TotalEnergies SE (TTE) 2011 Q4 法說會逐字稿

Ladies and gentlemen, good afternoon and welcome.

My name is Martin Deffontaines and I am in charge of the IR team.

As we do every time in Total, a few words on safety.

To start with we have in this room three safety exits, one here and two in the bottom of the room.

So in case -- there is no drill scheduled for this afternoon, so in case of alarm.

And there is a fourth one on the left at the bottom.

So in case of alarm, quietly and safely you follow the green signage.

Christophe, I will give the floor to Christophe, who will start with the formal presentation and we will manage to give room for Q&A.

Good afternoon to all of you and thank you for being here to have open discussions on our quarterly results and yearly results and more than this, our future views and the strategy of our Group.

First of all, to mention that all the executive members are in this room, Jean-Jacques Guilbaud, who is in English but is your title in English?

Secretaire General in French.

In no order, Yves-Louis Darricarrere, in charge of E&P and Globally Upstream.

Patrick Pouyanne, in charge of the new division, Refining & Chemicals; Philippe Boisseau, in charge of supply and marketing; and last but not the least, Patrick de la Chevardiere, if you don't know, our extremely expensive CFO.

They will participate to the debate.

We'll try to make it as short as possible so that we can answer it through Q&A and I will ask the members of the executive committee to participate when it is applicable.

So first the key figures, which is in fact meeting the new dynamics.

15% in the improvement in our safety records.

It is important we will come back to it with Upstream.

We are now close to reaching the goals we had, which is to join the team of the best in the class, still have some additional improvement to do in the Downstream but you will see in the Upstream, it is now there.

The production, I'm sure we will come back on it.

Production 2011 is almost exactly on line with our commitment 2.35 and a strong commitment for additional increase in the near term and long term.

Three giant discoveries is the message in terms of exploration is back.

Exploration is back in our wish to be more aggressive, more boldness, so here three giant discoveries.

They are -- we have always a discussion with Yves-Louis on the third one but these two first are equal, Absheron, Guyana, the third one is Bolivia, but we could discuss on some others.

The important element, the reserve respecimen rate, which has been the challenge for our Company for many years close to 200%.

That is the figure net of the price effects.

That's great, but this will still increase the policy we have had from now certain numbers of years and with the new acquisition we have made recently, it proved that it will be a continuity and not just one short rate.

The adjusted income plus 17%, $16 billion is what it is.

It's not a bad result, but we will see that when we compare it to certain of our competitors, it's true that we still are a little bit behind when the price of oil climbs, we still are a little bit behind our competitors.

And that's part of the strategy we have had that we have explained to most of you when we presented the Upstream last year.

We want to have more and more assets in our portfolio which are more as we said, linked to the price of oil, the same way we're doing it with the price of gas.

It is important.

It's not yet totally done but it's underway.

And $22 billion net investment, which is in control and we come back to it in terms of the commitment of Total to stay at an average of $23 billion net on the years to come and it means that it's done with a lot of this year's acquisition and divestment.

In the years to come, we will have to make it still at the same level with definitely additional divestment.

I come back on it.

The new dynamism of Total is there.

50 in an industry like us if you don't pick 50 as really the priority, it has been proved by others, you can just die.

That's not at all our wish and we are doing everything to make it in a clean way.

Production growing, exploration boldness, recovery in our reserves.

Replacement rate is there.

The adjusted net income should continue to climb.

But definitely for doing this, we need investment, but profitable investment and profitable investment with cash.

So the four drivers to deliver upside, remember we opened the subject of unlocking value.

I can tell you that it's something in which we believe.

In France, there has been the subject of discussion but it was difficult to understand what means unlocking value.

Unlocking value means you have it under your feet.

You sometimes know it but you don't deliver.

Now we know that we can deliver and we have certain areas where it's still doable.

LNG and deep offshore exploration, I said it, the restructuration of the Downstream and Chemicals and definitely a real active portfolio management.

What I mean by real, I will say in details limited, we only sell assets to match gearings or to make the cash flow what it should be, which is of course good reasons for selling, but we also want to manage our assets in a way where when we don't need an asset anymore, when we think it's just -- there is no upside, we sell it, which means that we might sell more one year and less another one but still it will be under the guidance of the $23 billion net on average.

Financial strengths, Patrick will tell you why it's not only words, but we have gearing which is at 23% by the year-end.

We had a lot of additional -- what do you call this -- working capital but it's under control.

We have all the capabilities I come back to it to meet our commitment in terms of investment and dividends.

Operational excellence, we are a heavy industry company with a lot of responsibilities but also a lot of source of profits.

It's nice to explore.

It's nice to discover, but if you don't develop -- no message about other companies -- it has no value.

So the message is in Total yes, we can also explore it but we are certainly among the best of the class in the way we are developing our projects with new innovative technologies, definitely with a clean understanding that we need to make it in a clean way on purpose.

It's clean twice.

And increase in cash flow on the period 2011-2015.

We will come back to it again.

So a quick word on what is supporting our strategy, what's important.

I have always been clear on this and until further notice even for those more pessimistic people in this room I know well, until further notice, we are not yet at 70 points.

I'm sorry for this.

Especially when we know that when the price of oil is lower, Total is reacting in a better way.

But at the end of the day, why are we investing?

Because we believe in higher prices.

So we still are very cautious on the way we use these prices, $100 for long-term plateau, $80 for short-term plateau.

We will come back to it but definitely today, we are at $111 for 2011.

Today we are at -- I don't know, I've heard almost at $119.

Just before we landed, it was $118.7.

I don't mean I am following it every minute but I was just checking it before I came.

And that's linked today definitely with geopolitics and the weather.

But at the end of the day, it's still there and frankly I know that a lot of people want it to be lower.

I don't know why, by the way, except if they are consumers.

But if they are buyers of energy company shares, they should appreciate that we need higher prices to make it long-term and profitable and that's the way we see it because we don't see how it could decline with OpEx what we call extra capacities going down and definitely on the top of it still an increase in demand by 1% per year.

That is our estimate but 1% per year makes at the end of the day which is in 20 years' time a lot of additional oil and a decline of oil fields, which is normal.

Which means on that slide in eight years' time, as you can see, we need to replace almost 50% of the existing production with 40 million barrels per day.

