TotalEnergies SE (NYSE:TTE) Q2 2023 Earnings Call Transcript

TotalEnergies SE (NYSE:TTE) Q2 2023 Earnings Call Transcript July 27, 2023

TotalEnergies SE beats earnings expectations. Reported EPS is $3.75, expectations were $2.21.

Operator: Ladies and gentlemen, welcome to TotalEnergies Second Quarter and First Half 2023 Results Conference Call. I now hand over to Patrick Pouyanné, Chairman and CEO; and Jean-Pierre Sbraire, CFO, who will lead you through this call. Sir, please go ahead.

Patrick Pouyanné: So good morning, good afternoon, everybody, wherever you are, Patrick Pouyanné speaking. Before Jean-Pierre will go through the details of where could characterize a solid set of numbers. I would like to come back on the solution on the major investments that we have announced in this last quarter, which are a good illustration of our oil and gas and electricity strategy, which, in fact, are based on these 2 fundamental growth pillars on one side, growing our hydrocarbon based, mainly driven by LNG, but all of course, is our cash engine of today; and secondly, developing a profitable and integrated power business, which is key for the future cash and Gino the company. results, I should characterize them as good cash flows, good and good distribution — strong distribution through buybacks.

So continuity and strong and solid set of numbers, but Jean-Pierre will come back on it. So first, on the first pillar, I would like to highlight some few important projects. The first one, of course, is our projects in Iraq, I — you know that the company is going in Iraq 10 years ago, but it’s not a matter of emotion. It’s a matter of creating value, that be clear. And the DGIP, in fact, providing for us access to exactly the type of hydrocarbons we are looking for low cost, low emission, oil and gas because both projects is targeting both gas being, of course, a source of gas for shipment, but all at the rate we feel will have to increasing production of our tariff over our second objective, though, I would say, a breakthrough contractual breakthrough innovative contractual conditions compared to previous service contracts, which were signed by others in the past.

This contract offers an attractive reward well balancing, of course, the Rite we are fully aware of that. Second, of course, example, a very major example of the strategy in motion is — our new projects in LNG projects in the U.S., the Rio Grande LNG projects, which we have announced in June and which now FIDs. You know that we are very committed to LNG. We think that is a growing demand. And that, of course, the U.S. position is very important because we have the lowest cost, a very low-cost source of gas there. And I would say this is a project on which is attractive because it’s one of the most competitive LNG plant with $850 per ton. Violante project benefits from a very good location outside, I would say, the Louisiana probe area and more importantly, access to scale forces with no competition, limited site preparation.

So again, it’s a CapEx competitive project. I know it’s a matter to deliver it. More importantly, of course, for us, we have decided to integrate project by different angles. And why do we integrate it by different circus, becoming equity holder or shareholder of Mexican company promoter of the project, but also direct investors in the projects with 1.15%.and,of course, another. We’ve done that because, in fact, we are leveraging this integration in order to have access to the most competitive pricing for U.S. LNG, and which will give us a clear competitive advantage on the market. So it’s not only a matter of taking, but the integration gave us the capacity to negotiate better price than others. And that, of course, has — it’s a source of value.

We might also enhance the value of the project by further integrating the upstream in order to protect our gas feedstock costs in the future. And other upsides will come also for expanding the plant from 3 to 5. So that’s why we consider that not only being enough taker, but more importantly, also to contribute directly to the investments in a way to leverage and to create different sources of value from this project. The last project, of course, emblematic from oil and gas is the final award of the contract for the Admiral project in Saudi Arasia in petrochemicals. In fact, it’s really, I would say, leveraging the Sator platform, an integrated platform, the world-class petrochemical facilities well supported by the kingdom of series in order to get advantaged feedstock and a very competitive project.

Then we have also, during the quarter, continue to deploy, I would say, the second growth pillar of the company, which is building the profitable integrated model in electricity, so integrated power. So it’s all gas on one side, integrated power on the other side on which we focus, I would say, our transition strategy. Two events at 2 deals or 2 projects happened during this past quarter, very recently. By the way, one is the full acquisition of total year end, which has been announced for quite a long time. You have seen through the figures that it’s $400 million EBITDA. It’s a company and cash flow for additional cash flow next year for total energies. The multiple is quite attractive. It has negotiated 5 years ago. It’s 3.5 gigawatts and mainly, by the way, 2/3 of them being in what I call different regulated countries, so feeding or integrated power business model.

So it’s also a lot of competencies which we joined the company in order to be efficient and more efficient. With this integration and all the — now the next step, and I think we’ll come back to you on that in September is to — we have all these assets around the world, it’s a matter of industrializing the way we operate them in order to deliver more value for the integrated power business. We also won some Maritimes in Germany, Fregat offshore. Some people think it’s too expensive. It’s not because I think it’s exactly, I think, what we are looking for in integrated power. It’s fitting — it’s a perfect illustration of our business model. Why? Because it’s the first of a market, the German market, which will offer the best price for electricity in the future.

Germany has decided not to go to new players. So you know at the end, the price of electricity in Germany when we support it. Secondly, it’s like an oil and gas concession. Now we pay only most are important, but in fact, it’s an upfront payment like we pay a bonus and an oil and gas concession for the way in fact, we fixed of fixed exactly our fiscal entryway do we pay upfront 10%. So for all these 3 gigawatts, it’s something around €500 million. And then we will pay a royalty around 20 years. And the really, by the way, avoid us to pay any connection fee to the green. So when you look to the math, I can tell you, I’m very happy that we have managed to get access to the 3 gigawatts of offshore when because it’s exactly the model we want to put in place.

price is not controlled up to us to decide which part we will sell to PPAs to German manufacturing industries and which part will keep merchants in order to trade around and to asset integration. So my answer to the ones who have criticized us is that, in fact, we are exactly in the model, not an infrastructure model, but an integrated power merchant model exactly what we do in Olinda. So that’s — and you will see us continuing to deploy this strategy. And by the way, I might be because only it’s easy for me to explain that because Javier will explain you, but these results in integrated power are surprising you quarter after quarter as they will not — they will continue to surprise you in a positive way. So that’s what we want to build. That’s my introduction.

I would say, my last comment, of course, is that the Board is very comfortable with the cash generation of the company. So yesterday, iterates trust in the future by increasing the interim dividend by 7.25% year-on-year and maintaining the $2 billion buyback program for the third quarter is the fifth quarter renewal that we say at $2 billion despite the softening environment. The payout for the first half is more than 42%, in line with the commitment of the group to distribute more than 40% for 2023. And so, I can only reiterate that commitment and all the transactions and projects, we, of course, will be the highlights of our of our present vision to you on December 27 in New York. And then, I will leave the floor to Jean-Pierre for biting into the results.

