to the oil price. So let’s have a look to the 50% production coming from gas. Then you have on this 50%, 50% of its oil-linked; 20%, 25% of it linked to the spot prices, NBP in the UK and in Continental Europe; you have about 20% of prices linked to domestic prices that you have for instance in Thailand, in Burma, in the UK or in Norway – no, no, no, it’s not in the UK – in Argentina, sorry. And thus basically, as the remaining part is 5% to 10% on Henry Hub. So even if I’m not fully able to answer your question, with those exposure to the different type of gas prices I think you could see what could be our sensitivity.

Sure, thank you very much. It’s very helpful.

The line of Oswald Clint from Bernstein is now open.

Hi, good afternoon. Thank you. Patrick, thanks for all the comments on Mozambique. I just wanted to ask around Mozambique was kind of what your thoughts were about actually delaying the – or actually, you seemed, if you could retender and perhaps get a cheaper construction cost for that plant. Or if that wasn’t possible your thoughts around sharing some of the onshore work with the Exxon/ENI project as well. If you could just discuss that side of it, is that something that could happen, at least from a sharing perspective after the FID of the other projects? And then just linked to Mozambique, you kind of gave the throwaway comment about South Africa. And I just wonder was that a throwaway comment or is this something interesting really about this deal? Have your geologists looked into the Anadarko block and see some type of extension of the success you’ve had in your own block in South Africa? That’s my first question. And then, secondly, maybe one for the Chief Financial Officers. Just looking at your Gas Renewables & Power business, and just starting to look at the unit cash flow margins, kind of cash flow per ton that you’re starting to generate here, as you split this business out. And you’re making around $100 a ton this quarter. And I’m assuming there is not very much for Renewables or Power just yet. But as I think about Cameron and Toshiba and Tellurian coming in, which is difficult for us to model, but also Yamal kicking on to oil-linked contracts over time, just trying to think about the accretion or dilution of that number, should we think about this $100 a ton as a sustainable number? Do some of these North American contracts coming in perhaps dilute that number? Or…

Yeah. Just to come to that, obviously, iGRP. I think, you have more granularity on LNG. Remember in February, we gave you more detail. We will come back on it. It’s becoming a very important part of the business portfolio of the production and we are doubling the volume. So we will reach next year 20 million tons and more to come in reaching by 2025 will be around 50 million tons in our portfolio. So I understand why you asked the question. Remember what we told you, I think, it was February or September, but we target of free cash flow by – CFFO by 2020 of around $4 billion in that segment. And like, Patrick said, Yamal, we started Yamal early, but the early volumes were going on the spot markets in Europe. Now since this quarter, we have activated the long-term contracts, which are oil-related contract, so it’s much better. So you will have good news from this point of view in terms of cash flow. I will not add on the comments on that result.

Okay. Fantastic. Thank you.

The line of Thomas Adolff from Credit Suisse is open.

Good afternoon. Few questions for me, please. Firstly, correct me if I’m wrong. I believe your investment criteria is a minimum of 15% IRR at $60 per barrel Brent. And I wondered, whether the African deal actually meets these criteria, whether you will also be subject to capital gains tax in Mozambique? And secondly, you have so many LNG projects in your hopper, I don’t even know where to begin. Maybe I want to comment, how large the player you are likely to be by 2030. And then finally, you’ve mentioned improving shareholder returns specific on the $1.5 billion buybacks you’re doing. Do you think that’s sufficiently attractive, in fact, if you look at the overall distribution policy? Do you think that’s sufficiently competitive, especially, as you look out to 2021 plus? Thank you. Patrick Pouyanné: Okay, Thomas. First, that for – we used the strong criteria for LNG projects. We don’t use the IRR. We use enrichments mostly, because there are very long-term projects, and we look to as the level of enrichments in capital rather than the IRRs as a way. LNG project is 16% return, I don’t think there are many projects like that, because it’s very capital intensive upfront. But value accretion is on the duration, because you have long plateau. That’s was the first point. The capital gain tax, let’s be clear, most of the capital gain tax will be carried by Occidental according to the purchase agreement we’ve signed with them. Secondly, on LNG project, yes, we have a large portfolio that’s clear. But this is the only segment of the hydrocarbon industry, which is really going quickly 10% in the last three years, everybody’s planning at least 5% in coming years. I think, your large portfolio allows us as well to be, I…

Okay. Thank you.