Today we produce 88 and that is linked and coming from at the same time additional demand and decline.

Increasing demand for gas, which is a good news for those who are moving more and more to gas, which is the case of our Company.

Well you remember I've discussed it many times, we have more than ever these three different areas, zones, whatever it is.

The US with a very low price, 2.5 million -- I mean $2.50 per million BTU.

It's a spot Europe with the MVP which is raising today to 10, 11.

And Asia, which is more than ever especially after Fukushima linked to the oil price.

Today the higher oil price is not yet in the price and we have already selling -- we have been selling gas to Japan and some other countries at levels which I shouldn't even say, but let's say it's more than $17 per MMBTU, so it's almost 8 times the over -- very close of 8 times the price of the United States.

So good news.

By news it depends to whom but we continue to consider this as very important for our LNG project.

Why LNG?

Because LNG is the best way to be able to move from one area to the other one and for it move from the States.

If it happens, we will see this probably soon for us but to go from a low price of gas to higher price of gas.

Definitely we continue to increase our share in LNG, where we consider that we have a real competitive position.

Performance, Patrick?

Yes, good morning, good afternoon, everyone.

Strong performance for 2011, mostly driven by Upstream, $16 billion net income and 90% of it coming from the Upstream division at $14.5 billion.

The return on capital employed of the Upstream is set at 20%.

Downstream it's more difficult obviously as the return on capital employed is a low 7%.

We faced a very challenging market last year and the 10% return on capital employed for the chemicals.

The overall Group return on capital employed is at 16% and honestly, it was mostly driven by its strength.

What we did last year we fully if you position our portfolio, we sold $15 billion of assets during the period 2010, 2011.

If we compare Total to its peers, we sold the value of 15% of our capital employed.

We are at ahead even of BP and we know why BP was selling assets.

We reallocated funds for some acquisitions, $17 billion of acquisitions.

We acquired about 5 billion barrels of oil equivalent of resources at a price below $3 per barrel.

And something we would like to share with you is that the asset sale is definitely integrated in our strategy to date.

And it's part of it.

The cash flow, I know you like it very much.

The cash flow for year 2011 was $28 billion.

It was $24 billion in 2010 and $19 billion in 2009.

This cash flow was used to fund the organic investment at $20.6 billion and of course the dividend of $7.4 billion and the net -- the acquisition was financed for basically increase of financing.

The cash flow was increased by 50% during the period 2009 to 2011 and the gearing end of the year was 23%.

Sensitivity, very quickly $10 per barrel of Brent is $1.7 billion of cash flow and the next sensitivity I will give you is the divestment of our Sanofi stake, which leads to a $3.2 billion of cash.

We own about 3.2% of Sanofi today and that's for me the end.

Thank you, Patrick, and it's always important to have the CFO delivering the message on performance.

On the branches' performances, as Patrick was saying, we start with Upstream.

It's not the first one, is it?

We start with the Upstream and the safety about Upstream.

I was telling you that we've been improving our records and the target by 15%.

Here is just for Upstream on the Upstream with 1.3 for the TRIR, which is a recordable injury rate.

We reached a 1.3 level, which is making Total one of the best of the class.

It doesn't mean that we have achieved everything.

It's always the most or the biggest of our concerns, but definitely it has been Total lagging for many years behind the others.

Today we are among everybody and I am not allowed to say it, but I will say it, at the end of September, Total was the number two in terms of this recordable injury rate percentage.

Now what's important, last message, sorry, is a message of what we call the post-Macondo.

Don't think that Total is not still thinking about it.

It's often left on the side.

We still consider that it has been a major concern for all of the industry.

We have had three tough courses as you know in place and we are still moving heartily to produce and deliver additional ways to improve the safety of our operation.

But if we think we are good in it, we know that we can still improving it and especially in the impact of potential spills.

Upstream performance in first production, that's normal.

Before talking about future you need to talk about what happened.

We said that 2011 will be a year of transition, flat.

It's not totally flat but it is without answering it to the price effect, the portfolio changes decline, we can talk about this in detail whenever you want and especially in the Q&A session.

But if you just want to say how we did it with -1.3%, it's only with Libya.

So Libya by itself is just responsible for the 1.3, so without Libya it would've been just flat the way we said it and then we come back to it.

We have a commitment to increase our production on an average by 2.5%.

The cash flow generation which is part of our common concerns during this period, we have on one part of the slide the cash flow generation on the realized price.

So as far as the realized price of our portfolio, the price at which we sell on an equivalent barrel position plus 32%.

To give you the figures for those who don't have it, it's 57 for 2010, 35 -- sorry, 75 for 2011, and the same 32% in terms of cash flow per barrel equivalent.

This is moving from 22 to 29, so it's cash flow well leveraged with the environment.

On the reserve replacement rate, first just the level at the Brent price at the end of the year, we have now 1P reserve, proved reserves of 11.4 billion barrels.

There is a debate even within Total to know whether or not it is the historical figure.

I believe it is.

If it's not, it's by 0.2 or 0.3 but it's a good result definitely.

We are moving from 12 years of proved reserve life to 13 and as I was telling you, we think we're in a good direction to continue on that way.

On the proved reserve replacement rate, after the price effect, we are moving to 185%.

If you want to move to the so-called organic growth of which we could discuss for length, we have an 85% increase.

Next, portfolio of resources quickly just to say that while by technology as usual, we are in almost all the areas where there is a possibility to have access to new reserves.

That's what we call the by-technology.

In terms of region, it is linked to where it is but what is more important than all the acquisition we have made and I want to remember to tell you that when we make acquisitions is mainly to buy resources, sometimes 2P and a limited part of 1P.

Our rule is to move from resources to 1P so we don't acquire 1P or little.

What's important with our new acquisitions in more than 40 years now of resources and coming from OECD, long-term plateaus you have to split, but definitely we have been increasing our resources base.

I think the figure is almost 45 years but we don't say it on this slide.

We prefer to say more than 40 but more than 40 is more than 20 and more than 30.

Improving visibility for production growth, also you know all those projects.

Just to say that in 2011, you have had seven startups including the Ofon 2 in Nigeria, an initial five to come.

Those are the projects which are bringing the growth of our production.

There they are.

They exist.