Jean-Pierre Sbraire: Thank you, Patrick. So let’s move to the financials. The commodity environment softened in the second quarter but still at high levels. Quarter-over-quarter, Brent was down 4% to $78 per barrel and Ermengas dropped by around 35% to $10.5 per million. In this context, Total Energy reported second quarter adjusted net income of $5 billion, a decrease of only 24% quarter-over-quarter and was able to generate a $8.5 billion of cash flow. Over the first half ’23, adjusted net income was €11.5 million, and cash flow was $18 billion. We continued to deliver excellent profitability reporting the 22% rate for the 12 months ended June 23, and we continue to share our success with our shareholders as explained by Patti.

During the second quarter, we paid €1.8 billion in ordinary impaired dividends and executed $2 billion buyback, which is consistent with the first quarter distribution despite the softening commodity environment as described. As a result, pay to shareholders, as mentioned by Patrick, was more than 42% over the first quarter — the first half, sorry, 23. Our balance sheet remained strong with varying at 11.1% in the second quarter. Moving now on to the segment results. Operationally, our Oil& Gas production was 2.7 million barrels of oil equivalent per day, up 2% year-on-year, thanks to new project markets. Under group Past in Norway, ITG in Iberia, Maran in Brazil and Brazil in Oman. The production also benefited from the integration of Sun and Umut in the United Aramis.

Note that our oil production was up 12% year-on-year, reaching about 1.4 billion barrels or Production for the third quarter is expected at around 2.5 million barrels of oil equivalent or debt, notably posted by a start-up of the Aperol in service. Exploration and production reported adjusted net operating income of $2.3 billion, down 11% quarter-over-quarter, primarily due to the lower owning prices. Similarly, cash flow of $4.4 billion was also down 11% quarter-on-quarter. These are quite resilient set of results compared to the lower environment. I already mentioned the minus 4% for brand and around 35% drop for European gas prices. As previously announced, we are now reporting integrated LNG and integrated power as in the Balance segment.

So let’s move on integrating — in the second quarter, 23 LNG sales were stable at 11 million tonnes quarter-on-quarter, benefiting from the result of Freeport LNG, that decreased year-over-year due to lower demand in Europe because of mild weather and high inventories. Integrated LNG generated adjusted net operating income of $1.3 billion, down 36% quarter-on-quarter, reflecting lower in price above $10 per BTU in the second quarter and softer trading results compared to the exceptional ones we benefited in the first quarter in less voluntary markets. However, operating cash flow was down only 13% quarter-on-quarter, also due to lower end prices but partially offset by higher margin secured in ’22 on Energy cargo to be delivered in 3 — given the evolution of oil and gas prices in Western months and the lag effect on price terminal, totality anticipates that its average LNG selling price should be between $9 and $10 per million in the third quarter ’23.

For Integrity Power, in the second quarter, we met our target of double-digit returns, biting a tracker as an integrative and profitable player in the electricity business. So for the 12 months ended June 23, we achieved ROCE at 10.1%. The crude is the results. Our integrated approach to the business is working, which combines renewable projects, flexible over generation, energy storage, asset optimization, trading and B2B, B2C supra. Integrated Power second quarter adjusted net operating income is $450 million, and cash flow is €491 million, up 22% and 12%, respectively, quarter-on-quarter due to the good performance of our integrity electricity portfolio. Integrated Power generated $93 million of cash flow in the first half ’23, versus only $340 million in the first half of ’22.

The different segments have performed well and contributed to distribute for half 2 results. Gas-fired power plants reliable trading and supply, demonstrating the strength of our integrated power stability. Net power generation was 8.2 terawatt hours in the second quarter of 23%, up 8% year-on-year as growing electricity generation from renewables was partly offset by lower generation completable capacity in the context of lower European demand. Growth in store renewable power generation capacity is now at 19 gigawatts at the end of the second quarter, up by more than 1 gigawatt quarter-on-quarter, including 0.5 gigawatts installed in the U.S. and the connection of 0.3 gigawatts from our Signoffshore wind project in the U.K. Let’s move to Towne.

The Downstream contributed $1.5 billion of adjusted net operating income, down 23% quarter-quarter, recurating clearly lower refining margins, particularly in Europe, partially compensated by higher marketing and services results quarter-over-quarter due to the seriality on in business. The remaining margins were impacted at the start of the period by Chinese exports and the quicker-than-anticipated reorganization of resin flows following the European on value. They were also occupated at the end of the quarter by higher Genoni exports to the U.S. and lower diesel imports in Europe from China. Our refinery utilization rates on processed crude improved to 82% in the second quarter, which is a good performance compared to 78% in the first quarter.

We expect same operating performance above 80% in Q3. And since the beginning of July, the average refining margin is higher, above 17 tons. On company working capital requirements; last quarter we had a externally high bill of €4.5 billion, mainly related to higher crude and petroleum product countries on water and to the seasonality of our power and gas marketing business. I said last quarter that we are expecting $1.4 billion good reverse. And indeed, we have a $1.5 billion working capital release, mainly due to the effect of lower inventory, seasonality of payments on the gas and power marketing business. Of course, we continue to monitor closely and take actions to minimize the working capital requirements. We’re expecting in the next quarter some working cap release coming from the proration and production tax sales.

On net investment, second quarter amounted to $8.6 billion and our guidance for 23 net investments is unchanged in the range $16 billion to $18 billion. The Board operator, as mentioned by Patti Kanter for 23 a shareholder distribution of more than 40% of cash flow, supported by our Canadian divestment as expressed and petro. Gabor decided the distribution of a set interim dividend for the 25th financial year in the amount of €0.74 per share, up 7.25% year-on-year and authorized the company to buy back sales for an additional €2 billion in the third billion in the third quarter 23. And with that, let’s move to the Q&A.

Patrick Pouyanné: Thank you, Jean-Pierre.

Q&A Session

Operator: Thank you, ladies and gentlemen. We will now begin the question-and-answer session. [Operator Instructions] The first question is from Christian [ph] of JPMorgan.

