Totalenergies Se · EURONEXT:TTE
Totalenergies — Investor Presentation (September 2019)
61 slides from Totalenergies's investor presentation, September 2019
Slide 1: Strategy and Outlook
Strategy and Outlook September 2019
Slide 2: Total, sustainable and profitable growth
Total, sustainable and profitable growth Sustainability means Coping with volatile and changing energy markets Focusing on breakeven and financial strength Building on our strengths for profitable integrated oil & gas growth Investing in growing energy markets (LNG & power) for medium and long term
Slide 3: Safety, Total’s core value
Safety, Total’s core value Cornerstone of operational efficiency and sustainability Total Recordable Injury Rate for Total and peers* Per million man-hours 2 Contractors 1 0.8 Group Staff 2014 1H19 But 3 fatalities in 2019 * Group TRIR excl. Specialty Chemicals Peers: BP, Chevron, ExxonMobil, Shell
Slide 4: Reducing CO2 emissions while growing the company
Reducing CO2 emissions while growing the company Scope 1 & 2 emissions from operated oil & gas facilities Mt/y - CO2 eq CH4 46 Flaring reduction Methane reduction 42 < 40 Energy efficiency Process electrification New • Each site to display CO2 emissions to 2015 2018 2025 promote staff awareness • “C
Slide 5: Market trends: coping with volatile and changing energy markets
Market trends: coping with volatile and changing energy markets
Slide 6: Energy markets in transition
Energy markets in transition Global energy demand Oil Mboe/d ~25% of energy demand in IEA 2°C in 2040 No more growth by 2040 300 Gas Renewables Growing in all scenarios, abundant and affordable, essential complement to intermittent renewables Nuclear Coal Power Oil Energy of the 21st Century Demand
Slide 7: Oil market fundamentally volatile
Oil market fundamentally volatile Supply-demand and OECD inventories Mb/d, days of demand cover Demand +1.1 Mb/d • Sensitive to price and global economic demand in 2019* growth 100 • Slower demand growth anticipated for 2019-20 Supply Demand Supply • Effective discipline from OPEC+ • US production e
Slide 8: Growing gas markets
Growing gas markets Gas demand Bcm/y 4,000 3.8%/y over 2015-18 Supply 1.5%/y • Increasing role of LNG in international gas over 2010-15 trade: 9%/y growth over 2015-18 • Fast growing US LNG production Demand • Stimulated by low prices • Switch from coal to gas supported by • Europe: increasing CO2 p
Slide 9: Strong momentum in LNG markets
Strong momentum in LNG markets Asia driving LNG growth Medium-term LNG supply & demand 2015-40 LNG demand Mt/y Mt/y 5% Other 700 CAGR 9%/y Middle East Market 5-6%/y Europe 450 tightening To be Rest of Asia sanctioned Under construction 350 India Demand 9%/y China 2015-2018 Existing Japan supply Kore
Slide 10: Europe: committed to energy transition
Europe: committed to energy transition EU 28 power generation mix Twh/y Coal 3,000 Oil Nuclear Liberalization of markets: opportunity for newcomers 1,500 Renewables Natural gas supported by ETS* against coal Strong European government policies in favor of renewables Natural gas 2015 2018 2025 Opport
Slide 11: Renewables capturing most of world power growth
Renewables capturing most of world power growth World power generation mix Twh/y 50,000 Demand • Dynamic power growth driven by non-OECD Renewables countries, in particular China and India 25,000 Supply Natural gas • Renewables capturing > 90% of 2018-30 power growth in Rupture scenario Other source
Slide 12: Petrochemicals sustained by growing demand
Petrochemicals sustained by growing demand Polyethylene market Mt/y > 3% CAGR Excess Demand: strong market fundamentals capacity* • Growing population • Lighter weight materials 100 • Recycling offers further growth opportunities Demand Supply: short term market imbalance • New capacities in Asia an
Slide 13: Sustainability: focusing on breakeven and financial strength
Sustainability: focusing on breakeven and financial strength