They are not at stake even if it's always a challenge.

The challenge well managed by the E&P teams, so we are quite proud of what has been done by Total in 2011 and which will continue 2012.

Exploration strategy, I would like to revitalize the word.

We have the three major discoveries I was mentioning at the beginning.

Azerbaijan with Absheron, I understand that the test is underway.

If you want to ask a question to Yves-Louis, he will be delighted to answer.

He is not always delighted.

On that one he is, so it means good news.

French Guyana and Bolivia.

You have four of the others wells we have done on which we made discoveries or not but it means at the same time not only more wells but new acreages, more aggressive ones just like the one we have done recently in Ivory Coast or in Angola.

I like to say as a joke that I did this morning so I will repeat it because I like to repeat jokes.

We are -- maybe not in Brazil but we are in Brazil in Angola.

Hopefully.

An ambitious exploration program for 2012-2013 that the numbers of wells to give you the exact figures, we were at 48 wells in 2011.

We moved to 65 in 2012, 2013, which means that we have a strong portfolio of assets but also a strong wish to make the discoveries on those assets.

I will not say what are all of those, but definitely it is a mix of conventional and frontier, but always targeting what we call elephants and big cats.

Definitely we are doing this, we needed to increase our exploration program, exploration investment program by 20%, which means $2.5 billion for 2012.

Strong production growth by 2015, so we maintain of course our commitment of 2.5% increase as an average for -- so to make Yves-Louis again happy with this, because we have always the debate on 2010 or 2011.

When we talk about 2.5% it is starting at the end of 2010 or the beginning of 2011, which is the same until 2015.

And on this period an average of 2.5% growth, which means by 2015 an additional 600,000 barrels per day under which 95% is producing or under development, which means committed.

And that's important.

When we are asked always are you committing yourself?

Yes, we are, because it is there.

So the contribution of the stocks up to the cash flow and to production, so you have on the left part the 600,000 barrels per day I just mentioned.

You have then the operating cash flow of these startups during the period at $100 per barrel.

Today we are at $119; $10 billion in 2015 and the startup in terms of cash flow per barrel bringing $50 per barrel equivalent in 2015.

So we don't only deliver production, we deliver production which are profitable and of course profitable meaning cash.

LNG to value creation, just keep in mind that are we the second larger LNG player or the first.

I don't think we are the first but are we the second or the third doesn't mean anything.

We are well-positioned to increase the value of our portfolio of assets and definitely on the top to value the trading of those assets and to trade the LNG contract that we have in our portfolio.

Philippe, it's okay?

Is -- I can't mention his name.

En passant, he is not an executive member but is in charge of something else of our LNG trading.

And I can tell you is delivering net operating income.

So being through trading or through our Upstream portfolio, we consider definitely that LNG even being extremely capitalistic is bringing more cash to the Company than the average portfolio.

Three LNG projects just to say that it's good to use what we have.

It's even better when you have other projects in mind, so Ichthys has been launched, Angola we deliver soon.

Gladstone has been launched but is not yet delivering, so that's underway and we have other ideas in mind to continue to develop our activities and part of our business which we consider as one of the most important and relevant part of the Total portfolio.

Total means a rather important investment so we don't escape the subject, but I don't know why there would be such a debate on Ichthys.

Ichthys is under normal I would say costs per barrel.

It's heavy but it's what it is.

It's profitable, so we try to make it clear in this presentation to say that it represents $1500 per ton, which is an average of the one of our competitors.

Now what's important at the end is not only the size of the investment, it's the return on investment and the return on investment of this project is definitely above the average of our products.

Industry leader in deep offshore, well you know this but it's worth mentioning it.

It is positioned to mention that it's the only 10% of our production and its 20% of our results.

So yes, some people might think it's risky but definitely we don't consider it as risky.

It is risk and reward and it is proved here with a lot of new projects to come on stream or to start in the years to come.

Upstream investments, well, to have cash flow you need to invest so here you have the organic investment.

So it's increasing from $17 billion to $20 billion.

It's mostly coming from startups and producing assets and of course that's normal post 2017 because we are preparing the future.

So we will not mention more than what it is.

But it's important for you to remember but what we always said is strict financial definition of the environment we use for launching those projects, short-term plateau $80 per barrel, long-term plateau $100, not $120.

So when it is more than $100 and even more than $80, it's more than what we are telling you in terms of what our view is on the future.

Downstream, moving quickly, so as you know, we has been restructuring our Downstream.

I must say it has been quicker than expected even if I told you that the target date was January 1, 2012.

I said it but it was also a way to make it.

Now it's true that we have not only said it, we made it.

We made it in terms of structure.

Now we have to deliver so if you have here the two persons responsible of now proving that what we decided was right and if you ask them, they will tell you.

But I mean just for the size of this, it was needed.

I definitely think that doing this we are just one step ahead of our competitors.

They are now asking how you've been doing it, why, et cetera?

It seems common sense.

It had to be done.

It's underway and definitely I do strongly believe that this new organization will bring a lot of cash and more than this, competitiveness of our assets in what we call mature areas like Europe.

Yes, you can make money in Europe.

But you need to change and to be more definitely accounting on synergies and cost cutting.

On the commercial part, we have considered it was better to have marketing on the side and not anymore with refining.

There is less and less link between refining and marketing.

There's more and more good reasons to consider that marketing is not a real option for growth.

It's also an option for accessibility.

It's also an option for getting access to new reserves and there are examples we can be clear.

Uganda is one of those, but definitely what we want to do is to make it profitable as such and not only as being by definition acceptable.

So just a message on the notion of integrated platforms.

As we said that synergies are not words.

Synergies are coming from facts and industrial moves which means that we have often platforms where chemicals and refining were just next to each other but not delivering synergies because they were not in the same division.

So it's good to talk about [verstaility].

I know it is one of the short ones but just believe it, that is why we were serious in saying it's not just by words, by fact that these new platforms will deliver their profitability, which is there.

So our commitment -- sorry -- the commitment of Philippe and Patrick with the support of the executive committee and the Board of Directors is to bring a 5% increase in profitability in the four years to come, which is to say the 5% increase.

We make it as a split between the let's say major platforms, which is a 1.5% I was just mentioning.

Portfolio changes, that's already almost down.