Unidentified Analyst: Hi, there. As we go in the strong quarter; I wanted to ask you about the 2 pillars, which you’ve simplified very well. Maybe that framed a compelling case of wind renewables through optimizing across the value chain. What I’m trying to rationalize is how you generate a return competitive with the oil and gas pillar when you’re looking at overall terms for the portfolio. And if you’re essentially trying to maximize every dollar you pace into your fuels generation, if you will, it just doesn’t make sense to me while you don’t double down on the oil reserves, while oil is getting firmer over the next few years. So my question is basically, can we expect a high growth oil target for you over the coming years? And if so, will that take CapEx higher?

Patrick Pouyanné: Thank you, Christian. We have — and you will come back on this question, of course, is at the core of our presentation in September to all of you and to our investors. It’s true that we have quite a large portfolio of oil and gas projects, all in LNG projects, and we’ll come back on it on all now, we have Gana,Angola, we have Iraq. We should have probably show in our project coming. We are just facing the last wells. And so — but to be clear, at the end, the guidance we gave you for $16 billion, $18 billion in an environment we like today, will be maintained to be clear. And if we have more oil, we’ll have to habitat project, we have room to maneuver in our portfolio be clear. So don’t expect the CapEx increase.

But again, we’ll not arbitrate against oil and gas profitable projects. It’s a question of finance. We have 2 pillars in our strategy. One is our prepenalty ore. And if we are more or, I’m happy to deliver oil, we have gas, and we have a global adobo growth, like oil and gas growth. You can make the math. I mean some of your knowledge, will find a 2% to 3%, I think, and that’s good. We are at but we have also a company in transition or integrated forward pillar. As you said, we are probably simplify and we are looking to the various energy, new energies that we are strong and we consider our commitment to build this integrated product and the business we are delivering is the core of our transition strategy. And in mind, I would say, simplifies the rest of the molecule is, by the way, we see a demand later than 2013.

So, that might be — will be — we come back on this topic, of course, in the strategic presentation in September that you should describe total Energy as oil and gas and electricity as the core of our strategy more than the sort of met-energy supermarket — so we simplify and that deliver the value.

Operator: The next question is from Oswald Clint of Bernstein.

Oswald Clint: Just on LNG and specifically United States, you Total Energies, I think, is the largest off-taker of U.S. LNG. It’s just — you got bigger now with Rio Grande and that. But I wanted to ask about that exposure to U.S. gas feedstock. I think you touched on potentially integrating further upstream. Is there a number here, a percentage, something we should think about in terms of feedstock coverage for these terminals for these offtakes that you would think about looking forward is the first question, please. And then secondly, I noticed it looks like you may be planning to drill a well in the South African portion of the Orange Basin perhaps next year. So just curious if you’ve completed any further analysis over the last quarter around the venous discovery that gives you the confidence to really extend the exploration campaign for herself?

Patrick Pouyanné: The second one, I think we will focus on the media and priority is not media. We have drilled an upgrade of Venus, which is very positive. Of course, we still are expecting the dynamic data. The first test will start again of August. And I think one will make I’m sure, in September, we’ll have the results of the first test, which, of course, is important because productivity per were course, it’s $16,000 per day, it’s fine, it’s fine. It’s not time. I can tell you the oil colones very big. So my or focus will be on ethers. We have a lot of in place. Of course, we have some license in South Africa, and we were unsure this are working on it. But it’s — again, I feel comfortable my priority will be to give value to expanses confirmed.

And then we see what are the expansion in the Orange base on the other side. new LNG exposure, it true. We have 10 million tonnes. We’ll move to 15 million tons; it’s quite a big exposure. And again, but you have noticed that we each project, we try since I am CEO, not only to update, but to integrate the project, GarmanLNG, ECA in Mexico, Reagan. Why? Because when you contribute to the investment, you have a leverage on the pricing. And of course, yes, because I believe in intention, it’s not — we have already produced a production, a net production more or less of €500 million tester day in the U.S. on the brand share that we maintain, and we can extend and double that quarter. No. There is no specific just for me, it takes time. So we’ll have opportunities on that.

But it’s part of course, because I think considering the cost of the feedstock is a smart way in order to control the full integration value — and so it’s part of — I would say, our strategic agenda and integration in the U.S.

Operator: The next question is from Irene Himona of Société Générale.

Irene Himona: Congratulations on a very busy quarter in terms of the 4 new projects that you launched in different areas. And you referred to the competitive advantage of low cost in all of those. Can you perhaps help us with how we should think about the return on capital in these very different projects, please? And then secondly, you preannounced the third quarter buyback. Obviously, you are generating very strong cash flow. Why would you not announced the fourth quarter buyback at this point?

Patrick Pouyanné: It was a death Board both we have a disbursement meeting in September. The Board is meeting in September and decided to reduce the full distribution policy for last at the end of the year. But as I told you, we have the first quarter in over $2 billion to be very surprised. And then — and to give perspective to you in New York compartment. So we decided that it was — we maintain the $2 billion per quarter. And again, the environment is softening, so we want to keep that flexibility. But — the main commitments both have taken to oral in buses is more than 40% of distribution this year. We have 42%. So it will not be 40.1%, we’d be more than 42%. So that we can make the market, I think. But again, the Board is working.

And remember that the commitment was also linked to the growing of the Canadian sales. And so we are moving forward on these elements positively Progress PA with Connected — so — so we sent grow by end of the third quarter and the decision with center are also progressing also towards the boat complete view in order to make the right decision for our investors in terms of distribution. On the projects in south, I cannot disconfigure now about contracts, in particular, I commented to explain you, but the active projects being at we have created a new category of contracts, clearly fitting with our standard way to work on. And I commented that the reward was commensurate to the risk. So we can imagine that it’s positively it’s a good return.

But gross or onto Iraq is probably the best way to maintain our record in terms of CapEx is like $7 per barrel are gives you a good way to mince difficult rather than other areas of the world. So that first, we commented a cogent have commented Rio brand, Vibrant, again, we have a good leverage. And again, for us, I’m looking to that an integrated way because not only we invest in the project, but thanks to the investments, we negotiated. Of course, I told you a very good offtake contracts. The price is very competitive, and we make money on the — that we make more money than somebody who do not invest in the project, thanks to our banca exposure, the offtake contract. And also because it’s — in fact, we want to capture the infrastructure margin somewhere leveraging it through, of course, the state contract early.

Globally, we think the integrated IRR is more than 15% of these LNG projects; so next to zero, in fact, so just to be it. So probably, it’s a strong project focus, which other comment, I think, sorry, too, I think — in Germany, to be clear, the many projects in the period, we are perfectly in line with our double-digit objective in Germany. And even more because I’m absolutely convinced that the German electricity project price will be meeting when we will come, and we have flexibility to deliver with the vantage in project later

Operator: The next question is from Christopher Kuplent of Bank of America.