Slide 14: Controlling breakeven at the heart of sustainability
Controlling breakeven at the heart of sustainability Pre-dividend organic cash breakeven $/b 120 Discipline on spend (Opex and Capex) 90 Brent price 60 Highgrading portfolio by counter-cyclical M&A 30 Sustainable contribution of Downstream 2014 2015 2016 2017 2018 2019 Key objective: breakeven < 30
Slide 15: Capex discipline and operational excellence
Capex discipline and operational excellence Organic Capex Successfuly starting-up giant projects in 2018-19 B$ Deepwater and LNG 20 10 0 2015 2016 2017 2018 2019 Evaluating projects at 50 $/b 5 FPSO ~600 kboe/d capacity 6 LNG trains ~30 Mt/y capacity 2019 Strategy and Outlook 15
Slide 16: Keeping constant pressure on Opex
Keeping constant pressure on Opex Opex savings vs. 2014 base Leveraging synergies to reduce costs B$ > 5 B$ Maersk Oil synergies delivered quicker than expected 4.7 B$ 2019+ cost synergies: 300 M$/y 4.2 • Headcount reduced by 30% in the UK Downstream 3.7 & Corporate • Strong synergies on corporate h
Slide 17: Extending cost saving program
Extending cost saving program New Group cost reduction program Production costs* B$ - Savings vs. 2014 $/boe 10 > 6 B$ > 5 B$ < 5.5 5 2020 2023 2014 2018 2020 + 1 B$ in 2023 vs. 2020 Targeting 5 $/boe 50% Upstream, 50% Downstream & Corporate * ASC 932 2019 Strategy and Outlook 17
Slide 18: Digital: stepping up value creation
Digital: stepping up value creation Creation of a Digital Factory in 2020 Impact on Impact on 200-300 Upstream Midstream and Downstream dedicated engineers ~1 B$/y* ~500 M$/y* Google partner on A.I. in Geoscience Levers: revenues, availability, costs Refinery 4.0 * By 2025 2019 Strategy and Outlook
Slide 19: Downstream: sustainable cash flow from diversified portfolio
Downstream: sustainable cash flow from diversified portfolio Best-in-class ~25% ROACE Downstream CFFO B$ Restructured Refining & Chemicals 7 • European refineries breakeven < 20 $/t Non-cyclical Marketing & Services • Leveraging leadership in Africa • Increasing non-fuel revenues • Divesting mature
Slide 20: Strong balance sheet further ensures sustainability
Strong balance sheet further ensures sustainability Gearing < 20% Net-debt-to-capital Net-debt-to-capital for Total and peers* % %, end-2Q19 – excluding leases impact 22% 21% 20.6% Leases 20% 15.5% impact 12% 2015 2016 2017 2018 1H19 Grade A credit rating * Peers: BP, Chevron, ExxonMobil, Shell – ba
Slide 21: Outperforming peers in 1H 2019
Outperforming peers in 1H 2019 Production growth 1H19 vs. 1H18 CFFO (exc. wc) growth – 1H19 vs. 1H18 % % 10% 5% -0 Downstream ROACE – rolling 12 months Group ROACE – rolling 12 months % % 30% 10% 5% * Peers: BP, Chevron, ExxonMobil, Shell – based on public data 2019 Strategy and Outlook 21
Slide 22: Oil & Gas: building on our strengths for sustainable and profitable integrated growth
Oil & Gas: building on our strengths for sustainable and profitable integrated growth
Slide 23: Oil & Gas: Building on our strengths
Oil & Gas: Building on our strengths Leveraging expertise in 7 core areas in an integrated strategy 1 Deepwater 2 LNG 3 Petrochemicals 4 Retail & Lubricants Africa 5 Market leader Middle East & North Africa 6 Partner of choice North Sea 7 #2 operator 2019 Strategy and Outlook 23
Slide 24: Sanctioning new wave of profitable projects
Sanctioning new wave of profitable projects Launching > 800 kboe/d to fuel growth post-2023 IRR* > 15% Troll, Ekofisk at 50 $/b Arctic LNG 2 Glendronach Johan Sverdrup 2 Cameron LNG Extension Dunga Ph. 3 Energia Costa Azul Anchor NLNG extension Al Shaheen 2 Ballymore Ikike Sohar LNG North Platte A6
Slide 25: Short cycle projects with flexible Capex
Short cycle projects with flexible Capex Short cycle projects delivering cash Tie-backs to existing units in Angola B$ - 60 $/b Block 0 4 150 kboe/d WI ~30% Block 14 Infills Infills > 10 wells > 10 wells Angola 2 IRR > 20% at 50 $/b CLOV Ph2 7 wells Zinia 2 9 wells > 30 $/boe Girassol infills Block
