Totalenergies Se · EURONEXT:TTE
Totalenergies — Investor Day (September 2018)
42 slides from Totalenergies's investor day presentation, September 2018
Slide 1: Strategy and Outlook
Strategy and Outlook September 2018
Slide 2: Consistently delivering
Consistently delivering Maintaining strong discipline on costs while growing production Managing portfolio countercyclically to increase cash flow and profitability Building a responsible oil & gas and low carbon electricity company Increasing shareholder value 2018 Strategy and Outlook 2
Slide 3: Safety, a core value
Safety, a core value Cornerstone of operational efficiency Total Recordable Injury Rate for Total and peers* Group six key HSE priorities Per million man-hours 2 Manage risks to safeguard Prevent people, the environment and assets Safety, the cornerstone of Integrate operational efficiency Strengthe
Slide 4: Supportive oil market fundamentals
Supportive oil market fundamentals Supply-demand and OECD inventories Mb/d; days of demand cover +1.4 Mb/d demand in 2018* Demand strong but sensitive to price and global economic growth uncertainty Supply 95 Demand Favorable short-term market conditions • OPEC & Russia regaining market leadership 5
Slide 5: Strong LNG demand growth driven by Asia
Strong LNG demand growth driven by Asia Constructive government policies 2015-30 LNG demand 2015-30 LNG supply Mt/y Mt/y +5% per year Other 500 500 Middle East To be Demand sanctioned Europe Under Rest of Asia construction China Existing supply Japan Korea Taiwan 2015 2020 2025 2030 2015 2020 2025 2
Slide 6: Electricity demand to increase by > 50% from 2015-40
Electricity demand to increase by > 50% from 2015-40 2015-40 electricity generation TWh, range of IEA scenarios* Growth driven by non-OECD countries, 40,000 Electricity generation in particular China and India from 36,000 to 42,000 TWh Large increase in gas and renewables share Low carbon electricit
Slide 7: Consistently delivering
Consistently delivering
Slide 8: Consistently delivering
Consistently delivering Production Opex Mboe/d $/boe Announced target 10 2.6 2.2 2015 2016 2017 2015 2016 2017 Capex Cumulative asset sales B$ B$ 24 10 12 2015 2016 2017 2015 2016 2017 2018 Strategy and Outlook 8
Slide 9: Outstanding production growth
Outstanding production growth Best-in-class growth 2018-20 Production Mboe/d 6-7% per year 3 Under development 2015-18 M&A In production 2017 2018 2020 2022 5% CAGR from 2017-22 2018 Strategy and Outlook 9
Slide 10: 2018-20 major start-ups
2018-20 major start-ups Delivering ~600 kboe/d by 2020 kboe/d Share Country 2018-20 average cash margin Yamal LNG T1 150 29.7% Russia CFFO – $/boe Fort Hills 180 24,5% Canada Vaca Muerta 100 41% Op. Argentina 2018 Timimoun 30 38% Algeria Yamal LNG T2 150 29.7% Russia 70$ Kaombo North 115 30% Op. Ang
Slide 11: Relentlessly reducing operating costs
Relentlessly reducing operating costs Opex savings vs. 2014 base Production costs (ASC 932) B$ $/boe 5 B$ 9.9 4.2 B$ 3.7 B$ Downstream & Corporate 5.5 < 5.5 Upstream 2017 2018 2020 2014 2018 2020 Confirming cost saving targets Driving down costs through the cycle 2018 Strategy and Outlook 11
Slide 12: Simplifying processes and organization
Simplifying processes and organization Total Global Services generating results ONE TOTAL • ~400 M$ savings in 2017 (Opex + Capex), • One Total Chair per country targeting 1 B$ by 2020 • Cross-segment support functions • 40% of procurement negotiated globally • Group-wide simplification program • Bu
Slide 13: Discipline on capital investments
Discipline on capital investments 15-17 B$ per year from 2018-20 Capital investment* 2018-20 capital investment B$ Downstream 16-17 15-17 15-17 Exploration & Production iGRP: Integrated Gas Renewables & Power 2018 2019 2020 * Organic Capex + net acquisitions iGRP: integrated LNG (upstream and midstr
Slide 14: 2018 Exploration: first successes of new strategy and team
2018 Exploration: first successes of new strategy and team Ballymore, US Sururu, Brazil Shwe Yee Htun, Myanmar Glendronach, UK Total 40% Total 22.5% Total 40% Total 60% Giant deepwater oil Giant deepwater oil Offshore gas Nearby exploration, gas Existing network Iara License Atapu MYANMAR Glenlivet
Slide 15: Downstream consistently delivering 7 B$/y CFFO