Christopher Kuplent: Just 2 quick ones, hopefully. Patrick, I wonder, as you are highlighting the more than 40% of CFFO payout ambition, whether you’ve learned anything from last year’s special dividend. Is it a fair assumption to assume that the continuation of the €2 billion buyback run rate into Q3 is by now your preferred way of redistributing these, let’s call them extra proceeds from your expected oil sands closing. So I just wanted to see whether you have a view on what the market prefers buybacks over a special dividend? And my second question is going back to the LNG portfolio, which is growing nicely. And I wonder whether if you consider all your options that are still pre-FID, and I would count Mozambique into that, too, whether you think by the end of this decade, all these options will actually be in development and will be operating or whether, to your point on CapEx, whether you’re answering, actually, it might be a good thing to have more portfolio options because then you can be tougher on the returns you can squeeze out of them from a project on project competition.

Talking about P&G, Mozambique, of course, Arctic 2 is no longer in your consolidated numbers, and you’re very busy in the U.S., too. And I’m not even mentioning some of the smaller assets. So sorry, it’s a long-winded question, but hopefully, a relatively short answer.

Patrick Pouyanné: It’s always restatement question. I’m thinking back in like you and taking the second one first. And it’s clear that today, the portfolio we have in the position to arbitrate these costs are a sentiment. To be clear, I think we’ll make an arbitration in the U.S. and because 850-feet better than the cost we are paying today for the additional train on Camel. So I mean, I have the option. And clearly, I’m very comforted and if the CapEx on Cameron will not decrease compared to the first feedback we get to contractors. It will be easy for us to postpone it, and that will complete the option not just one. We can give it in the portfolio. We are delivering PCA Phase I shortly in Mexico. We have also been possible to expand at semester of arbitration.

We like a specific position that we can arbitrate it. And so for the key for me position of the project in terms of quarter end CapEx but is very important to keep that discipline because at the end, growth term projects, that’s the key. And recent clearly, we will see what we need about at Mozal, we have a public debate with subcontractors. So we are keen to deliver them that part of the plan. But again, as you said, we have leveraged class portfolio, and we work on all of them. And at the end of the day, if the CapEx are not meeting our expectations because there is eating market we know well love. But again, it for I mentioned North American project because this is where we see many projects coming together. And so a more — I think on the international arena find a way to make this project going through.

And again, we are in a I would say, comfortable position to be — to select the ones on which we consider we have better returns. On the cash flow, we are not exactly in the same position last year. Last year, remember, the special dividend came of super revenues we generated last year, $45 billion of cash flow. This year, we are more redone €18 million for half other and €2 million, €35 million, €36 billion Again, it’s not 45. So the bot is making a difference between 45 and 46, even if we receive €4 billion for — from Canada, we make 40million not 45, 46. So we give the obvious debate there. We also know that today’s market is keen on buyback because we consider that the share of total energy undervalue compare some of our peers.

So there is a certain logic I think from the Board, who shows the trust in the share as we share with billability. So that’s the argument. But with all these elements, I think you can make the completion yourself or we let me say redrive bypath on 27th of September to [indiscernible].

Operator: The next question is from Lydia Rainforth of Barclays.

Lydia Rainforth: Two questions, if I could. On the renewables business, clearly, the capacity and development has gone up again this quarter to the 50 gigawatts. Can you talk about what you’re seeing in terms of the cost of this? And I think this was related a little bit to the German wind farm as well that actually people are worried about costs going up. And I think sometimes the idea of the grid connection costs and the integration with the rest of the business that’s missed. But just are you worried about the cost base in renewables at this point on the CapEx side? And then secondly, Patrick, probably, we’ve seen oil prices rally in recent weeks, and we’ve seen refining margins rally more. Can you just talk through what you’re seeing in the markets in terms of demand at this point?

Patrick Pouyanné: Okay. The first part, typically, it’s like exactly at the end slightly alter — we will invest in projects, and we are in the returns we get. And that’s why, by the way, the German auctions were interesting because, in fact, we have committed the bonus to get the option in our portfolio in 10%, but the global, I would say, bid, which is for me, I’m putting my option like when I’m buying an exploration license in Brazil, I could pay a bonus of €300 million. very old and this one is sugaring that the cost has to be better. You have the cost — so of course, we see that there is — and again, it’s a question of, honestly, thrown often told you, I’m not surprised at the end that all major companies are coming into that business because it’s clearly exactly the type of projects that we are able to manage project management.

We can leverage the skills of the company relation with contractors. It’s exactly what we do in any offshore oil and gas project. So for me, that there’s the right way to look at it. So I’m not worried. I just I’m not worried I don’t like CapEx increase either in LNG or in oil offshore order in offshore win, but up to us to leverage the processing power. And I think this is where we have an advantage. I think total energy in this business I think in scale under value and the purchasing power of total capacity to come efficiently. We have approved a very large solar module contract to cover part of the future leveraging or projecting power. So that’s where we need to work in order to be more efficient than ethane at the stage of the wear expected from us to be efficient.

And again, the other point for basis that we consider the European electricity plans because of all what happened in Europe, no Russian gas, more the new levels, nuclear actions more expensive PR. So price to go in the right direction. So that’s one we think fundamentally. And with the exit volatility, of course, but the price up. So we understand the content we have — it’s up to us, exactly same answer and online. We have to manage this CapEx in refining margin Okay. Well, we see the refining margin. I would say today on the first margin today, as I said, Santista, $70 per ton, which is more resting-months. They are supported as well on gasoline by the insane, which is quite — we have more consumption doing in Europe and in the U.S. on both sides.

So in the U.S., the industries are quite low. This means that today, we spotted from Europe to the U.S., which is good for my European refiner and I just would that they have a good performance availability today more than 80%. So that’s what we think on the case. So we are positive on the guideline. On the — or the demand grow it’s true because it’s more into, I would say, the global macroeconomic environment. But we can benefit also an effect in Europe when the line is lower low water, then you have some problem of supplying Germany and many create some upside in our downstream business. So it’s another part of it. So I would say — I mean, it’s one I’m trying to get a candidate, but we are more positive on the refining margin for the third quarter.

But I would be surprised to go down to $40 per tonne, which we seat average on the second quarter. I think the third quarter will be in a my view on these projects. By the way, when it’s up youth refinery refineries do not like whatever. So running the refinery is not so good in particular when the water is too low. So it’s good for margin as well.

Operator: The next question is from Alastair [ph] of Citi.

