TotalEnergies SE (TTE) 2005 Q3 法說會逐字稿

Good afternoon, ladies and gentlemen and welcome to the Total third-quarter 2005 results conference call.

At this time, all participants are in listen-only mode.

Later, we'll conduct a question-and-answer session and instructions will be given at that time. (OPERATOR INSTRUCTIONS) Just to remind you, this conference is being recorded.

I would now like to hand the conference over to the Chairperson for today, Mr. Robert Castaigne.

Please go ahead, sir and I will be standing by.

Thank you.

Hello and thank you for joining us today.

Once again, we have reported very good results for the quarter.

Our adjusted net income was $3.8 billion, a 32% increase over last year.

Our adjusted earnings per share was $6.5, a 36% increase compared to the third quarter 2004.

Looking at the first nine months of the year, the increase is 46% over last year, which is the best performance among the majors.

Awardship (ph) over the past 12 months reached a new record of 28%, which is at the level of the best in the industry.

Awardship by segment was 37% for Upstream and 32% for Downstream.

Both of these are very strong and 12% for Chemicals.

It is clear that we are benefiting from a very strong oil market environment.

Also will say that conditions were not so good for base chemicals in the third quarter.

Overall, we're very pleased with the progress we're making in terms of growing the Company.

Now I will briefly review each of the segments and then we can get to your questions.

First on the Upstream, operating income expressed in dollars increased by 31% in the quarter and 47% year-to-date.

This reflect the increase in our oil and gas price realizations, which on average were up by 44% for the quarter and 39% year-to-date.

Production volumes declined by about 2% compared to the third quarter 2004 essentially as a result of the price effect.

Excluding the price effect and the hurricane effects, production volumes would have increased by about 2%.

Production growth in Trinidad, Congo, Indonesia and Venezuela combined with lower loss in maintenance compared to last year more than offset the negative impacts of disruptions in Nigeria, the decommissioning of rig and the natural decline of major fields.

Most of the news for the quarter, which included several exploration successes, particularly in Africa, the launching of Yemen LNG and Moho-Bilondo as well as of course the Deer Creek acquisition, were covered in our September presentation.

So just to remind you, we have more than ten new fields that are starting up in 2005 and 2006.

They will add more than 300,000 barrels of oil equivalent per day at plateau net to Total and this will represent a strong increase of oil production.

Also in September presentation, you can see that we have excellent visibility on our medium and long-term production growth profile.

So the message is clear.

We are very confident and I would even say very pleased, if I may say so, with the progress we are making in the Upstream.

Then for the Downstream, the TRCV indicator for European oil refining margins increased by 35% for the quarter.

This very strong increase was due mainly to the disruptions caused by the hurricanes in the Gulf of Mexico, which made the already tight supply demand situation for refined products even worse.

Now just something to keep in mind about our TRCV indicator.

It is a full refinery market indicator, not only a cracking margin and does not necessarily reflect our realized margins.

Cracking margins were strong in the third quarter.

Toopig (ph) margins were lower in July and August due to seasonal weakness.

This is essentially why the TRCV was more or less flat in the third quarter compared to the second quarter of 2005.

But anyway, our performance relative to our piece in the Downstream in the third quarter has been very competitive, which is of use when you see that our Downstream net operating income expressed in dollars increased by 35% in the quarter and 46% year-to-date.

The third-quarter refining throughput was down by 5% due mainly to longer than anticipated turnarounds at our Onvert (ph) refinery.

Also at the end of the quarter, there was the strike at the Normandy refinery and the hurricane at the Port Arthur refinery.

Both of these refineries are back now onstream and our current estimate of the impact of these two shutdowns, Port Arthur and Normandy, is about EUR200 million on the Downstream operating income, of which one half should be attributed to the fourth quarter.

On the marketing side, we suffered from the very rapid increase of product prices, especially in the U.K.

The specialty business also suffered as a result of the rapid increase in the raw material costs.