The line of Lydia Rainforth from Barclays is open.

Thank you, and good afternoon to all of you. I have two questions if I could. Firstly, on the $5 billion divestment program. How are you looking at what the criteria of those assets will be which is what you’re looking to sell? And then secondly, can I just follow-up on that the CapEx number, where you touched about that being $16 billion to $18 billion. Is that simply a reflection of the net acquisition or have the organic number, you were looking at slightly different organic number to what would have been without the Anadarko assets? Thanks. Patrick Pouyanné: No. I will not tell you what is the list of assets. Sorry for that. Just because that’s never been the policy. The criteria are clearly as I mentioned in my speech either noncore. We have one of the characteristics of the E&P portfolio of Total, we have quite – people in the number of countries, sometimes for small production. And so it absorbs some human resources, and one of our objectives with Arnaud Breuillac, President of E&P is still, he’s trying to refocus on maybe less country. So if we can exit some few countries, we have a list of countries, small countries in terms of, I would say, revenues and production, where it will depart. And the second criteria is high breakeven assets the one like we’ve done in the mature fields in North Sea. We have sold a little production. Again, I’m not afraid at all to sell some production. We have some margin, it’s not at all volume driven. So these are the two main criteria. And then in the Downstream, we will continue to sell all this infrastructure, P2, we were thinking in 2016, we have a list, but we are discovering some piece of…

I understand. Thank you very much.

The line of Christyan Malek from JP Morgan is open.

Hi, good afternoon, gentlemen. Thanks for taking my questions. First of all, just on for the cash margin dilution of the new projects including Kaombo and Egina. How they compared to previously sanctioned projects in West Africa? And we’ve talked a bit here, your average cash flow about portfolio basis is still within the sort of mid-to-high 20s. Would you say, these projects are falling in that range or higher? The second question, I just want to come back to, Patrick, you commented the priorities, not volume growth but value growth. The first is just that you’re about to step away from the volume target altogether. And if so, is there a case to make now that you can made the deal with Anadarko. You can potentially prioritize your capital framework around cash return over balance sheet and CapEx? And finally, linked to that last question. I understand the targets of increased returns would stay 40% of free cash flow. I want to think about your yield in the context of divisional buyback of market cap. You still see within sort of the mid-range of the group and not necessarily for the top-end. So how do you think about in that context? Patrick Pouyanné: It was the cash margin, evolution on some projects, if I understand. Kaombo and Egina, I think, on these projects, like, Kaombo and Egina, which are projects on which we have invested a lot and it’s in our PSE. Clearly, we are very accretive in terms of cash margin to our portfolio, it’s above $40 per barrel for this type of projects, because we have to recoup of the cost plus we have the additional profit. So it’s clearly cash equity in terms of $1 per barrel to our portfolio and we will benefit off it,…

Thank you.

The line of Alastair Syme from Citi is open.

Hi, thank you. Patrick, I wonder if you could just update us on the situations in Uganda and Papua New Guinea. I think, you made it a priority to move these assets for the sea. So I just want to understand, what the situation is in each country as it stands today. And then maybe if you could also secondly just comment around the LNG market. We’ve obviously seen a big move in pricing over the winter. So what do you think that’s telling you about the state of the market? And are your customers saying anything on the fact that their contract pricing is essentially above where spot prices are today? Thank you. Patrick Pouyanné: Okay. No. These two projects are – as you know PNG, we signed a gas agreement with government and PNG in the beginning of May. I was there. In the meantime, there has been a change of government. From my point of view, I think that these types of agreements are signed with a country. So we expect the new government to respect it. Then various news in newspapers, but we are confident. But it is the best interest of PNG to respect the agreement which have been signed in order to move forward with the project. It’s like you have seen, there are many projects, energy projects around the world. We have also many projects in our portfolio, one more with Mozambique. And obviously, we have to – I think, everybody has to consider the global planning of the LNG industry in order to move forward with various projects around the world. On Uganda, I think, as you know, it has been a long – we spend a lot of time there. It’s not an easy project, it’s a project which cross –…

Okay. Good. Can I just wrap up by wishing P2 all the best in his retirement? Thank you very much. Patrick de La Chevardière: Thank you.