Unidentified Analyst: On Iraq, I understand it’s confidential. But are you able to say maybe what your maximum capital employed exposure will be in the country, and we all see this $27 billion headline. So I just wanted to give it some context. And then I’m just interested in fascinated in your comments about Germany having the highest power prices in the future. I mean that’s quite a statement about one of the industrial powerhouses in Europe. How do you think about the issue of industrial competitiveness and affordability for consumers.

Patrick Pouyanné: 3 million maximum capital and $3 million. We have 45% of CapEx, which are around €1 billion, €1 billion, but we are also production coming onstream immediately. And the duty of the contract is that the rate is producing will stabilize very quickly the production to 50 60 60,000 by very quickly. Artistree we work that on the year-end. Then we have a phase of IT the improvement of the oil production up to $90, $120 per barrel per day and then going to 12%. So we have some cash coming in. So it’s a way to generate a lower exposure as part of the scheme we have in Iraq. So keep that in mind. And $3 billion for me is very acceptable with the terms we have. So that’s the clear answer to you. Germany industrial competitiveness, okay?

I mean, it’s a more global question. The question will be more for the space, which is how do we will be again. And we see that what will be the support of states to energy-intensive industries in fact, the question. But I think in Europe, thinking that the price of electricity might be around €70, €70, €80 or megawatt, it’s not a bad bet in fact. So that more it’s a matter of course, I will tell you of — we’ll go to some industries. It’s long-term commitment. The answering to the government to — my math customers. If you already take some long-term commitments — we had the price at just a question of if you want to say for the complex business, we began a I don’t recommend to anybody to invest in Europe based on spot prices because then you could be in travel.

So we see what we disclosed last year, I would say. So I think the question for me is, yes, there is home for industrial government business in Europe and Germany, if we are able to put together some long-term contracts. And I think this is part of our intent with the offshore wind development will be to commit some of the capacities to this type of long-term contracts and you depart of it as much. So we have been famous. But we have — we know that this is the type of price we kind of pay today in Europe and Central Europe and people are ready to commit on this level of parsing.

Unidentified Analyst: Patrick, can I ask when you speak to politicians — are they surprised about €70, €80 megawatt hour sort of number mementos twice what it used to be, right?

Patrick Pouyanné: Yes, keep an overlap change as well a chance. But I mean we have to be clear for the in transition as a new fact on the energy prices, and there is no way to make a transition in Europe without a higher price. But — and I think I understand the new nuclear is not under the price that just at the can tell you. And so we can have to the U.K. investors or to the French government to know I will tell you. So I think it’s part of the transition. And again, if you have to add up towards this closing at the end the customer, we have to accept to pay somewhere. The cost of this energy, the cost of the transition. But now I observe as well in the U.S. the contracts, given the solar contracts in Texas began to increase on the tort recover.

So it’s part of the — we have to keep track in mind. The energy transition will happen if we are to access some cost increase. And we have a super-efficient system, we ship the poling gas system, and we want to move to a system which is not an efficient in terms of energy efficiency, but the cost that has a price. And it’s a real question for all of us is at which pace will make that transition in order the customers to accept it. It’s what we call the just man. We have to manage the transition between just Jangle will be rejected. So that’s — so I’m not sure they are so afraid. They are just a matter of accepting tonality and we have to be consistent. Then it’s a question for industrial competitive open manufacturers to be competitive and probably to have like the U.S., by the way, to take actions in — as we are accessing this price to somewhere, we have to protect this company industry.

So otherwise, in policy Europe is integrating price of CO2 in products and not the other countries will have an issue for sure.

Operator: The next question is from Biraj Borkhataria of RBC.

Biraj Borkhataria: First one on your LNG business again. In the past, I think you used project financing that deliver some projects. But obviously, your balance sheet is extremely healthy at this point, and you probably have some capacity to take on some more CapEx. Could you just talk about your plans and whether it’s Rio Grande, Mozambique or otherwise and your intentions on financing and how you’re thinking about that split between balance sheet and our balance sheet. And then second question is just following up on Al’s point on competitiveness. Obviously, you have a refinery in Germany and chemicals operations. With your view on higher power prices, obviously, that will feed into gas prices? And then you said you won’t take Russian crude. How do you think about what more you can do in your operations to remain competitive in a global context?

Patrick Pouyanné: Okay. Project financing in energy is part — by the way, and has been announced with the project financing. I think it’s globally speaking, it’s a $15 billion CapEx with — and I think it has been a one 70%, 30% project with a package of low or blending project Garanti has been announced as well. And a way we help them. We contributed to that. GIP has strongly contributed to that as becoming a shareholder. So I think it’s easy to finance. We still — it’s competitive in terms of interest rate. So because it’s — we are working hard on it and we butanes in order to get good commercial terms, and this is the case. And Mosinee, the package was already there and have been preserved, I would say, because you remember, when we start the project, we stopped — we maintained all the project financing.

Jean-Pierre Sbraire: Banking, but it will — casing with the number. Of course, with the startup of when the nondirect will start, of course, to entry the product in…

Patrick Pouyanné: So the conditions are good. So as gas conditions for project financing are okay and don’t be it to our equity, I would say. I think we’ve maintained that stance. I don’t know have yet there, I think, today on these projects, but we are working — Japanese banks are very adorn to finance P&G, and you could have good conditions with Japanese banks in that part of the world. So from us, it’s — I think we are fine with that, and it’s part of the way to globally have the returns I mentioned to you on Ria-branded won 15% to 20% are taking that into account. On the view on its strong that’s what you said, 32. Yes, I can tell you, when we look to our refining the breakeven in Europe today, 23 compared to ’21, no more Russian gas, no more plus CO2 pricing last quarter, at the end, there is an impact and think the breakeven went probably up around $25 per ton to $30, $35 per ton.

So at the end, the question is we have to work in order to find the efficiency way to compensate it. And this is why, by the way, my position on refining in Europe is a good way to transform the biorefineries. And so here’s a question is the pace of it. So I mean — so we are managing that for already we have transformed 2 refineries next one will come. As I told you before, because we understand that the question of competitiveness and we take into account in our industrial decisions. That’s obvious, so I cannot highlight — and I think — but again, the question will be there on this type of probably more complete for clamor refineries in Europe because they are 4 sig. We don’t like that too much. But at the end, it’s a question of security of supply for the government.