So to conclude on the Downstream, since we met with most of you recently, let me just say that we are proceeding well with our program to increase conversion in decentralization capacity and to improve energy efficiency at the refineries.

So Downstream segment is performing very well and we are pursuing selected growth opportunities for marketing, in particular in Africa and Asia.

I come now to the Chemicals.

The story is a bit different because of significant weakness in the third quarter for base chemicals.

Net operating income expressed in dollars decreased by 37% for the third quarter of 2005 compared to the same quarter last year.

Thanks to the strong results in the first half of the year, the year-to-date comparison shows an increase of 75%.

Base chemical results were negative in the third quarter primarily because steam cracking margins were below breakeven due to the rapid increase in raw material costs.

In addition, near the end of the quarter, the Port Arthur steamcracker was shut down by the hurricane and the Normandy steamcracker was down due to scheduled maintenance.

So of course this led to lower utilization rates for the crackers.

The good news is that polymer demand was not an issue and these activities were profitable during the quarter.

Arkema is on track to become an independent company in the first half of next year and their results by the way showed strong improvement for both the quarter and year-to-date.

Specialty Chemicals, as usual, continued to perform well.

One of our best operations in the Chemical segment is a plant that we operate with Samsung in Korea.

We were able to connect the aromatics unit earlier this year increasing its capacity by 25%.

And now we have launched a program to further expand this site to increase the capacity of the cracker by 30% to 850,000 tons per year.

When this expansion is completed in 2007, it will be one of the largest crackers in the world.

This is consistent with our strategy to grow the Chemicals segment mainly in Asia and in the Middle East.

Looking now at the corporate side.

The balance sheet is very strong with a net debt to equity ratio at the end of the quarter, which is at the low end of our 25 to 50% target range.

Over the first nine months, we generated cash flow from operations of $14.5 billion.

Over the same period, CapEx, including $1.1 billion for Deer Creek, was $9.3 billion, a 37% increase compared to last year.

This year, through October, we pulled back more than 70 million shares or 2.7% of our capital for about $4 billion.

In addition, we announced that the interim dividend payable on the 24th of November will be EUR3 per share, which represents a payout of about $2 billion.

As you know, when we began paying the dividend, the interim dividend, we proposed that it would be equal to one-half of the previous year's dividend, which would have meant EUR2.7 in this case.

However, due to the strength of our earnings and our confidence in the strategy to grow the Company, we felt that it was more than appropriate to increase the dividend, the interim dividend, to EUR#.

Taking into account the $4 billion of share buybacks through October, plus the dividend paid in May and November of $2 billion each, we have returned $8 billion to our shareholders so far this year.

The oil market environment is very strong and very little reason to believe that for the medium-term this should change dramatically.

I'm sure I will get this question so let me just say that one subject of worldwide demand, destruction.

We have not seen anything up to now that supports the view of demand destruction at least up to now in 2005 despite the fact that the rate of growth of the demand should be significantly lower than it was last year.

In terms of our strategy, our priority is to grow by adding high-quality assets and projects to an already strong and very profitable portfolio.

And in this environment, we are able to do this and also to return a good deal of value to our shareholders through a combination of dividends and share buybacks.

In this respect, I think that our results speak for themselves.

So this concludes my comments and I am now ready to take your questions.

(OPERATOR INSTRUCTIONS).

Jonathan Wright (ph), Citigroup London.

Good afternoon, Robert.

I just had two questions please.

The first about Deer Creek.

At the end of the offer period you had acquired 82.4% of the company.

I wondered if you could let us know what the processes is for acquiring the remaining outstanding shares.

The second question was to do with your product sales.

I noticed in rest of the world your product sales fell very heavily by over 50%.

I wondered if there was anything in particular you'd highlight that caused that.

Okay.

Concerning Deer Creek first.

It is clear that we intend to acquire the remaining shares through a subsequent acquisition transaction at the same price of the offer price.

And based on the possibilities that are provided by Canadian laws to the owner of more than two-thirds of the shares after a public offer to acquire the remaining shares.

Having said that, we will give in due time the details of the proposed form of the acquisition.