Downstream consistently delivering 7 B$/y CFFO While selling 7 B$ of assets over 2015-17 Downstream CFFO B$ Continuously optimizing Refining & Chemicals 7 • Upgrading Antwerp • Debottlenecking Satorp Consistently growing Marketing & Services • Non-cyclical business • Expanding non-fuel revenues Best
Slide 16: Driving down the breakeven
Driving down the breakeven Post-dividend organic breakeven $/b Discipline on spend 100 High margin production Brent price Robust Downstream 50 Increasing CFFO leverage to oil price • 2.8 B$ for 10 $/b Brent in 2018 • 3.3 B$ by 2019 2014 2015 2016 2017 2018 2018 Strategy and Outlook 16
Slide 17: Outperforming peers in 1H 2018
Outperforming peers in 1H 2018 Production growth 1H18 vs 1H17 Downstream ROACE – rolling 12-month % % 10% 30% 0% -10% ROE – rolling 12-month Net-debt-to-capital % End-2Q18, % 30% 10% 15% Peers: BP, Chevron, ExxonMobil, Shell – based on public data 2018 Strategy and Outlook 17
Slide 18: Creating value through the cycle
Creating value through the cycle
Slide 19: Countercyclical Upstream M&A creating value
Countercyclical Upstream M&A creating value > 25% portfolio change since 2015 Acquisitions B$ > 7 Bboe resources added at < 2.5 $/boe 2015-18 E&P 8.3 B$ acquisitions average Brent 50 ROACE at 60 $/b (%) > 10% 7-8% $/b Opex ($/boe) ~4 ~5.5 2.5 B$ 2.6 B$ 2.2 B$ Technical costs* ($/boe) ~12-13 ~19 Orga
Slide 20: Maximizing value in the North Sea
Maximizing value in the North Sea Integrating Maersk Oil assets and highgrading portfolio Maersk Oil accretive acquisition Divestment of high costs assets B$ Main acquisitions – Tech. costs ~20 $/boe Main divestments – Tech. costs > 35 $/boe 10 Key existing assets – Tech. costs < 25 $/boe 70$ Packag
Slide 21: Favorable cost environment to sanction new projects
Favorable cost environment to sanction new projects Significant spare capacity and opening new supply options Yards* & deepwater rigs** utilization rate Decrease of capital costs % Deepwater – IHS Markit – Q2-2018 100% 100 75% Spare capacity Deepwater rigs South Korean yards 50% 75 Chinese yards 25%
Slide 22: Accelerating short cycle developments
Accelerating short cycle developments Portfolio of flexible and highly profitable projects Launching short cycle projects West Africa, sanctioning tie-back and B$ infill drilling opportunities 4 70 $/b Usan infills Akpo infills Torpille Ph 1 60 $/b CLOV Ph2 Dalia infills Capex CFFO Deepwater Offshor
Slide 23: Sanctioning high return projects to prepare future growth
Sanctioning high return projects to prepare future growth Launching > 700 kboe/d by 2020 Arctic LNG 2 Troll, Ekofisk, 600 kboe/d, 22%* 360 kboe/d, ~10% average Glendronach Johan Sverdrup 2 25 kboe/d, 60%, Op. 220 kb/d, 8% Cameron LNG T4/T5 9 Mt/y, 17% Ballymore 170 kb/d, 40% Al Shaheen 2 NLNG T7 Nor
Slide 24: Building a responsible energy company on core strengths and growing markets
Building a responsible energy company on core strengths and growing markets
Slide 25: Integrating climate into strategy
Integrating climate into strategy Taking into account anticipated market trends Global energy demand Mboe/d Focusing on IEA 2°C oil projects scenario* with low breakeven 300 Renewables Nuclear Expanding along the Coal gas value chain Oil Natural gas Developing profitable & 2016 2040 sizeable low car
Slide 26: Reducing carbon intensity of our energy sales
Reducing carbon intensity of our energy sales Responsible contribution to tackle climate challenge Carbon intensity Base 100 in 2015 (75 gCO2/kbtu) 100 Further improving our operations efficiency IEA NPS Growing in natural gas -15% Developing low carbon electricity 2015-30 Increasing biofuels Possib
Slide 27: Oil & Gas: Building on our strengths
Oil & Gas: Building on our strengths Leveraging expertise in 7 core areas 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 2018 Strategy and Outlook 27
Slide 28: Leveraging deepwater expertise
Leveraging deepwater expertise Reaching 500 kboe/d production by 2020 Deepwater production kboe/d Leader in Africa 500 Other US Brazil Growing in Brazil Africa 2017 2022-27 Gulf of Mexico, average the next wave > 30 $/boe CFFO at 60 $/b 2018 Strategy and Outlook 28
Slide 29: Expanding along the integrated gas value chain
Expanding along the integrated gas value chain Reporting Integrated Gas Renewable & Power segment from 2019 Production & Trading & Gas & Power Regasification Liquefaction Shipping Marketing 20 Mt/y LNG 40 Mt/y portfolio 20 Mt/y capacity ~6 M customers Ichthys & Yamal > 10% market share #2 Global LNG