We sold part of our product portfolio which was having a lower profitability than the existing one so when you sell CEPSA, you don't only get cash, you also increase your rate of return.

And more than anything, which is the important part, these efficiencies and synergies 2% with the 2010 environment it should bring us to 14% return.

But definitely for the mix of refining chemicals and marketing, which does not exist anymore but we have to compare things with things, it will be shared between the two divisions of the Company.

Outlook to end of it.

Well, first one word on CSR.

It doesn't mean that it's not an important part of our strategy.

At (inaudible) somebody told me don't talk about it.

I said yes, we need to talk about it but just to say one simple word, it's part of our strategy.

It's not only a strategy, it's a priority and more and more in all countries where we operates without CSR, no chance we can develop our business.

So we're not going to include; ask the question you want but definitely it is integrated in our strategy.

It's integrated in our decision of launching projects.

Budgets and commitment, here you have the $22 billion of 2011.

You have our commitment for the average three years to come, which was $23 billion but I will certainly come back to that, but you have here the budget for 2012.

It's $20 billion net investment.

I know you like to have the organic budget so the organic budget is $24 billion with divestment of $4 billion, which will bring it back to $20 billion.

And with $20 billion in 2012, it will help to have the average of $23 billion for the three years to come.

Definitely 80% is dedicated to Upstream and out of the $4 billion asset of divestment, you already have $2 billion -- no more -- because that's in dollars, it's not exactly 3.

It's EUR2 billion so then use the currency rate you want, $4 billion, but already you have out of the $4 billion, EUR 2 billion coming from the sale of Sanofi.

So I do believe that in fact at the end of the day we're probably selling more than $4 billion of assets.

Ample cash flow to fund growing investment and dividends so you have on the right part a commitment of keeping the average net investment for 2012-2014 which are the three years I was mentioning, $23 billion average.

You have $20 billion for 2012.

You have a robust cash flow and if you just use the dividend of 2011, we paid in 2011 which is $7 billion.

[The usage of our] cash is definitely above $30 billion at $100; it's still at almost $30 billion at $80, which I don't expect it to be what we will see.

So it's plenty of room, no risk to just make the financial capabilities and the financial strengths of our balance sheet at stake.

Patrick, is there to keep this under control.

So strong balance sheet and return to shareholder.

I just mentioned it.

I mean just taking the adjusted net income and dividends where you have the same ratio, where we keep this 50% payout average target for our dividend to help you to make your calculation.

In 2010, it was 50%; 2009, 66%.

It's here probably.

It doesn't matter because I know the figures by heart.

Yes it is here but they are the same, which is good.

And the 45%, if the annual shareholders meeting is accepting the dividend, which has been yesterday approved by the Board of Directors is to maintain the dividend at $[2.28].

I know the figure by heart but that is a challenge we have with Patrick.

So that's 45% of payout, which is a competitive return at least for the time being because with today's rate is the yield is almost a 5.5 with the share value of today, which is close to EUR41.

So to end my presentation before the Q&A session, we are implementing the new dynamic.

Not the new Total but the new dynamism for creating value for 2012 and beyond but not beyond petroleum.

(French).

But first priority to safety and accessibility, which is the same with responsibly.

We need definitely to be more aggressive, bold on our exploration, which we are doing.

Production growth is important, 2.5 and now we strongly believe it's not only words but it's almost committed, which I mean delivered.

Increased cash flow for our startups, which is again the commitment of the Company, making the downstream after restructuration profitable and a strong management of our portfolio and to make it in short-term words or short words, which is more the truth, first we are back to growth and profitable growth, increasing cash flow, which is today a strong concern of our investors.

We've only to be careful to have cash flows you need to invest, no investment, no cash flow.

I like to read certain papers saying that it's good to have cash flow, don't invest.

Believe me, I know what it is.

It will not last long.

Ability to invest, that's important, it's definitely being able to spend the money when we consider it worth doing in a profitable way and a long-term view.

And last but not least, focusing on unlocking value because before making it through investment, it's better to deliver the value from what you have already in your portfolio.

So in my opinion, hope that is to be yours.

A good year in 2011 proving that we are meeting our commitments.

We are waiting to more than this deliver all of the growth which is needed for this Company to come back to a normal price of our share.

That was not part my speech at the beginning, but I think it is an important message for those who consider still that the value per share of Total is not the right one.

Believe me, I strongly share this view.

Thank you and I go to the Q&A.

Thank you, Christophe.

I will ask you for the Q&A to present yourself and to be as short as you can.

Thanks.

Lydia Rainforth, Barclays Capital.

I think very short questions if I could.

On the cash flow numbers, you gave 33% (inaudible) as an average.

Given the [advances] of your production, are you able to give us what you think the 2014 exit rate might be within that target for the cash flow?

Then given where the oil prices are and you said after you can meet both CapEx and dividends, what would be your preference in terms of any additional cash flow you might have, whether it's divestments, the higher oil price?

Is it investments to look for more areas in which you can continue to invest or is it kind of higher cash return for shareholders or is it kind of lower gearing level?

Yves-Louis?

Because I definitely think it is more E&P than anything else.

I can ask the Refining & Chemicals.

You don't want to answer on this question?

I will not answer to all the figures and detail.

We will make it on the one to one because it's a bit too long.

Definitely when you look at our portfolio, and I have been telling you what it is with the numbers we have today, the cash flow coming from the new operations is definitely higher than what we have today as an average.

Now I know the subject and I know we've been discussing it many times.

I know that the decline of our assets is definitely based on assets which usually have a high return and high cash flows and when we told you replace in fact at the end lower cash flow -- or sorry high cash flow by lower cash flow, it's obvious that it's true because when we had those assets, they were built at the time where the price of oil was lower.

The cost was lower, so we had at the end extremely high return.

Now coming to the point of making a new investment, which are today with lower returns than the one we are replacing, first what is important is they are more than the average of the existing portfolio.

And second, as far as we believe that why it's important to have a vision of prices to launch a project we use in $80 to $100 but if you ask me what you believe for the years to come, just as been the case in 2011 and even if it's not only for -- I've not been brilliant but remember I told you when I was challenged by most of you to say it will be below $100, well it's $110.

Good news?

Bad news?

I don't know.

It is what it is.