But it will not be a public offer and I also would like to remind you that our offer price was with a 72% premium over the last quotation of the Deer Creek prior Total offer.

Concerning the second question, that was referring to the refined product sales by region for the rest of the world for 7 minus 58%, if I am correct.

Yes, you mentioned 50%.

I think this is essentially due to the trading activity if I remember correctly.

So I think we shouldn't draw any conclusion out of this figure because trading activity could increase or decrease depending upon the volatility of the market.

Tim Whittaker, Lehman Brothers London.

Firstly, could you explain the increase in Latin American gas volumes?

I'm assuming it might be Argentina and Bolivia, also the fall in African oil production.

Could you update us on where you are with Sincor negotiations?

Venezuela, back taxes, whether you're paying higher royalties now and so on?

And finally you might comment as to whether it is really worth staying in the U.K. retail market given that you are saying it is lossmaking and obviously it's not one of your strongest regions?

Yes, many questions.

First question was about the increase of our gas production in Latin America and I think this is essentially due to the increase of our production of gas with Yucal Placer.

Concerning the decrease of our production in Africa I think it was essentially due to the price effect and also to reduction of our production in Nigeria due to our own short production in Nigeria due to the difficulties that we have encountered with the operator in the area where we are start our production.

The third question concerned the issue of taxes with Sincor, just to summary a little the situation.

I just would like to remind you that we have received a letter from the Minister of Energy and Mines.

I think it was on June, the middle, 20, 23rd of June claiming royalty increase to 30% from 16 to 30% we paid for the production.

So this letter was claiming an increase of the royalty from 16 to 30 but for the production, (indiscernible) 114,000 barrels of oil per day.

So with our partner, Statoil, we have contested this instruction given by the Minister.

But finally we have accepted to make these payments.

At the same time, we have declared that these payments were made under protest.

Having said that, I just would like to remind you that we still have some discussions in order to settle the tax issues and at the same time to have the possibility to develop our operation with Sincor to operation and this is still where we are now with those discussions but I can say nothing more about that.

And finally your last questions were about retail marketing, where do we stand in the U.K.

In the oil industry, you have to think on a long-term basis.

Having said that, we think that we still have a small handicap in terms of breakeven.

This is why we have decided to implement already a few years ago an important restructuring plan in order to reduce our costs.

So I think that this plant is not totally completed but very well in progress.

We have already significantly improved our position in terms of cost and volumes.

And so we are now in a pretty good situation from a competitive point of view.

I think that there is no reason why we shouldn't be able to continue to improve our situation.

We can also expect a recovery of the U.K. market.

That should not stay for long term with very low marketing margins as we may see from time to time.

So the idea is to stay and to continue to improve our position on the U.K. market.

Next question.

Niki Bekabestance (ph).

You spoke in the press release and in your comments about this deep conversion project at Port Arthur.

Could you just elaborate as to what that might entail?

The idea that we have in mind but it is not for tomorrow morning is to build a cooker (ph) in our Port Arthur refinery in order to increase the capability to convert a heavy fraction of the crude oil into diesel oil and gasoline.

But it is a project that we have in mind to start let's say at the end of the decade.

And as to -- you have to know that it is a pretty big project as the order of magnitude for the price and the cost should be something like $800 million.

So I think it is a big project that I think is totally justified due to the evolution of the market south of the U.S. but it will take a little more time before taking the decisions.

That again should take place probably in a few years, before the end of the decade.

Just to follow up.

Did you say that you would not invest before the end of the decade or it would not be operational before the end?

No, no, no.

The idea is to launch the investment at the end of the decade or before the end of the decade.

Usually it takes something like three years for this type of investment, which means that it should be in operation, if we confirm this investment, at the beginning of the next decade.

And finally, did you record any costs associated with the hurricane at Port Arthur and in the Chemicals?

We have estimated that the cost of the hurricanes for our Port Arthur refinery should be something like EUR120 million and 80 has been taken in the third quarter and 40 will impact the results of the fourth quarter.