Slide 30: New wave of LNG projects located in all key supply regions
New wave of LNG projects located in all key supply regions Priority to low cost, brownfield projects 2025 LNG supply sources Global Market and TOTAL share Arctic LNG 2, 20 Mt/y, 22%** Giant low cost reserves Total 19.4% shareholder of Cameron LNG T4+5, 9 Mt/y, 17% Novatek in Sept. 18 Low cost US sha
Slide 31: Executing Petrochemicals strategy
Executing Petrochemicals strategy Low cost feedstock on worldclass integrated platforms Petrochemical production* Mt/y 6 Naphtha US – Borealis Nova JV New 1 Mt/y ethane cracker South Korea PE capacity increase to 1 Mt/y Cracker expansion to 1.4 Mt/y PE capacity expansion to 1.1 Mt/y > 60% Ethane ~40
Slide 32: Well positioned for new IMO regulation
Well positioned for new IMO regulation Positive for E&P and R&C, a new opportunity for M&S Crude Oil Products value Alternative fuel Low sulfur crude value increasing HSFO decreasing, distillates increasing Development of LNG for bunkering Mt/y 7 Antwerp modernization Port Arthur coker Total: Logist
Slide 33: M&S: Moving to growing markets
M&S: Moving to growing markets Creating value through portfolio management Marketing & Services CFFO 2015-18 portfolio management B$ > 2.5 B$ 3 Expanding in large, fast growing markets Growth businesses • Africa retail • Mexico, Egypt, Pakistan • Large emerging countries • Non-fuel Europe • Alternat
Slide 34: US, a land for growth: LNG, petrochemicals, deepwater
US, a land for growth: LNG, petrochemicals, deepwater Building on abundant low cost gas resources > 1.5 B$/y > 1 B$/y > 10 B$ CFFO Capital Strengthening US GoM deepwater position Capex Over 2018-22 employed with Ballymore, North Platte (Op.), Anchor Port Arthur Building strong LNG position based on
Slide 35: Building a low carbon electricity business
Building a low carbon electricity business Integrated approach: production trading and marketing From Gas to Electricity ~2 GW capacity in Europe Marketing 7 M customers by 2022 5* CCGT’s in France and Belgium European market Producing ~1/3 of sales by 2022 Trading From Renewables to electricity ~3
Slide 36: Increasing CFFO in all segments
Increasing CFFO in all segments E&P, profitably generating cash iGRP, investing for growth Downstream, robust cash B$ B$ B$* 20 20 20 70 $/b 60 $/b 50$/b 54 $/b CFFO CFFO 2017 2020 2017 2020 2017 2020 * ERMI 35$/t Capital employed ~55% ~30% ~15% CAPEX ~10 B$ ~3 B$ ~3 B$ ROACE at 60 $/b > 10% 7-9% >
Slide 37: Delivering shareholder return
Delivering shareholder return
Slide 38: Clear visibility on cash flow growth
Clear visibility on cash flow growth Debt adjusted cash flow (DACF)* B$ 30 70 $/b Strong contribution from 2018 project start-ups: • Kaombo, Ichthys, Egina > 3 B$/y by 2020 60 $/b 22.2 60 $/b 50 $/b Solid cash generation from acquisitions 54 $/b • Maersk Oil, Brazil and Adnoc offshore ~ 3 B$/y by 20
Slide 39: Clear priorities for cash flow allocation for 2018-20
Clear priorities for cash flow allocation for 2018-20 1 2 3 4 Capital Balance Share Dividend investment sheet buyback 10% increase Maintain 15-17 B$ per year over 3 years gearing < 20% 5 B$ over 2018-20 No scrip dilution grade A credit rating 2018 Strategy and Outlook 39
Slide 40: Executing shareholder return policy
Executing shareholder return policy Delivering best-in-class TSR 4-year TSR %, Total and peers* as of end August 2018 20% 2018 interim dividend increased by 3.2% 10% Share buyback: ~1.5 B$ in 2018 on top of ~2 B$ of scrip shares buybacks 0% ~20% TSR since 2014 despite downturn -10% Bloomberg data *
Slide 41: Consistently delivering for the benefit of shareholders
Consistently delivering for the benefit of shareholders Delivering on objectives • Outstanding production growth • Maintaining Capex discipline • Best-in-class Downstream Strong cash flow growth to 2020 and clear roadmap for shareholder return Attractive portfolio in hand to deliver the strategy pos
Slide 42: Disclaimer
Disclaimer This document may contain forward-looking information on the Group (including objectives and trends), as well as forward- (ii) Inventory valuation effect looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, notably with respect to the The adjusted