But I strongly believe in the long run it will be higher and the problem will be just the problem of the tax and the share between states and companies.

So definitely we believe those new operations even if today they are delivering what we consider as being normal double-digit rate of return depending of short-term plateau, long-term plateau.

We definitely believe that on the side of the three years to come, the next to come after 2015 will be even more relative.

Why?

Because it has been our policy and it is the opposite of many of our competitors is to move now only to projects with high return.

I mean high return when the price portfolio is increasing.

So (inaudible) at any cost, no fixed margin at any price, but just trying to (inaudible).

I know that doesn't totally answer to your question, but I promise you we will answer to this in detail when we make this market affirmative.

But that's my way to answer in a global way.

Then we can answer it in more details in terms of figures.

Iain Reid, Jefferies.

Can I ask three quick questions?

I think you or somebody in Total said a month or so ago you don't expect to see a current fiscal terms in French Guyana when you actually start developing Zaedyus.

Can you tell us where you think they're going to move to on that basis?

Secondly Shtokman, still waiting for the FID on that.

Have you got any thoughts as to when we're going to start to see that work?

I know it's a moving target.

I will answer on the Shtokman.

Who wants on the first one?

I want to have my executive members -- Yves-Louis?

So if I understand the question was what kind of fiscal framework do we anticipate for Guyana discovery?

I will not answer precisely on this question because it is tough to give any idea, a full idea to anyone.

So it's told that today the government take on the Guyana is not particularly low it's not particularly high.

So I dare hope that we will end up in a fiscal framework which will lower to develop this [current] --.

But definitely at the end of the day, the good thing or the bad thing with globalization, I think everybody knows what is the normal split between states and companies.

So I don't think it will be strongly different of others.

And if I have to say something, unfortunately I don't think it will be the United States income tax.

Or corporate tax.

Okay, corporate tax.

Income tax too, but that's a private thing.

Shtokman is concerned being a director of the Company.

I would have liked to give it to Yves-Louis to take the first one.

Well let's say that we are definitely more [competitive] on Shtokman than we were at the end of the year.

We got the approval to get an extension of the license.

What I mean by the license is the right to participate to the license, because you know we are not a license holder.

That has been done at the Board between Christmas and the new year.

So a nice way to spend your holidays, and at the same time, it was good news.

It proved that the Russians are more than ever extremely willing to get this gas.

Will it be -- and I'm opening the subject [only] -- will it be still a mix of LNG and gas pipe?

We don't know.

There is a chance it will move to gas but the LNG part will be treated differently.

I cannot say more, but as to tell you that we have good ways of making this project and all of our projects in Russia profitable.

In any case, I cannot change what I've been saying.

If it's not, we will not accept to participate to any FID.

But I believe that the FID will be taken.

It might not be exactly in the way it was structured at the beginning.

Is that a clear answer?

(Inaudible - microphone inaccessible)

I agree.

To get the real final one you will have to wait the FID, which is supposed to be taking place before the end of March 2012.

Theepan Jothilingam, from Nomura International.

Just one question, actually.

I was just looking at the portfolio and the target around sort of a net investment of $23 billion.

It seems this year you are helped by Sanofi but I'm just wondering going forward, it sounds like from your comments that the rest of that $23 billion number on a net basis is perhaps a little bit higher and that's where it could come out.

I was wondering what your thoughts are there?

So you want to have a list of the divestments?

Not really, not necessarily.

I'm just wondering it sounds like the message is that Total will be a bit more aggressive on portfolio rationalization but then -- you've given a number of $20 billion this year but then it's $23 billion going forward, so a little bit more.

I'm just wondering whether there's actually a sense is there a risk that number can come down -- and let's wait and see but --

First we talked about the $23 billion before the $20 billion.

That's important.

I gave you the $23 billion last year before I gave you the budget because we have this way of doing things in Total.

We don't give a budget until it has been voted by the Board.

It has been voted at $20 billion net.

In fact, I put $24 billion minus $4 billion.

That is what it is so they are facts and it will be delivered.

So it's lower than $23 billion.

It is good you mention it, which means that through it, it leaves us with a certain capacity for growing our net investment.

Now are we going to deliver the net?

Yes, we are, and that's why we use these presentations.

I was upset I said to this to my friend of the country who said it's a pity I couldn't deliver the slide number 8 on the percentage of our sales of assets for the period 2010-2011 when you have been told you don't know how to sell.

You never sell, you only buy.

Well, we are the one which is being the first buyer -- no, the first seller for the industry, more than even BE.

And without Macondo, so how much can we do to prove that we are doing things when we said?

And I will not go to the point of saying that today's investment net is $23 million.

If I give you the divestment, you will get the organic.

In fact, if you tried to get the budget which are a key for my point, you would not get it.

And I am absolutely confident that during the one to one, we will tell you which assets could be for sale and ready for sale and it depend on the other 23 because as we said, it is a new management of assets, but we will make it.

Now the issue considered that we don't believe or maybe you don't believe I cannot force you but we proved it.

We will continue.

We have a list of assets to be sold and when we said $23 million, it will be $23 million.

At the same time with $23 million, do we get and keep a strong balance sheet?

The answer is yes.

Will we bring sufficient cash flow to pay a dividend and even increase dividends?

The answer is yes.

So now the question is do you want a list of everything we will be doing in the three years to come?

The answer is no.

Can I try something else just on Angola?

Perhaps I think you showed on one of the slides you are going to look to drill a well this year.

Can I compare that being in the pre-salt and maybe you can get a little bit of color on maybe what block or relative to some of the news that have come out (inaudible) that would be great.

You mean the discovery of cobalt?

Yes.

Let's make some publicity for cobalt, Yves- Louis.

No.

On cobalt, I don't have any -- unfortunately I must say I don't have any more information that you might have, but you have all teams that Total is today or the day before.

It is today later an announcement to carry that they have made a the nice discovery.

So it can only reinforce the expectation that we have from the three permits in the contract.

Not really what -- I don't know what I can say more.

Have you decided what block you might drill in perhaps and how that relates to --?

Yes, we have.

I'm not sure I have all of the (inaudible) in my notes.

But yes, we have all our strategy, our drilling strategies fixed but will depend also nevertheless lives fixed on the state or the status of the information we have today and we will make some [cycling], so it might change.