And this is the best regard to that if we want to maintain this activity in Europe because you still need a gasoline and led, and you don’t give us conditions in order to have an attractive, I would say returns. We might take decisions, which might be the segmental. But again, there are also positive ways to look at it. We are working today to see how we can leverage all directly in order to get the green hydrogen and could create additional revenues. In fact, when you look carefully to the new scheme, which has been published by Europe. So you can see it’s a cost CO2 as a cost, but CO2 might be a source of reverse as well when you combine green hydro fuel products. And we are working on 2 projects, one in France, one in Germany, which will bring additional revenues, which might compensate part the lack of competitive that I think it’s 2 ways to look to the energy transition.

I got to look at a cost of an opportunity. It’s a price framework I put in place. It seems to be the key for hydrogen with a dose by a strong push, then that might become a new source of competitiveness for refineries in Europe. And we are working on it. And I think in September, we’ll be able to come back to you and to give you 2 good examples where we created value from, I would say, the energy transition framework. And so that’s also, I would say, a case of a negative or a positive way to think to that. By the way, I’m convinced that the transition we work only if we create opportunities and not just imposing cost and prices.

Operator: The next question is from Kim Fustier of HSBC.

Kim Fustier: Firstly, just on your existing targets on renewable capacity. I was just wondering what is the acquisition of the 71% stake in Total Erin and then other deals as well that you’ve announced. So what do those do to your targets, particularly the 2025 target of 35 gigawatts. If I recall, we’d already reached a pipeline of over 35 gigawatts more than a year ago. So I mean there’s upside to that 35 gigawatt target? Or do you have the opportunity now to second to the best projects as you’d like to talk about with respect to LNG and high-grade your project portfolio. My second question is around reports a few months ago that Total was looking at a major gas development in Saudi Arabia, together with Saudi Aramco. I just wondered what the angle is here. Is this about the domestic market and more about exports in the form of either LNG or blue hydrogen or ammonia?

Patrick Pouyanné: We don’t have a good information on the second Alonso should believe all wear agencies are pricing in the paper — second one because as long as I know, Arabia has a monopoly alert gas. So second one — first one, to be clear. It was basin our mind, but the acquisition of Tantan will be part of our road map. So when we said the 35 terawatt, the acquisition of Total was probable there doesn’t deal all elements. We knew that trend was working, where we renew what were our conditions to leverage our option. And with the figure I gave you, €400 million is the — you can understand that we can it’s an attractive bagel use that. So for me, there is nothing additional. By the way, we are also working more on value and volumes that are all the ones for me.

Of course, there are some stable 35 gigawatts, and we are working there are optionalities and evaluate offshore in Germany is not there, it will be in 2020 or 2025, I say no way to be bios in 3 years. So more I’m thinking to that again, if we have more opportunity, we can arbitrate different projects, right? Because we have in my portfolio, more opportunities to reach a target. But when we’re moving the target up and devoting all the volumes, not volume over value. We know that we are in when you do asset value — so I’m able to generate opportunity and then we might recollect the ones which are the best for us and more importantly than the bigger one, by the way, at the end, for me, what is important is because it’s clear we focus on it is how much terabits like for oil gas and oil and gas, you go by 2.5 million barrel of oil per day.

You will have to learn that we will speak more in [indiscernible] year rather than in legal. The year that’s what creates the revenues, the reserve and the profits and the cash flow. So, I think we should move in that filled as well because for me, it’s improving. We are quite iterates terawatt are looking the 5 largest utility. So it’s not small. So let’s take in terawatt years in capacity. At the end, what is important is delivering revenues, cash and reserves.

Operator: The next question is from Lucas Herrmann of Exane.

Lucas Herrmann: And that’s been answered for a couple, if I might. The first, Patrick asked it too. Do you have any interest remaining in that project? I’m just conscious of Novatek comments around timing start-ups, so on and so forth and the original position, even though you obviously have not been funding anything. And the second question was just around going back to balance sheet and how you think about gearing debt levels, absolute at this time? Is the range still 10% to 20%, something you’re comfortable with just a reiteration

Patrick Pouyanné: It’s not iteration. We told you before that it was less than 5. We are given, and I told you already when we have a positive treasury. I’m I think the best way to protect an oil and gas company is to have the strongest possible balance sheet. There is a question of arbitration and the remainder of the scheme we gave you is very clear, dividends, CapEx and then strong balance sheet and invest targeting potentially evaluating if we can. So I’m still very subquestion of when we have a buyback. So we are the Board is looking to all of that. Recently, by the way, Jean-Pierre has bought back €1 billion of Irdeto. We have decided to lower it debt because we thought it was a good way to maneuver. So our balance sheet is improving. So on 20 is less than 15% and lower as low as possible. That’s my thinking on the [indiscernible].

Jean-Pierre Sbraire: I agree.

Patrick Pouyanné: Clear with you, as we have said in May in March 22, we don’t bring any capital from Total Energy to these projects. You know the project when we let was, in fact, the equity was already injected and it was more project financing, in fact. So the project is moving on. We didn’t put a single more equity from Total Energy SC from parent. And then — so today, yes, we still are around the information because, as you know, our governance, we decided to leave all the assets. So I cannot tell you what is really happening — newspaper in you. There was lower preventative total synergies of this last lemon.

Lucas Herrmann: And did you remind me, did you have any legal liability to offtake volume to meet you here 2 million tons of what of agreement?

Patrick Pouyanné: If the plan is produced, we have some of the per I don’t remember exactly specific, but the contract is not a no. We have a long-term contract, 25 years. It’s a take-or-pay contract, and we have one on Aman [ph]. Today, we only offtake the long-term contract on Janae [ph]. Absolutely nothing else than the long-term contracts, so no additional volume. We have reduced our Russian activity to the only long-term contracts — and that’s the reality of what we do. And if our big 2 came on 3, we have a commitment, so I don’t remember exactly, I should read that, to be honest, I didn’t spend much time on open for the last year. But I will we’ll be able to tell you exactly what is the volume. We had a lower share in not 10% and not 20% of the man.

So I think it’s worth a very proportionate. And by the way, so we see that we can come back to you. But again, the same policy with a client, we have a contract. We have a conduct. We have to execute and to the contract as long consumptions do not prevent to do it, but we did the same policy. But we can come back to you on exactly where we see the this. So independently of our shareholding, what happens to our equity, the contact of take contract is there.

Lucas Herrmann: Okay, thanks.

Operator: The next question is from Jason Gabelman of TD Cowen.