Sue Williams (ph), Cazenove London.

It's Hugh Williams from Cazenove.

Two questions.

First on the dividend, second on Chemicals area.

First on dividend, clearly the September meeting, there was communication of the potential for pushing the dividends higher.

I think you've delivered on that at this interim level.

Just wondering whether you could give us a feel for the likely level of dividends going forward and how that would relate to the levels of buybacks as we go forward into the '06 year.

Secondly on Chemicals, clearly you were aware of the potential and obvious weakness in the bulk area in Q3.

But on the flip side, as you said, Arkema performed very well and it has done so through most of this year.

For Arkema, could you give us a feel for whether that level is sustainable heading into Q4 and into 2006 on a quarterly or even an annual basis please?

Okay.

Concerning the dividend.

In fact, when we fixed the level of the dividend, we have to think at what we have in mind for the evolution of the reserves of the Company, taking into account certainly the growth of the Company, which is expected and also the evolution of the environment of what could be the results of the Company for the next two or three years in case we would come back to something like $25 per barrel.

I think there is no real connection between dividend and share buyback.

The share buyback is clearly the way we adjust the balance sheet at the end of the quarter, which is a result of the cash flow minus CapEx minus dividend.

So concerning the feelings that we may have now as far as the dividend that we will pay in connection with the year 2005 or it is clear that, as you may have seen, we have decided to increase the interim dividend from 2.7 to EUR3 per share, which means that clearly we are determined to continue to have an active policy for the dividend.

We know now the results for the first nine months of 2005.

We don't know the results for the totality of the year but we have started the last quarter with a pretty good environment even if we have no refining margin in Europe, which is slightly lower than the levels we have seen before.

But clearly we should be able to continue to increase significantly the dividend related to 2005.

We also have to take into account the payout.

Up to now, we have a payout, which is in the interim in the situation intermediate between the U.S. companies and the European companies.

So the last point is that over the last two years we have increased the dividend by 13% and over the last four years on average by 13%.

So now you have all the elements and the feeling is that we should continue to increase the dividend in 2005.

We cannot exclude that the increase could be a little higher than it was for the last two years.

Then concerning the base chemicals, our base chemical, it's clear that they were weak and even negative in the third quarter of 2003 or difficult to speak with chemicals of what does the situation should be for the future.

Maybe I can give you an indicator.

I think that, which is a very short view, a general indicator for the cracking margin in October has increased by 35% compared to what it was in September, which doesn't mean that our profits have also increased by 35%.

It's a bit too early.

I think I will -- on Monday.

Usually there is a small delay, small adjustment between the evolution of our profits and the evolution of the indicator but I think just to give you a flavor.

We can expect to have for the end of the year and beginning of 2006 a situation that should be better certainly than it was during the third quarter.

Concerning the results of Arkema, I think, yes, the results were good in the third quarter, sustainable.

My feeling is that in fact we should be able -- or Arkema should be able not only to sustain but to increase its profit because I think we should see the results of all the restructurings that have been made over the last two or three years and I think we are optimistic with the future of Arkema.

Concerning the clow (ph) chemicals, I think we have the clow chemical -- in fact, results have recovered in 2005 a much better situation and we have also seen an increase of the margin over the last quarter and I think that the situation should continue to go I would say on the right direction for the months to come Next question.

Neil McMahon, Bernstein London.

I just got a few questions.

One, I was wondering if you could run us through the format of the Arkema spin-off next year and indeed if you have thought about the exact timing or what could derail the spin-off of the unit.

And secondly, there were suggestions I would say at your midyear strategy presentation that one option with Deer Creek to reduce your exposure to the high-energy costs was to build a nuclear plant up there.

And I was wondering if you would like to expand on that at all?

Okay.

Well concerning Arkema, what we have in mind is to make a spin-off, a pure spin-off.

That should be submitted to our shareholders in May 2006 and immediately implemented after the shareholders' meetings at our plant I think the 14th of May.