Thank you.

Jon Rigby from UBS.

Two questions.

One is you have obviously are done or are in the process of doing the Utica transaction.

So that's finally an entry into the US after many years.

Is that a prelude to something bigger in that now that you're in there you may as well get larger with big plays and you've got a small positioning?

Are you getting more comfortable with operating in the US?

Would that mean that you'd be open to doing more transactions either onshore or offshore?

Second is, just going back to the financial framework that Theepan was talking about, when you look to your net number over the next few years, are you clear already what you think the pluses and minuses are or do you have a sort of list or a longer list of potential disposals which will be dictated by what your organic spend is likely to be over the next two to three years?

If something organic, inorganic comes up, what would you feel predisposition would you like the let your debt rise or would you go back to that list and look to sell something else to sort of offset that additional investment?

Thanks.

Sure, I will start by the second one which is linked to the one of Theepan and I'm sure we've been discussing it.

You have no right to discuss before.

It is against WTO rules -- joking.

But we have the first list and the second list.

The first list is the one which is part of our budget and plans.

And secondly is the one which is to be used in case we really need it.

But normally the first list should be not only good for maintaining the cash where it should be, but also good in terms of asset management.

I'm repeating that we have changed our strategy.

We are not anymore straining for meeting cash flows or gearing even we want to maintain our gearing.

But we are confident in our gearing.

So the second list as you say, would be to be used if we were wrong in our estimates in terms of price and things like this.

But today frankly we think that with the first list we will manage easily and maybe especially the price of oil and gas outside of United States remains at those levels which are above the prices we are using in our presentations as it is today, and BP today is at 11.

Okay, the weather is cold.

But okay, it's cold so it was warm, now it's cold.

But it is at 11.

So again, we don't see any reason for the time being to go to the list number two but it exists.

This list is just to be used in case we will be facing a problem which frankly we don't see today.

But to also at the same time answer to the question of Theepan, we are proud of having investments.

I don't want to always say that okay, we are concerned about investment.

We are concerned about organic investment and the only thing we want to do is to reduce our investment.

It's not true.

We want to have a strong investment base of good assets.

And maybe that's not exactly what you want to hear.

You would like to hear that we will increase our cash in selling assets when we believe in a higher price of oil and gas.

I disagree with this.

The strategy of Total is to invest in profitable projects bringing cash and return to the Company more even cash flow in the future.

We have ups and downs.

Sometimes we invest more and then you have cash flow.

There is a company which looks a shell which has been investing billions of dollars which is now getting cash, but if they were not investing, they would not have cash today.

When they have been investing, everybody was shouting, crying.

Now they have cash, everybody is saying bravo.

If you don't invest, you don't have cash.

If you don't follow your strategy on a long-term basis, you die.

What's important is to have a strong criteria for developing your assets, to have strong gearing in terms of balance sheet, keeping your gearing and making it in a way where you give priority to your shareholders.

So when you ask me the question is it where the priority, the priority is definitely not to sell assets.

It's to sell assets when its needed or when it's worth doing it, which means not any more profitable assets, which I mean assets with no upside.

We could be very well one year selling more because we have opportunities to sell, because we don't consider that asset is good, which means that we will have gearing below 20, which is not our target.

But why not?

And then we might have to go to 25 but I would like to have our investors to understand that it's not to keep 20% fixed on a year-by-year basis, which is a good way to manage a company.

The Company needs a certain flexibility based on trust but definitely not to make it as 20, 21 and 21, 20.5.

And today we have more the capacities to at the same time face our commitments and also face our wish especially in this world where there is a need for new assets, there is a need for new reductions.

Why should we get out of it?

So we will take and continue to invest on a sound basis and definitely not at the expense of our shareholders because they have the priority for the money they are bringing to the Company.

I wasn't critiquing what you are investing or how much.

I was just trying to understand how (multiple speakers) how dynamic each of the numbers were in the framework that you've got buying, selling, investing, gearing, to try and understand how you were thinking about how each of those could move around?

To give you -- because I like to open the subject easily.

We are talking on purpose of working capital.

I could -- I knew the word but I was trying to bring Patrick into the discussion.

We have had the numbers of working capital at the end of the year which was far higher than expected.

It's very difficult to predict the working capital on the one day but that's a balance sheet.

It's one day.

And we know at the end of the year especially when the prices of oil are high, you have a lot of income to be placed in our working capital plus or minus and it can change the figures very quickly.

When Patrick gave me -- his teams, not him -- and what I called expectation on what could be the working capital, what we had at the end was different.

The Company is not richer or less rich, it's what it is, so it's moved our gearing from 22 to 23.

Okay, I would have preferred 22 but it is the same Company with the same balance sheet, with the same strength but it's moving with those kind of things.

So again, what is important is to give you our targets for gearing and we said 20 to 30.

In fact, we are much more in the 20 to 25 and definitely in the re-secureds, much close to 20 on purpose.

That is to give our investors the credibility of the way of the Total strategy is moving, respecting our balance sheet, respecting the dividend, and then, and then we will have to sell assets.

Not anymore.

We will have the wish to sell assets.

When we sold CEPSA, it was not because we were forced to sell CEPSA.

We sold it because we thought it was good for reducing our exposure on refining and even marketing for that one.

In Europe it has been done.

It was good for the strategy of relationship with Abu Dhabi and at the end of the day, it was part of our commitment to reduce the refining capacities to $500,000 per day.

When we sold CEPSA, again I'm not criticizing, I'm listening to you -- but nobody is taking into account the fact that we reduced our refining capacity by 256,000 barrels per day.

But as far it was not part of the 500, that does not exist anymore so we should have said 756.

I said why?

We said 500.

So if it's coming from CEPSA and not coming from somebody else, that's what it is.

That's management and what is important is when we said 500, we did more.

Should we do more?

Yes.

Do we think that we still have two adapt our refining capacities in Europe?

Yes.

It will be done on the right time.

We have done it on Normandy.

We did it under here and thanks God, we are not the only one moving.

It helps.

Remember the discussion we've had four years ago with this group about who should be the first to sell or to close?

Now we are at the moment we are faced to realities.

So that the way the Company is managed -- and I strongly believe that with Yves-Louis and his team, we proved that we are now good sellers, that we have assets to be sold.