The line of Michele Della Vigna from Goldman Sachs is open.

Thank you for taking my question. And thank you, Patrick for all your help over the years. Two questions, if I may. The first one, when I look at your P&L, the associates line has been a bit of a drag in the first half of this year, down about 30%, while EBIT was pretty much flat year-on-year. I was wondering, what were the key drivers there. And whether we could expect some of this to reverse in the second half as Ichthys and Yamal continue to ramp up? And secondly, on Mozambique, I was wondering what kind of accounting you will want to use there. I think, some of the companies there are using proportional consolidation for Upstream, but associate for Downstream. I was wondering if you would go for the same methodology. Thank you. Patrick de La Chevardière: Yes. Let’s try to answer on the equity affiliate. It is true that net operating income on the equity affiliate is below last year. But this is basically due to the weaker gas price. We started, this is true, so a few projects like Ichthys or Yamal, but the gas price effect, you see it on the equity affiliate. That’s the main reason. Patrick Pouyanné: Yeah. Most of the equity affiliates are energy affiliates, in fact. And I think, it’s giving you and then to as the way we generally accounting method. Okay, we need to – it’s linked also to the way the financing package will be structured. So we – honestly, at this stage, we have spent some time to understand the project itself, financing package. We have not been involved, and we could not for, obviously, a good reason. We are today, we just buy an option. So there we have not been involved in any way with, I would say, the ECAs and the final stakeholders of financing package from Mozambique. This could take time, because we will look at it, and obviously the way this will be structured could influence the accounting method. So I think it’s a – there is a link. So today, we don’t have any position. The way we structured, we generally account LNG – it for the equity affiliates, but we have to link, but the related link. So we’ll have work to be done in the future months, after we are clearly [Technical Difficulty]

…philosophical question as we move into the September events. When you think about CapEx, it seems to me there’s two schools of thought, there’s those that say that they want to fund every single good project that makes money or it makes a good return in the portfolio and those that apply a top-down sort of maximum amount of spending in the sort of spirit to capital discipline. So when you come to think about CapEx, and sort of medium to longer-term CapEx, which school of thought, do you belong to? Thanks. Patrick Pouyanné: First, let me call, the guidance I gave you $16 billion to $18 million of CapEx. From 2019 to 2023, it’s taking into accounts, the development of most of the projects, we – you have mentioned. So we have the capacity to take them onboard. And you know why fundamentally, it’s because of the capital discipline, but we had from $16 billion to $18 billion. We’re spending a lot of money on projects, which were sanctioned before the project. We did not sanction a lot of projects, because we were not in a position to add CapEx in the program to keeps a discipline with strong balance sheet. And so in fact, today we can absorb this additional, these new projects by keeping a guideline, which honestly, we’re on $15 billion, $17 billion, we move to $16 billion, $18 billion. So we are – we keep the discipline. Why do we keep the discipline and it’s linked to your philosophical questions? On my side, I consider that I’m more on the school, but we should not finance all the projects, we should keep a discipline, because it’s sort of global balance sheet and it’s not only CapEx, of course, we want to develop the company, but it’s a mix between the CapEx, the investments, return to shareholders, the giving and finding the right combination. I think, we historically have done the other way from 2018 to 2014, this is in the impact in particular on the profitability, because the massive capital employed has grown a lot. So today trying to manage this massive capital employed, it’s very important as well. So I think, we try to find a way to – between, I would say, creating more value, but also being strong and creating value means for me having a better profitability on capital employed. So this is the right combination. So if we – I gave you a new guidance of $16 billion, $18 billion for the next four to five years, because we are willing to maintain this guidance.

That’s clear. Thank you.

The line of Christopher Kuplent from Bank of America is open.