Shareholders meetings, both of Total and Arkema. (Indiscernible) said that you know and if we proceed like that, it means that our shareholders will receive the dividend and Arkema shares.

But to do that, to be able to do that we need a tax ruling that, up to now, we have not obtained yet.

We have still some discussions with the French Minister for Finance.

We're confident that at the end of the day we will get such an approval.

If we shouldn't be able to get this approval then we would have to make an IPO with a technique that would be a bit different.

But clearly the idea is still in any case to list Arkema as an independent company.

Concerning Deer Creek, I think I remember that the idea was launched in order to reduce the cost -- production costs of Deer Creek and also by the way to reduce this issue to emission (ph).

To use a nuclear plant, I think it was just an idea that maybe for the very, very, very long-term could be envisioned.

I don't know.

But it is clearly -- we have nothing in mind as far as the development that we are studying for the production of Deer Creek.

I think this has to be said very, very clearly.

I have got a final question on the flow of products to the U.S. in the fourth quarter.

Have there been any changes in the kind (ph) or type of Downstream products you have been sending across the Atlantic in the first month or so of Q4?

No, the flow was about the same.

We continue regularly to export our surplus part of our production of gasoline to the U.S. in fourth quarter; this represents something between 8 to 10 per month.

It should represent something between 8 to 10 ships, something that we make regularly.

Next question.

John Rigby, UBS London.

Two questions quickly.

The first is -- despite the very rapid rise in oil prices -- in fact, you appear to (indiscernible) your working capital increase fairly low.

Are there any timing differences or anything else going on within those balances that mean that they are lower than one would might expect and maybe extending that, are there anything or is there anything we should know about the way that working capital will move towards the end of the year?

And the second question is you talked about how you see for the medium-term anyway operating conditions not structurally changing.

And clearly at these levels you are able to pay your CapEx, pay your dividend and have quite a large share buyback program.

How do you look at and decide about Sanofi in that context because as I understood it Sanofi was always held almost like a reserve of value to kick in with the share buybacks once conditions sort of went back to the old-style conditions?

So I confirm that our stake in Sanofi is certainly not holding for us.

You know that on under French law, there's at least a tax incentive to keep our second Sanofi up to the beginning of 2007 as a tax on capital gain should be counsel (ph) after the first of January 2007 in France, or at least we have a good incentive to stay with our stake in Sanofi.

In addition to that, I think we continue to be very, very optimistic with the future of Sanofi.

It's a company that is doing extremely well with a lot of synergies between Sanofi and Aventis as a result of the merger with a very good future when we look at the new drugs that will be put on the market in 2006 and 7.

So even after the small issue, that was not really an issue, linked to the Allegra, we continue to be very, very optimistic with Sanofi, which means that, from a financial point of view, it is clear that it is worth for us to continue to stay at least for one or two years with our stake in Sanofi.

And after that, we will see at the beginning 2007 an opportunity, what will be the best way to reduce our stake in Sanofi.

Clearly the idea is to use the proceeds in the disposal in Sanofi for the benefit of our shareholders.

Concerning the question, the working capital.

Our working capital I think is something that is very difficult to analyze.

What is clear is that part of our activities have working capital, especially in Downstream and Chemical even on a replacement cost basis, which increases I would say a little when the oil price increases.

But in front of that in the Upstream, the situation is very different and usually when the oil price increases the working capital decreases but it varies very significantly from one quarter to the other depending upon the maturities of our tax payment.

And this is why it is very, very difficult to make a deep analysis but coming back to the working capital increase by EUR0.4 billion in the third quarter of 2005.

In fact, this figure of 0.4 takes into account the increase of the value of the inventories but on a replacement cost basis.

In fact, the working capital would have decreased by EUR0.7 billion.

Something like that.

And anything we should know about it.

Obviously fourth quarter, there's a lot of cash to go out with the dividend and the buyback.

Is there anything in terms of --?

There will be dividend buyback.

In addition to that, you know that in some countries, like for example Germany, we have to pay the consumer taxes for the last quarter before the end of the quarter.