Definitely I know that you'd like to know the list but I cannot say it.

Now, you know our portfolio.

You know which assets are long-term, short-term.

It's easy to understand what it could be, but I cannot go further on or be more explicit.

And your new love affair with the United States?

Your new love affair with the United States?

Okay, on Utica, on Utica, there has been a debate and I was listening to the Exxon -- what is it called -- on the Exxon (inaudible) meeting and the good questions you asked the CFO because the CEO was not present but he's keeping himself for the next one.

So I have heard that they were extremely confident in the gas price in the medium and long-term but for the time being, they are focusing on developing part of the assets which are liquids-rich.

Well you have the offer for Utica and Total.

Maybe a little bit more conservative view on the price of gas than our colleagues.

But in terms of assets going to Utica, which is rich in liquid reserves, it was worth doing it because at the same time we are profitable with a very low price of gas thanks to liquids.

And second, if this company I was just mentioning is right on the price of dry gas, or the dry gas as opposed to liquids, we will make this project tremendous.

But it's a good way to have access to reserves in the states at a good price.

Does it mean that we will go further than this?

At this time, the answer is no.

For one simple reason.

First, we have enlarged our base of gas in the US, especially in shale gas.

We have the part in the South which is not as rich, so which needs to be driven a different way and you've heard that Chesapeake was extremely careful in sometimes reducing the numbers of where they are putting.

On Utica, we are much more in an Asia positioning but for the time being, this one we accepted it with Yves-Louis because it was rich in liquids so it's a project which is in fact sinking on the short, medium-term, oil price will be high.

And in the longer term, as far as you have huge reserves base, it is still important to have gas, dry or dry after the liquids are taken out in the United States.

That doesn't mean that we are going to develop something larger.

It doesn't mean that we will be buying a company even if -- who knows, but there's no such plan today in our vision.

Irene Himona, Societe Generale.

I have to Upstream questions.

The first Argentina.

Why BF has just certified about 20 billion of unconventionals?

You are in the country.

What is your view on the economics of these projects, particularly in that very anti-business political environment currently?

My second question on Azerbaijan, you have a lot of conventional gas.

Can you talk a little bit about how we turned out in -- we avoided turning that into stranded gas, i.e.

what pipelines routes and when?

It seems to me we've been talking about some of these pipelines for as long as we have been talking about Shtokman.

Thank you.

Yves-Louis?

The first question was about Argentina.

We consider that there is a high potential for shale gas in Argentina.

That's why we took more permits with this objective.

It happened I suppose as you know that the permits that we have had for a long time are also prospective for shale gas, so when you combine our existing permits, which are prospective for shale gas, I think the ones which are in American, and the permits that we acquired quite recently altogether we will consider we have a nice acreage in terms of shale gas.

And in 2012, we have a number of ways to -- with this acreage.

Regarding the new -- the very recent move of the authorities, for the time being, it does not apply to gas floods.

They maintain what we call the gas floods plus, which is the incentive for gas but the move is the incentive that they had put in place for oil.

But as far as we are concerned as a Company, we did not -- we were not in the situation to take advantage of the oil price incentives.

But we took advantage of the gas flows and for the time being, it has not been changed and they say that it cannot be changed.

That's all what I can say.

The second question was about Azerjabain.

(inaudible) Regarding the pipe, the situation, before up sharing, we have already the issue of the Phase II of Shah Deniz and what I can say is that this issue is progressing quite well and I am quite confident that there will be a solution, a pipe solution to unlock the delivery of gas and that -- to avoid to have the gas stranded.

I believe that before option comes into production, today I don't think it is on the critical path of our development in Azerbaijan.

In meeting with the -- to support what Yves-Louis is saying, in meeting the President of Azerbaijan recently, I must say that I am much more to comment a little bit on it's not going to start producing in three years time.

So it's purpose was much more we need gas to prove that we can play a role, so today the question is much more -- how it's likely to continue to know exactly what his discovery which seems to be very attractive to make the necessary delineation and then develop the field.

However, in terms of access to markets, I don't think there's any reason to be concerned, so it's already unlocked.

Now the problem is we need to deliver and I can tell you we will get much more I would say pressure to deliver the gas than to wait and see.

Now it's also politics.

Martijn Rats, Morgan Stanley.

I have a question about your new project pipeline.

The nature of the question is this.

Ever since you communicated that target of $32 billion, $33 billion of cash flow from operations over the next three years, I must admit we've been struggling with everything else we feel to kind of fully explain that.

Listening to the frustration today, it sounds like a possible explanation of the gap between what we thought we could get to versus that number is very high cash flow coming from the new project, the project that you're starting up.

Looking at slide 21, it looks like the projects you are starting up between '11 and '15 are generating roughly double the cash flow per barrel compared to the existing portfolio.

That's pointed dramatic move higher.

If I now look at slide 16, which shows the project backing up that increased cash flow, that looks like it's fairly typical for oil projects these days.

I am sure you are going to tell me they are fantastic projects but there are also fantastic projects in your current portfolio.

What is it in these projects that will allow Total to generate double the cash flow per barrel whilst the general trends in the industry over the 100 years has been to develop the easy oil first and therefore profitability has been on a sort of a like for like basis on a downwards trend?

What's so special about this list of projects that it's going to -- that it will allow you to generate double the cash flow per barrel?

What can I say?

That I checked the number, which is true.

It was checked by the CFO because that's all (inaudible) presentations so I can't give you a list of the project with the dates.

And then you'll have to make your own calculation.

But the result is coming from the cash flows of each of those projects which are in our startup dates.

We can question the startups in terms of date, question the investment cost, I think we are usually quite conservative but here I have the list of all the projects and I'm sure that the financial team will be more than happy to give you those fields and production in details and then the result is made from the computation of the (inaudible).

So I cannot say you more that it is a result of all of those startups and then we can challenge it one by one.

So as far as I cannot do it myself, it's not true to give the -- to send a hot potato to somebody else.

But I did reconsider that those have been done in the right way.

So we will definitely answer to your questions at the appropriate time.

So I cannot give you the list today, but I am sure that we're ready to answer on the way we achieved this number.

I'm sorry, but unless I answer to each of the fields, I cannot tell you why and especially in the list, it's true that you have fields with I would say high cash and some with less especially in terms of timing, in terms of plateau and in terms of cost.