Slide 26: Leveraging favorable supply chain to launch projects
Leveraging favorable supply chain to launch projects Simplifying designs Upstream Capital Cost Index Base 100 in 2014 – IHS Markit – 2Q19 100% International E&P costs stabilized at low level -30% vs. 2014 • US E&P focus on shale reducing Offshore international competition Deep offshore • Significant
Slide 27: Exploration: seizing high quality acreage delivering results
Exploration: seizing high quality acreage delivering results North-Obskoye Salmanov Jurassic Nyakhartinskoye ~1.2 B$ ~25 per year wells per year Glendronach Yamal Gydan Glengorm North Sea East Mediterranean Myanmar Ballymore GOM Oman Jethro Shwe Yee Htun UAE Joe Guyana West Africa PNG Santos basin S
Slide 28: Promising start in Guyana basin exploration
Promising start in Guyana basin exploration CANJE (35%) Explo wells Successful first wells Jethro • Jethro: oil bearing high quality sandstone Joe reservoirs, 55 m net oil pay ORINDUIK • Joe: play opener in Pliocene (25%*) Carapa Multiple wells and prospects already identified: • Carapa well in 2019
Slide 29: M&A: counter-cyclical portfolio management in line with strategy
M&A: counter-cyclical portfolio management in line with strategy Acquisitions and divestments 2015-20 B$ 30 Anadarko African > 11 Bboe of resources added at < 2.5 $/boe assets* Maersk Oil 5 B$ 2019-20 (shares Divestment > 30% Upstream portfolio change since 2015 & debt) program > 40% Downstream port
Slide 30: Anadarko African assets, clear strategic fit
Anadarko African assets, clear strategic fit Africa, LNG Mozambique Area 1: one of a kind asset • Low acquisition price < 1.5 $/boe • Giant high quality resources > 60 Tcf • Sanctioned 12.8 Mt/y LNG operated project with competitive liquefaction costs ~850 $/t Mozambique | Area 1 | 26.5%, Op. | ~350
Slide 31: Refining & Chemicals: a focused strategy
Refining & Chemicals: a focused strategy Consistently delivering > 20% ROACE Investing in Priority to integrated platforms Growing Petrochemicals low carbon solutions > 70% capital employed Building on low cost feedstocks Biofuels: La Mede start-up in 2025 Leveraging growth in Bioplastics: #2 in PLA
Slide 32: Expanding high return Petrochemicals
Expanding high return Petrochemicals Building on world class Investing in low cost feedstock Integrating monomer and integrated platform > 60% by 2025 polymer capacities Antwerp Normandy Satorp Daesan Port Arthur Qatar US: Algeria: Saudi Arabia: South Korea: JV Total-Borealis Nova JV Sonatrach-Total
Slide 33: M&S: growing selectively and delivering non-cyclical cash flow
M&S: growing selectively and delivering non-cyclical cash flow Expanding in large fast Developing Growing in growing markets non-fuel revenues low carbon fuels > 4,000 stations targeted in new Increasing Shop Food & EV charging: 150,000 charge markets (China, India, Brazil, Services revenues in Euro
Slide 34: M&S: expanding in large fast growing markets
M&S: expanding in large fast growing markets Building on worldwide network of > 20,000 service stations by 2025 Mexico Saudi Arabia China 500 500 1,000 stations stations stations Targeting > 4,000 stations in new markets Building network growth on partnerships (DODO*) and brand agreement: ~70% of ne
Slide 35: Investing in growing energy markets for sustainable long term
Investing in growing energy markets for sustainable long term
Slide 36: Integrating climate into strategy
Integrating climate into strategy Taking into account anticipated market trends Global energy demand Mboe/d Focusing on oil projects with low breakeven 300 Expanding along the Renewables gas value chain Nuclear Coal Developing Oil profitable & sizeable low carbon Natural gas electricity 2017 2040 20
Slide 37: iGRP: investing in growing markets