Jason Gabelman: First, just on the NOVATEK dividend. I believe historically, you guys got it in 2Q and 4Q. So wondering if you received the NOVATEK dividend this quarter? And if not, what the certainty is you will see them moving forward? And my second question is on global gas. There’s a lot of concerns around European gas storage actually filling over the coming months out of winter draw season. And given your unique position in operating European gas assets, just wondering what your outlook is for the European gas market in the fall and kind of an extension of that, how these tighter gas oil spreads have impacted your outlook for trading given last year, integrated LNG trading was particularly strong in part because of the wide cash or spreads?

Patrick Pouyanné: No, we did not save any dividend this quarter; that’s the first answer. Second one, in new gas storage, it’s clear that the story could be full by October. So today, it’s one, we have a soft gas price, $10 per million BTU. We don’t anticipate difficulties because we exited the winter with high inventory, so it’s easy to reinitiate and so it will be done. So that’s why today. But then, as I have always explained, is the interest core if the Ukranian pipeline, the gas commercial going through Ukraine, it starts, the situation will be intention. And also called weather, if on the top of it, China is recovering the activity and is buying more LNG, which seems to be the case today. We have another additional factor of at the situation in Europe will be positive.

We are relying on the — from the methogapical conditions plus external elements, including the ones I mentioned about the transit for Ukraine. So that’s. So that’s why, by the way, the full price of European gas is — so the pricing is in next week, next January, next first quarter, the first half ’23, the higher cost market. You see more snore, would say, very bull factor than the age, think that’s the deal.

Jason Gabelman: So what happens?

Patrick Pouyanné: What will happen, and we’ll see what will happen as for relevant of tension. And by the way, it’s also to be — you don’t see manufacturing industries in Europe shifting from fuel to gas as last year, we see because the price was very high in ’22, the manufacturing industries shifted from gas to fuel, we could have expected that 10 million to face lower than pure patty in Europe, but they stay best concur because they’re afraid what could happen next week. So it is interesting being that’s why people say the demand as in Europe is lower and stay low because in fact, we should make that ship on the short-term front. They don’t do it because they are credit there is no stability, I would say, in the gas part in Europe to go.

And that’s why, by the way, our trades illustrated in the tier low volatility, they make more money. But this quarter was lower volatile, so lower results that we could expect winter tire generally. So what is high on — that’s what I can tell you.

Jason Gabelman: Sorry, just to clarify on the first point on the NOVATEK dividend; should we assume that you stop receiving it moving forward?

Patrick Pouyanné: I don’t — I don’t know. We — that depends on the other — it depends on this. So I think I just answered you — what is the contracted the Board and the CEO of total channel has decided that Russia did not — no more in my account, it’s not. We do not have any distribution or a shareholder ret linked to any cash flow coming from Russia to be honest. So we neither gold and the figures, I’m turned are reaction. That’s all because anything could happen. I prefer to show the case if something is coming stunning, but we are not chasing it. It’s more by the way we think it pales deconsolidation was a very clear decision by the board in December ’22, and this is the way the managed company.

Operator: Next question is from Henri Car [ph] of Berenberg.

Unidentified Analyst: I had two. One, just coming back on the hybrid debt. Why did you choose to buy back some of the debt? And would you think about buying back more in the future? And then kind of what do you have to pay for it? And then the second question is on the downstream. You’re talking about changing refineries into biofuels and biofuels platforms. How do you see profitability for the biofuels platforms in Europe how are you getting on sort of securing feedstock for those platforms? And are you seeing increasing government support for sustainable aviation fuel and renewable diesel and other biofuels within Europe at the moment?

Jean-Pierre Sbraire: Yes. First question regarding a grade. So at cement, our IB portfolio has a very low cost, below 3%, it’s 2.4%, if I remember well. So we have the flexibility offered by S&P to diminish the global level of hybrid, minus 10% on a yearly basis. In May, we have a tranche mature, and so we decided to use the flexibility, otherwise, in a market at present time, variability costs increased compared to the 2.4% I mentioned to you, it’s around 5%. So given the cash able to gelatin — so we pass to the board, we think we do not need to renew this hybrid tranche, and that’s the main driver behind the decision not to renew this tranche. And so we decided to get rid of this €1 billion Yes. Yes. Is the target was the cost of the hybrid; it’s more than 5% — so make no sense to work.

Patrick Pouyanné: So that means that the division this year could be renewed the next year. just because we don’t want to repurchase rig’s just the management of the cash and the balance sheet of the company. So I think it’s an obvious decision to make sense — on the downstream. I know we have changed so we finally into biofuels with Calama, which are changing monthly. I told you that will be others. In fact, there is a clear framework in Europe, why I’m comfortable in Europe because you have some mandates in Europe, in particular, the sustainable addition fuel in Europe is a mandate. It’s not just a target, it’s a mandate. When you have the immediately, you create a market and the pricing, which will integrate the CO2 cost.

So I’m comfortable to invest because I think they really — Europe is very serious, but we have a 6% mandate by — which is increased to 15% minus in 2045. So it’s great market, positive market. Then the big question is on how to produce it? So you have — so we like all refineries because we have a CapEx form, which is lower than the makeable. So you will not see total energies investing in it refineries to make start to be clear. I prefer to convert the whole refinery. By the way, it’s part of the transition. We have really let the demand for gasoline and gasoil diminish in Europe. We have more EVs in 2025. So you need to prepare the transition and transforming, we can reuse some units to make a biorefinery. So — and the CapEx per ton is around $500, $600 per ton, it in 1 is around 1,000 per let’s convert rather than creating new if refinery that fundamentally your view.

But we need to find the feedstock yes, you’re right. And the fit in Europe is an issue because they want — they don’t want 1, the new 1G vegetable or in a so we need to secure it. We don’t want to import use cooker from far away and being trapped into, I don’t know which story about waste imports — is not good approach. But there are ways we have secured stock on Grand by JV with a German company. We produce anymore fast. So we are looking to that segment. And we are also beginning to look to another technology, which is Icolo, which might be the next one because when you look to, in fact, the balance of the European markets were 35 to reach a 15% manday — it will be difficult to be only with lipid feat. I mean we’ve used cooler animal fats.

We could have to be overlie — so it opens the room to additional next technology. So we try to select the ones which don’t be the most expensive. We don’t need issues, but you might have technology in between providing the SaaS, I would say, a little more expensive, but not the most expensive one. So this is the way we approach the project issue. But again, for me, it’s — for us, the focus will be in Europe again because we have the assets. We know we have to make the transition. It’s an opportunity, which is in fact given to us by this transition, all these famous European indeed framework. So let’s see the opportunity is like I say, green hydrogen, the other way to compensate service cost of CO2 and the cost of energy in a positive way to create new markets.

and to decarbonize the in the airline. So that’s the way we look at it. So we work and we have always 2 projects. We are working on the third one.