I think it is about the same in Belgium and also in Italy for the VAT.

Altogether, I know that this should represent something like EUR500 million.

David Klein (ph), Exane London.

This is David Klein from Exane.

A couple of questions.

Firstly, when you talked about the impact on the refining and marketing result of the interruptions to refining operations during the quarter, the EUR200 million figure you gave. 50% in Q3, 50% in Q4.

So far as I heard, you didn't include Normandy in what you said.

Was that figure including Normandy or excluding?

It includes Normandy.

I think it was something like 120 for Port Arthur and 70 to 80 for Normandy.

And the second question is on the Sincor raised royalty, is that something that had a P&L impact in --?

Yes, it has a P&L impact I would say for the quarter.

I think it was EUR20 million. (indiscernible)

Edward Westlake, CSFB London.

Good afternoon.

It's Edward Westlake at CSFB.

The sound is very bad.

Edward.

Hang on.

Hello?

Ed?

You're lost.

Can you here me?

Yes absolutely.

Sorry about that.

Not at all.

Please do.

Your base chemical number is back down to limited free cash generation and we know that there were some extreme circumstances.

But does it cause any deeper rethink of chemicals, base chemical strategy, particularly when you look at some of the sales prices being achieved by some other sellers?

The other question is your partner in Surmont is looking at investing in the Keystone pipeline to its refineries in the Midwest.

Is there any interest from Total in doing the same?

No.

I think the evolution of base chemicals during the last quarter will certainly not change our strategy in petrochemicals, which I remind you is -- first I would say to consolidate and to improve our plants in Europe, to develop our position in the U.S.

But I think what we may have in mind is modest developments and to concentrate the development of our base chemicals essentially into Middle East where we have access to the raw material in good conditions and in the Far East where there is and where there will be the bulk of the gross of the consumption of base chemicals.

It's clear that the seats (ph) in Europe where the situation is the most difficult but I think that our petrochemical is integrated with our refining operation and I think this is an advantage that probably should continue to increase if we see a especially a much bigger rate of growth of the consumption of styrene and polystyrene and polypropylene compared to the evolution of the consumption of gasoline in Europe.

So clearly the idea is to try to continue to take advantage of that.

But at the same time we clearly have to improve our petrochemical operations to reduce the costs and to increase the yields.

Concerning now the situation of Surmont.

You said that our partner has decided to invest into a pipeline to carry its share of the production of heavy oil to the Midwest of the U.S.

Up to now what we have in mind is not to do that, but to invest into (indiscernible) in Canada.

And having said that, we will see what to do for maybe an interim period.

But clearly we are not at all in a situation to invest in a pipeline to treat our production outside of Canada.

So next question.

Mark Gilman, Benchmark New York.

A couple of questions, if I could please.

Could you quantify in the third quarter the impact of entitlement and price effects and production sharing contracts and the Gulf of Mexico storm impact?

Secondly, it looks to us as if the equity LNG earnings are weak in the third quarter, and was there anything other than the disruption in Nigerian LNG that might account for that?

Thirdly, there is talk that Bontang is looking to significantly reduce cargoes from contract levels in 2006.

What does that imply in terms of your Indonesian production in 2006?

The answer to your first question, the impact was -- for the price effect for the third quarter was -3.5% for the price effect, in connection with our PSC contract and buyback contract.

And the impact of the hurricanes was minus 0.5% of the production.

Then your second question concerned our LNG results in Nigeria.

I think, quite frankly, I don't have the feeling that our LNG profits in the third quarter were not in line with the evolution of profits in the other E&P segment of activity.

I think I will have to check that, but I think -- no, I think everything is going pretty well for this type of our activity.

And your last question was about Bontang activity.

In 2006, you mentioned possibility of a reduction of the number of cargoes out of Bontang.

I think as far as we are concerned, at least for 2005 in Indonesia, we have registered a new production record of 653 barrels of oil equivalent-per-day.