iGRP: investing in growing markets Building strong positions along the integrated gas and electricity chains Global LNG Electricity in Europe Renewables worldwide Expanding Integrating along the Selectively investing in wind global LNG portfolio electricity value chain from and solar electricity 50
Slide 38: Growing LNG position to fully capture economies of scale
Growing LNG position to fully capture economies of scale LNG sales Integrated gas CFFO Mt/y B$ - 60 $/b 6 50 Supply from 2.5 x 3rd party 3 25 Supply from equity JVs Spot Equity JV sales to 3rd party 2018 2020 2025 2018 2020 2025 2019 Strategy and Outlook 38
Slide 39: Russia LNG: Long term partnership delivering growing cash flow
Russia LNG: Long term partnership delivering growing cash flow Novatek Russia delivering growing CFFO B$ B$/y at 60 $/b 1.0 Dividend received since 2011 10 Novatek dividends Value of shares on 13/09/2019 0.5 5 Yamal LNG Shares Value as of 2018 2019-25 acquisition today since 2011 World-class LNG pro
Slide 40: Building strong US LNG position
Building strong US LNG position Key market for global portfolio player #1 > 10 Mt/y US LNG LNG supply exporter by 2021 by 2021 Sustainable abundant low cost feedstock Sabine Pass T3-T5 Cove Point Freeport T3 Integrated along the gas value chain Barnett Energia Driftwood Costa Azul Growing competitiv
Slide 41: Europe: developing a customer portfolio to pull LNG value chain
Europe: developing a customer portfolio to pull LNG value chain 2025 Customers CCGT (~3 GW) ~2 Mt consumed Midstream Supply Regasification capacities LNG Portfolio 10 Mt/y out of 20 Mt/y 10 Mt/y out of 50 Mt/y Marketing (3 M gas customers) ~8 Mt sold 2019 Strategy and Outlook 41
Slide 42: Developing integrated strategy along the Power chain in Europe
Developing integrated strategy along the Power chain in Europe Generation Infrastructure Trading Customers Marketing B2B/B2C Renewables ~8 M power customers ~7* GW by 2025 by 2025 Mobility services Trading ~175 TWh in 2018 Gas (CCGT) + Aggregation 150,000 ~3 GW platform charge points by 2025 Develop
Slide 43: Selectively investing in worldwide renewables market
Selectively investing in worldwide renewables market Targeting free cash flow positive by 2025 Renewables capacity installed Renewables business model GW* > 25 GW > 15% 1 Development 20 Asia Americas Leverage Africa, ME 10% 2 10% 5-7% (70/30) 10 Farm Down 3 (~50%) Europe 4 O&M 0% 0% 2019 2025 Typica
Slide 44: Investing in carbon neutrality businesses
Investing in carbon neutrality businesses Anticipating on carbon pricing Energy efficiency Nature based solutions CCUS • GreenFlex: 400 people, • Dedicated business unit in place • 10% of R&D program 2018 turnover ~500 M$ • Investing 100 M$/y from 2020 in • Successful pilot in Lacq sustainable and r
Slide 45: Our ambition: reducing the carbon intensity of energy products used by our customers
Our ambition: reducing the carbon intensity of energy products used by our customers Carbon intensity of the energy products sold to our customers Base 100 in 2015 (75 gCO2e/kbtu) Ambition Realized -15% 2015-30 100 95 85 75 Possible sales mix in 2040 depending on consumer behavior • Natural gas: 45-
Slide 46: Outlook 2025 & Shareholder return
Outlook 2025 & Shareholder return
Slide 47: Sustainably growing profitable production
Sustainably growing profitable production Production Mboe/d > 5%/y > 3%/y Numerous Production Project project start-ups stabilization start-ups Leveraging portfolio of high-value projects 3.5 LNG projects driving profitable growth Low 3%/y decline thanks to ~50% of long plateau with no decline (LNG,
Slide 48: Committed to disciplined Capital spend
Committed to disciplined Capital spend While being active on portfolio management Capital investment 2020-25 Capital investment B$/y % 16-18 ~18* 15-17 Downstream Exploration & Production 15 Low carbon electricity iGRP LNG Previous New 2019-20 guidance guidance 2018-20 2019-23 1-2 B$ net acquisition
Slide 49: Strong cash flow growth