Operator: The next question is from Henri Patricot of UBS.

Henri Patricot: Yes, thank you. Two questions, please. The first one, I wanted to come back to your integrated strong performance in the second quarter with the earnings secretary. As I think can you give us some details on the driver of the secondary improvement because one net for production ton quarter-on-quarter — interest to hear what was driving the improvement here sequentially? And then secondly, most once, if you have an update to provide on the timeline next milestone to for the project before we can start.

Patrick Pouyanné: Mozambique LNG, we are working on both parts. One is with the contractors, and I expect that to be done in the second half of this year. So we’ll have the answer and could be positive for them. And then we are working also like I told you on the relaunching, decreasing the financing. So I think my objective — or objective for us is to come to you and to have before year end, and we say we should have clarity on the way forward. But again, we need to not all cost before and making deported by step properly, but batwould say, the objective we have. But if we need to wait a little more way. iPIthink Jane gave you some indications. It’s all you, it’s coming from a I can give you but you know why. In market for even supply business, the winter is always more tough in terms of business because we have an average cost of supply, more demand.

So you have a sort of seasonal effect. I think when you look — you are covering following some utilities, you can see the seasonal effect. So it is more positive in the sedan in first quarter. The second and third quarter are more paid, but we have also good performance coming from our flexible generation capacities because of the I would say, the gas to the spread between gas and electricity. We have some good results from trading as well, and we have positive results from renewables. So opening is increasing, I would say. So the that one, it’s everybody contributed. And by the way, it’s why the more we look at it, the more we did our approach of integrated power, and this is why we pose to you these results in this way, then like we report the results of refining and Chemical [indiscernible].

And so I think — but nothing special. Everything was positive which is a good source of — I would say, confident for the future on this one.

Operator: The next question is from Paul Cheng of Scotiabank.

Paul Cheng: Two questions, please. Patrick, any update you can provide on and that I know that you guys will not be ready yet, but any time of tree capacity for the first to assume that that’s going to go forward and also the time line that you would expect for the first order? Second is that, just want to see if you can share over the last several months. What’s your investors given the changing market conditions about you pan investment in the low carbon excess from the wind solar power buses the method thinks that the pace is right or that do they think that the pay [ph].

Patrick Pouyanné: I captured the first question. The line is the — sorry, in is not very good at Paris on this one. I can to the first question I think is about Serena, I’m sure. And the second about investor feedback or integrated on our renewable direct port business, if I understood carefully. Did I catch up 2 questions?

Paul Cheng: Yes.

Patrick Pouyanné: Okay, good. So Sinaga [ph], I told you that we are just finalizing the test of the last appraisal well. So I will give you a meeting point in September because my teams are in and gave you a positive indication that seems that we are moving forward with development, but I want the teams working in the — to take ore reserves together, to put back together to have a case I think we’ll have a data development for sure exactly what we just signed the mess in terms of my late and then you come back to me end of August, September. So we answer you with a clear I think we have a clear ID by versus 7%. So got to New York, and will have the answer to your question, if not before. But obviously, we work on it. I can tell you, we have an integrated group of development.

So we in positive sanctions might be diluted by end of ’24, but I would say, and there is a question of execution. But more what I have in mind. But again, I want to — there are still some debate about what would be decided exactly but the new areas, but the test seems to be quite good. So one. So just in patients, it will come. On — I mean our investors are they are just investors, you know they want to have the cash to have dividends and cash flow. So if we demonstrate that this business is contributed — and so that’s the question mark for us. And I think before we decided to publish this result the output is profitable, but we can generate cash flow. And the question post will be rented to become net cash flow positive. So — and again, we are working part of that because our objective that this should be a cash positive generator.

So we invest more or less in the €4 million per year. So when do we have the threshold for €4 billion. But again, we’ll come back to you in December on that because it’s also part of the question. So this question probably from investors, we understand you are in transition. I think the message is, okay, if you focus on one link, let’s focus on it. So that’s my message at simplify. And again, I think it’s better for us to — but I guess, in the last — what we clarified in the last year, which is, in fact, we want from the to apply. So we integrated our business the same way we think in Orinda, the volatility capturing integration, I think it’s a right answer to business. And so that’s where we are to this. So we think on our strategy to be clear.

We might simplify from some molecule part, but we are here on this bond.

Operator: The last question is from Jack [ph] of Jefferies.

Unidentified Analyst: Yes. I have one last, just there is some cash flow this quarter and obviously showing the impact of your hedging position integrated LNG. Just wanted to check if you can remind us sort of what sort of the hedging level for the remaining quarters of the year and whether you are still continuing into your rolling hedging program and given where current gas prices are looking for next year?

Patrick Pouyanné: No, no, it’s strong, it’s a clear policy. We are hedging more as 80% of the portfolio — so what has been done in ’22 or ’23 is done, and we do sale for 23 or 24 or 25. And that’s it. We have a merchant exposure on our balance sheet in LNG, and we assume it that we try to, I would say, to cover a part of it and to keep some of this margin by the way. You know that we have decided that all the Russian should not be because I’m not sure that that will continue. So I mean — so it’s part of the answer. So it’s continuing. And so that’s why so you should expect the next quarter in terms of cash would be to remain more or less positive because if I remember well, the for Q3 and Q4 ’23 were higher than the one for Q2, or begins in March.

And you remember, the peak of the prices were in Q3, Q4, not in Q2. So we should have good cash flows migrate something I did not understand my business, but I think we understand I’m clear. So I’m very clear — you’re not joking yes. So the core of the ages will come on the second half of ’23, more than the first half. Okay. Co. So thank you to all of you for your answers and all your participation. I know that you are busy there because we are 3 company open companies are delivered on the same day. I will not be longer just again, the key, I think, on the results of the first — second quarter, we demonstrated that we are profitable, 22% for use. But we have a strong cash flow, including from LNG, $8.5 billion much stronger than, I would say, the decrease of the environment.

And further, of course, we are committed to the distribution to shareholders by maintaining the buyback, €2 billion for fifth quarter in a row despite the softening development. So with this message has a good vacation, have a good summer, and I hope we’ll meet all of you on September 27 in New York for our update on strategy. I will — just to remind you, we took our lessons that you don’t want to listen too much to us. So it will be only one this morning, and then we’ll have a less review and answering questions. Thank you for your attention and have again good rest on time [ph].

Operator: And gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect. Thank you.