Thank you very much. And P2, Mercy [ph] interrupt your recovery from whatever made you so tired. I hope it wasn’t us. And quick question for you, P1, and then one for P3. Your 40% payout ratio, which is effectively giving us on CFFO at $60 Brent. Do you have a view on how much should come from absolute dividend payments, when you talk about dividend should continue to grow? Should they only grow on a DPS basis? Or do you actually, I think, it’s a good thing to increase your $8 billion roughly annual dividend cost and any further thoughts you have in terms of prioritizing returning cash back to shareholders via buybacks versus dividends would be helpful? And P3, the quest goes on. Net working capital only seems to work in one direction, I wonder, whether you can give us a little more detail on your introductory remarks, how it could actually release a little bit of cash into the second half? Thank you. Patrick Pouyanné: I will not give you the full detail of your spreadsheet to allocate everything. I mean, let be clear, I think, I’ve been clear in my answer. I told you, but we want to have a competitive return to shareholders. As Patrick said, we have the objective, but we have a strong feeling, but if we hedged into 30%, we are very competitive compared to this. I also said that dividends are clearly when I discuss with our investors their priority. So we will continue to grow the dividend. And it might – yes, it will probably be in terms of absolute value, we spend a little more for dividends. Of course, when you make buybacks you eliminate some shares. But at the end, my priority would be dividend in order to return to shareholders. I will not go more in detail, because then it’s a decision which is taken by the Board of Directors about these various ways to do it. The second question – I think first, second, Chris, thank you to have find a new nick name for Jean-Pierre. So definitely it will be P3. It’s not Patrick, it’s Pierre, but it’s not far. So P1 and P3, it’s good Patrick, you have a new – we will not call in P2 junior, because we are in France, but P3. So P3 will you give some – will explain you how we will eliminate with working capital burden like we’ve done last year. We have some seasonal effects, but I leave the floor to P3.

So that’s good that we have increased the working capital this quarter. It was the case during the first quarter. We will work on the working capital. As P1 explained to you, we demonstrated in the past that we are able by year-end to decrease the working capital. We will give clear guidance in particular to our trading to reduce the working capital. And so, I think I’m quite confident that we will restore the working capital by year-end. Patrick Pouyanné: Yeah, you have some inventories effect and things like that. But it’s not we have the discipline internally to know, but we have some seasonal effect. And then we come back on this figure, on the right figure by the end of the year.

Okay. Thank you. Patrick Pouyanné: What else? Next question?

The line of Bertrand Hodee from Kepler Cheuvreux is open.

Good afternoon. Two questions if I may. The first one on the LNG market, going forward, there is a lot of projects that are getting close to sanction. And you have a lot on your plate, Cameron extension IV, V, and Engie 27, PNG. You could participate also in Driftwood, Costa Azul, Russia Arctic 2 is being – almost FID plus to Mozambique. Do you believe [indiscernible] do you believe that the market could absorb that and that we are not running the risk by 2024, 2025 to be in oversupply again like we are today? And the second question, more I would say data points, when do you expect Icthys LNG, Kaombo Sul and Nigeria Egina to reach plateau? Thank you. Patrick Pouyanné: No, we have some. Yeah, we are involved in projects, many projects. There are some which are very near sanction like Arctic 2, like Mozambique has been taken. There are some others like we speak about Driftwood, where today there is no date on the paper. It’s more options we have in our portfolios. Honestly, on Cameron LNG, which we mentioned as well, today’s priority is more to start the 22 and 23 next year rather than preparing to sanction on 24 and 25, even if, obviously, it will be I would say some priorities. So as I said previously, I think the LNG market, again, there is quite a large roof. We observed not only China, India is buying more and more LNG. Of course, it’s linked to the price, so it’s back to what assumption do we take when we sanction a project. And we are cautious. We take assumptions, which are linked, I would say, to a $50 per barrel world. We don’t take assumptions linked to a high price of gas. So…

Thank you very much, P2 and all the best for the future.

The line of Jason Gabelman from Cowen is now open.