Strong cash flow growth Debt adjusted cash flow (DACF) B$ 35 +1 B$/y iGRP and Downstream driving growth 26.1 • iGRP: ~+3.5 B$ in 2025 vs 2019 mainly driven by LNG 71 62 60 60 60 • Downstream: +2 B$ in 2025 vs 2019 $/b $/b $/b* $/b* $/b* Targeting 12% ROE at Brent 60 $/b 15 2018 2019 2020 2023 2025 S
Slide 50: Moving towards sustainable long term businesses
Moving towards sustainable long term businesses Capital employed CFFO % % Downstream Downstream iGRP iGRP E&P E&P 2019 2025 2019 2025 At Brent 60$/b – NBP 5.5 $/Mbtu - HH 2.5 $/Mbtu Note: at 60 $/b 2019 Strategy and Outlook 50
Slide 51: Confirming priorities for cash flow allocation
Confirming priorities for cash flow allocation 1 2 3 4 Capital Balance Share Dividend investment sheet buyback Maintain 5 B$ over 2018-20 Discipline New guidance gearing < 20% Sharing extra cash grade A credit rating > 60 $/b 2019 Strategy and Outlook 51
Slide 52: Sustainable dividend growth
Sustainable dividend growth Dividend vs. Brent Clear visibility on €/share 2019-25 strong cash flow growth +1 B$ per year at 60 $/b 3.0 CAGR 150 Dividend 2000-18 per share +6%/y +8%/y in $ 100 Increasing dividend Brent 1.5 ($/b) Board Guidance: dividend growth of 5 - 6 % per year 50 Immediate effect
Slide 53: Sustainable ESG commitment
Sustainable ESG commitment Total’s commitment to ESG recognized by Sustainable relationship with local stakeholders rating agencies • A- grade Climate Change • Best score for an O&G Major and Water Security In Nigeria, on Egina Startupper Challenge: • A grade FPSO project, supporting entrepreneurs 7
Slide 54: Total, sustainable and profitable growth
Total, sustainable and profitable growth Priority to growing markets: LNG and low carbon power Focusing on organic breakeven < 30 $/b and balance sheet strength (gearing < 20%) Maintaining discipline on spend • 16-18 B$/y Capex over 2019-23 • 5 $/boe Opex, extending cost saving program Strong visibi
Slide 55: Appendix
Appendix
Slide 56: Portfolio sensitive mainly to oil prices
Portfolio sensitive mainly to oil prices 2019 production CFFO sensitivity to prices* Power Local power prices 100% Local markets Low volatility HH NBP/TTF +1 $/Mbtu Gas ~ +0.3 B$ 50% Brent +10 $/b ~ +3.2 B$ Oil Oil, Gas, By price indexation By price Power indexation * Based on Brent 60 $/b – NBP 5.5
Slide 57: IMO 2020: positive impact on crude differentials
IMO 2020: positive impact on crude differentials Crude oil Differentials vs. Brent Low sulfur crude value increasing $/b 5.5 Low sulfur 5 Nigerian 4.5 4 3.5 Low sulfur 3 Angolan 2.5 2 Total: 1.5 60% 1 0.5 low sulfur 0 -0.5 1Q19 2Q19 3Q19 4Q19 -1 World: -1.5 ~42% -2 High low sulfur -2.5 sulfur -3 Ura
Slide 58: Refining ready for IMO 2020
Refining ready for IMO 2020 High Sulfur Fuel Oil production Distillate yield Mt/y % 7 Antwerp modernization Port Arthur coker Logistic segregation Total: 50% LS/HS crude flexibility 2 Worldwide: ~40% 2017 2020 Low fuel oil yield (< 5%) High distillate output (50%) IMO: International Maritime Organiz
Slide 59: Priority to low breakeven projects
Priority to low breakeven projects Breakeven - Integrated LNG projects $/Mbtu – DES Asia – pre-FID and under construction 15 10 5 Source: WoodMackenzie LNG tool, 2019 Q2, Breakeven @10% IRR 2019 Strategy and Outlook 59
Slide 60: Integrated and diversified along the value chain
Integrated and diversified along the value chain Yamal LNG Snøhvit LNG Artic LNG 2 Rotterdam Cove Point LNG Skikda LNG Driftwood LNG Bethioua Egyptian LNG T1 ECA LNG Cameron LNG Sohar LNG Freeport LNG Sabine Pass LNG Qatargas Qalhat LNG & Oman LNG Adnoc LNG Oman Yemen LNG Equity production Nigeria L
Slide 61: Disclaimer
Disclaimer This document may contain forward-looking information on the Group (including objectives and trends), as well (ii) Inventory valuation effect as forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, notably The adjusted results of the Refin
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