TotalEnergies SE (NYSE:TTE) Q4 2023 Earnings Call Transcript

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So the new criteria is less than 18 kilograms per barrel of CO2. And so we progress. It’s a virtuous criteria and this will be the case of the 4 projects, which are just mentioned. An innovation that we announced yesterday or today, I don’t know, but we need to continue to work on the CapEx costs. Of course, we face an environment which have more inflation. In particular, in the drilling rigs for deepwater, we’ve seen the market moving from $200,000 per day to more than $400,000 barrel per day. So we decided to take an innovative action, which is to acquire part of a rig because to control the cost, in fact, for us, with Vantage, 75%. It’s a way to hedge in fact, our costs on drilling the company will benefit from, but I can tell you the costs are not $400,000 barrel per day.

They are much lower than that. I know it’s some people – but we know we are using a fleet of 8 to 10 deepwater rigs per year. So to try to manage one. Maybe it’s only the first one of the fleet, but it’s a way to hedge the costs because we cannot just accept that because of less competition. The costs are increasing because the market is not really there. It’s more less competition. So we have decided to move. It was frustrating during 15 years. I have realized one of my personal objectives not to let these guys taking plenty of one of us without participating on getting it. So, yes, it’s a way to control the cost. In ‘24, another comment I want to make – these are the new productions coming on stream, Mero 2, Tyra in Denmark, the redevelopment in Tyra that we generated for Maersk.

It’s planned for end of March, beginning of April. Anchor in the U.S. with Chevron. It’s important comment, and we just announced a new production coming in the portfolio. Of case, we need to close it by end of the first half, probably, gas in Malaysia. We are acquiring this year on this field with quite a good potential to deploy beyond the asset. There are a lot of other opportunities in Malaysia. It’s also a way for us to consolidate our partnership with Petrobras working there. All these additions including the ones which have been put into production in ‘23. When you look at them, which is Absheron, which is SARB and Umm Lulu, Iraq as well. When you look to the cash flow per barrel, they are all accretive compared to our portfolio.

And so – and it’s important. They have an average, I would say, of cash flow per barrel around $30 per barrel compared to our portfolio, which is around $22. So it’s again back to my comment, but we continue to high-grade the portfolio, and that’s very pragmatic. It’s true for acquisition and divestment, what we acquired in SARB Umm Lulu and Sapura, but compared to what we diverse, by the way, in Canada. Make accretive part of the barrels that we produce. It’s as well for the organic part of the portfolio. So that’s an important message. In particular, at a time where, in fact, the declining part of our portfolio, for example, in the Northern U.K. have a little much lower CFFO per barrel because of the taxation. So we continue to high-grade the portfolio for this new project.

Exploration. It has been for TotalEnergies a successful story for the last year. We did not mention there Nigeria and [indiscernible] or Cyprus, by the way, where we are confirming with Eni. We have 50% of these discoveries with Eni in Cyprus. We have the gas in Cyprus for sure. So we will find a way to have an efficient development process. And I think being partnered with Eni will obviously have some capacities neighboring country is a nice way too. And I love the fact that Eni is keen to go to shorten the time to market. We are fully supportive on that, in particular, and this part of the military NMC. Here, I interested, I just mentioned Sapakara South and Krabdagu. So I will not come back on [indiscernible]. On Namibia, we continue to drill.

So Mangetti, I can tell you is we find again some hydrocarbons in Mangetti. We find against the hydrocarbon level of Venus or the extension to the north. As it was commented on what the mind of my peers and we share the data with our neighboring peer, we – in the different appraisal wells and the test, there is clearly not an heterogeneous. It’s not homogeneous field. There are a lot of hydrocarbons, but we need to – there are some sweet spots in terms of productivity, permeability. There are some areas which have less good characteristics. I repeat that on our side, we see a first development clearly, in our hand, if no question of optimizing, we will continue to dwell for how many debates in the company because everybody is excited.

We have another exploration potential well on the south of Venus, called [indiscernible], and we can also continue to appraise what has been discovered. So clearly, in Namibia is on the top of our spending in exploration and appraisal we will spend around 30% of our budget exploration upgrades in Namibia again in ‘24 because we have the continue to see what is the best way to develop that. LNG, the other part, so several message on the Slide 4 ‘24. First, the projects we have quite a big portfolio of four projects fundamentally in the U.S. in Qatar. In the U.S., in fact, Energia Costa Azul is not in the U.S. and Mexico, but it’s a gas coming from the U.S. that we valorize. This project is progressing well. We should be able to produce by mid ‘25, I think that’s more or less a target we have with Sempra.

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