Yeah, thanks for taking the question. I just wanted to clarify the free cash flow guidance you gave for the Mozambique project. Is that including interest and post-tax? And if not, can you please provide what that number is? And then, secondly, just on Mozambique, what are the – or do you guys have concerns there with regards to security and are you taking any measures to shore up your security around the project site? Thanks. Patrick Pouyanné: Okay. The guidance I gave in terms of free cash was for the portfolio of the free African assets, Algeria plus Mozambique plus Ghana. It was not only – and obviously, it was a guidance in net cash flow, so after tax and interest, that’s clear. Second question, security, yes, we have, of course, made a full due diligence on it. And security of our people is the highest priority in our company. We are – and the situation there is – we know, but it’s – we have to take it seriously. I think we have ways to manage it, like we done in our countries. It’s one area. By the way, somebody mentioned to me are you ready to corporate with Exxon. I answered yes. And obviously, on security, actually we share the same values together with Exxon and the same ways to tackle this type of situation. Say, in Africa, we have some operations in Angola, in Nigeria and elsewhere. So we obviously will put the level of investments which is required to ensure the security for all the people who will work onshore Mozambique, but a clear priority.

The line of Henry Tarr from Berenberg is open.

Hi, there. Thanks for that. I think most of my questions have been answered. But just very quickly, on the Toshiba LNG acquisition, it looks a bit like a sort of directional bid on LNG pricing. Would you characterize in this way or do you see it a bit differently? And then, secondly, just on the gearing target, how much of a constraint is it? So if the right opportunity comes along, would you go above that target near-term or do you think – you talked about the sort of counter-cyclical M&A strategy? You’re probably now more likely sellers than buyers of E&P assets looking forward. Thanks. Patrick Pouyanné: Toshiba was – honestly, I think it’s just a matter of very different situation for both companies. Toshiba is not really involved in the LNG business. It’s not an energy company. They have by the way other businesses where we have difficulties. So I think they were – they decided to sell to – which was considered and then – their border has high risk. Honestly, from us we are a big player in LNG. I think on the – in our portfolio, additional 2 million tons of LNG in the U.S. on the standard pricing, does not afraid us. We have that. But getting the benefit of the $800 million, if you divide $800 million by 2.2 million tons over the number of years, you will discover. But in fact it allows us to have access to LNG from the U.S. at a super-competitive price. So I think it’s really a different approach of the risk of the LNG market. We are a strong LNG player. Toshiba was not and has decided to exit. And so, we were agile enough to take this deal. And I’m quite happy, but my…

Great. Thanks.

The line of Jason Kenney from Santander is open.

Good afternoon. P2, thanks very much for your support. JP, all the best for the coming future and, P1, thanks for your input today. I had a question for P2 probably. I think you said in a previous call, there was no bump expected for the IMO to support second half 2019 or 2020. I just wondered, a quarter on, if you were seeing any potential support from IMO dynamics. And if so, that was – if that was confirming your belief and refining margin assumptions, second half 2019, 2020. Patrick de La Chevardière: The answer is yes. Patrick Pouyanné: So I think the – I think wants to conclude. And, yes, sometimes concluding at the end. So I did not attend a lot of calls, but I understand, but sometimes the last call of July, before holidays, Patrick has one priority, which was to go to holiday. Today, he wanted to go to retire. No, but I think, yes, the answer, probably the IMO will be a support to refining margins. It’s difficult to appreciate how much we have already explained many times. But let’s look to the market and we’ll benefit. But we are in a good position. We have organized a company in order to take benefit from the IMO threshold. But just it came, yeah, as I was speaking to Joel, the opportunity, I think that was normal call if I understand. So you are, Jason, the last one. Thank you. I think I would like first to thank all of you for all your questions. I think – I hope you have gotten a bit of clarity about the business case of the company and the logic of this Anadarko deal, but also, always being supported by the strong results. And I know we don’t make headlines, because we continue just to be – to reach all the consensus quarter after quarter. Even if this quarter, we have been better on cash flows, which for me is really the nerve of the war. It’s because we have more cash flows that we can envisage to continue to develop the company and high grade the return to shareholders. I would like to thank you again, Patrick, for the outstanding contribution to Total during his 12 years as CFO. And to pay tribute to Patrick and to demonstrate to Jean, which sent me a sort of joke yesterday. But, yes, they are definitely bold people at the helm of Total. Now, it is time to say vroom, vroom. Have good holidays all of you.

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.