I know that some of our competitors have some difficulties to meet their commitments, but as far as we are concerned, I think we should be on track with our expectations for 2005.

So I think our business in that country is going pretty well, and I would say extremely well, especially in 2005, and we didn't expect any drawback for 2006.

(OPERATOR INSTRUCTIONS).

Jean Luc Romet, CMCI Securities (indiscernible).

Good afternoon.

My question relates --.

Yes.

Good afternoon, Jean Luc.

My question relates to projects you sanctioned this year and I was wondering what are the rules for (indiscernible) new results.

Will oil production expected from this project booked as terms five additions (ph) or will there bookings in terms 5 and 6 and then for OES (ph)?

Yes, I think in 2000 -- in fact, we will be able -- first, it is clear that it is an exercise that we make in December and we should be able to give much more detail in February.

It's clear that what we have in mind is to book Yemen LNG project.

There will be also for SEC purposes a small booking linked to the acquisition of Deer Creek for the second part of the project.

There will be of course some other bookings.

But I wouldn't like to enter into a lot of detail at this time of the year.

There will be also by the way negative price effects on reserves that will depend on the evolution of the price between now and the end of the year.

So that is it.

This is all that I can tell you now.

I'd say it's a little bit too early but clearly there will be a big contribution of our share in the Yemen LNG project.

Another question.

So, if there is not any other question, I'd just like --.

You have two out of four more questions, sir.

Oh yes, please do.

Jason Kenney.

ING Edinburgh.

It's Jason from ING.

Good afternoon, Jason.

A broader question if I may.

Given that the Total share price has essentially matched the performance of the European sector over the last 12 months, do you think the market is underestimating the sustainable reward and offer at Total, particularly in terms of cash returns or is it overestimating the risks of some of the diverse exposures that you have?

Well, quite frankly, I don't like commenting on the market.

The market is already right.

It may be just -- I can add these up.

We continue to make share buyback during the fourth quarter and you know that now our share price should be something like 215 and we think that it is totally justified to continue to make share buyback of course with such share price.

So I think there was another question I heard?

Daniel Barcelo.

Two questions if I may.

Firstly, what cash balances do you consider needed to run your business on an ongoing basis?

And the second question would be you have commented specifically about Venezuela and some tax increases there.

I didn't know if you could broaden that to discuss maybe the concept of higher tax throughout the country, particularly U.K.

North Sea, some talk in the U.S., which I know you're less exposed or just globally?

It is very difficult to speak of what could be the dangers to have higher taxes in some countries.

We see -- it is clear that -- what I can say is that in some countries we have already contracts under which the level of tax as a percentage of taxes increased when the oil price increases, which to a certain extent gives some comfort with these contracts.

But quite frankly, it is very difficult for me to say more, especially in a public and open discussion like that.

Concerning cash balance, what we have in mind to run the business, as you say, is to have liquidity of something between 8 to $10 billion.

And for us, liquidity is the net cash, that is to say the cash minus the short-term debt and the short-term financial debt, which more or less is an average of $2 billion.

It varies, something between zero to four.

In addition to that, we have a strong (indiscernible) line of credit, that are not grown for an amount on average $8 billion.

So this is why, on average this year, we have had a liquidity of something I would say close to $10 billion.

I think that a company like Total needs to have such liquidity.

In addition to that of course giving something between 25 to 50%.

So this is a way that I manage the cash situation of the Company.

Another question.

Irene Himona, Morgan Stanley London.

Most of my questions have actually been asked/answered.

But I wanted to ask very quickly about Cepsa.

Is there any movement at all on that front?

No.

You know that we are still in the process of arbitration and we are expecting a decision that should take place at the end of 2005 or the very beginning of 2006 according to what the arbitrators told us.

You have no further questions at this time, sir.

I'll hand the conference to you for any closing comments.

Just to thank everybody for being with us with many very interesting questions and I just would like to wish everybody a very good weekend.

Goodbye.

Ladies and gentlemen, thank you for your participation today.

This concludes today's conference.

You may now disconnect your lines.

Thank you.