Now it's a mix of everything.

You have the North Sea.

We often forget North Sea.

That's why that piece of (inaudible) is there to mention North Sea still exists.

Even the UK, even if we don't like their new tax regime, so it's very difficult to say that it's going to be a lot of cash at the time we are obtaining the government that it's not true.

But it's still not so bad in comparison but it's less than what it should be.

I cannot be more normal than this.

But it is what it is.

So you have the North Sea, you have Nigeria, you have Norway.

That is North Sea, too.

You have Ichthys, which is a good project.

You have parts of Argentina, Italy, Congo.

That's all of those who are making it this figure.

So unless you [enter] into details, I cannot tell you more than those figures that's correct and ready to be challenged, but --.

(French)

Maybe as you mentioned that we can provide some details.

I don't -- the main project that will contribute to our growth and cash flow by 2015 you have in the order of Pazflor, CLOV, and consists like an (inaudible) Gladstone, cash and equity capital, all those projects are contributing heavily to our increasing cash flow.

If your question or was 2015, those are the main contributors.

(Inaudible - microphone inaccessible)

Yes, another way to ask answer to your question, past the end of these projects, [PSC], and they will be producing at their early stage of production in a space where you regularly record and you have a high profitable range.

So in PSC, which is the case for sure, it is also the case for Kashagan, frankly, you have the first year of production where those projects are contributing a lot to our cash flow.

Peter Hutton from RBC.

Three fairly definitional questions, really.

Can I ask in the downstream by how much should we expect the capital employed to decline between 2010 and 2015 to help the rate of return?

Second question is and this may be perhaps related to Martijn's question a little bit as well, can you give an indication as to what the average operating rate of Pazflor was in the fourth quarter and what it was operating at the end?

Because obviously we see that as certainly one of the projects which is helping you on the road.

The third one is you mentioned what the organic reserve replacement rate was but I'm afraid I missed it.

Could you confirm that and if there is any differences between the oil and the gas side on the organic side?

Patrick, on the first one?

On the first answer, we do not expect to have the capital employed to decrease.

Part of the profit of the value we want to deliver is coming from new projects, so we are investing in Dubai.

We are investing in open projects like in (inaudible).

So these attract capitals.

In fact, we are more in our plans as a global increase.

In fact, we need to decrease in Europe between 3 -- and the projects which are more profitable, which is part of the 1.5% we have seen of the gain in the schematic (inaudible).

So the strategies based on controlling capital employed in Europe and improving the profitability of European activities, which are quite low today, so it's part of the efficiencies and synergies are actually directed to Europe.

And then we have other projects which are much more profitable on the emerging countries, especially Korea, Qatar, and Dubai coming on stream.

We have been facing a large part of our what we call specialty chemicals, which are not part of our long-term strategy.

We still have a portfolio of specialty chemicals, which are of good quality, which have been improving their return largely and as you've seen when we say 10% return in chemicals in 2011, it's mostly coming from those specialty chemicals.

So we have to be careful with what you might keep in mind of what was the return on those assets in the old days, which means only four years ago, when they were very low return like at (inaudible).

Today (inaudible) is having more than the average return than the Group, which means above 16%.

So we never talk about those assets because first, they are not huge assets.

And second, they are probably not in our core business.

So I don't want to be more explicit but part of those assets we can sell if needed, just not only E&P could be those.

Again you know how careful we need to be because of certain laws, but at the end, we do it.

[Brazilians] have been sold; the public assets of Hutchinson also have been sold.

So keep this in mind, (inaudible) it's not anymore losses but a plus ad for sale.

But at the end, it's true that in terms of refining and chemicals, we believe that outside of Europe, which is too mature, [close] to grow, and what we will do is be more not only adapting ourselves but to invest in places where we know and to think there is a long term.

Otherwise we would not invest.

But for new countries like I don't like to talk anymore about emerging countries because as I said this morning, now have emerged.

It's time to recognize this.

Yes, we still believe that polymers ought to go into more details.

It's a product of the long-term and today we see it as in a lot of places becoming short.

So today there is an economical crisis.

But just to consider that you could get rid of all petrochemical activities just to please I don't know who, that's not our strategy.

So as Patrick said, we will be very careful in the way we increase our capital employed in the refining and chemicals.

It will be reduced in terms of percentage versus the rest of the Group but it's obvious when we invest 80% in the upstream and [1911], it will be still the case in [1912], but at the end, the downstream part in relative terms will be lower but lower doesn't mean we reduce the capital employed.

But again, we will follow the same rules and for the rest of the Group, if they are not economical we will not do anything.

So it means we are going to be extremely strict on any decision on this specific part of our core business.

Pazflor, Yves-Louis?

Regarding Pazflor, we are exactly on track with our time.

We reached a little bit more than 2000 barrels a day a few days ago.

We still have -- 200,000, sorry.

200,003 to be precise.

So we have another 17,000 barrels per day to reach the plateau of 220,000 barrels per day and this will be a -- we will be able to achieve it when we have some action (inaudible) and when we put in operation, into operation what our injection, which is planned during the year.

But once again, we are perfectly all that is in conformity with our plan and our project -- of reaching our plan.

(inaudible -- microphone inaccessible)

Regarding the question, yes, your question was is it -- (multiple speakers)

(inaudible -- microphone inaccessible)

Yes, so the organic investment rate is 5% over the year.

As you know, it's proven reserves so absolutely no impact of any exploration discoveries that but clearly of course even for our acquisition, most of our acquisitions are acquisitions in other phases which are clearly part of the cycle.

It is a very deliberate strategy.

We are not buying production.

We are not buying proved reserves.

So here again, most of the entirety of what we have done in the year 2011 in terms of preparation of the structure exploration or discoveries of these opportunities has of course no impact for this year on the organic rate of the business of returns.

At the same time if we look at the decision, the FID we took, which there are a number of them and here some decisions had a full impact in terms of organic reserve replacement rate, has a 9.10 (inaudible) rate.

But although there is like to get to the LNG, our nonconventional gas and you know that in nonconventional gas you are not able to book in 1p or a large package of reserves.

But you do it over the years when you are progressing with that rate.

So there is a slight moderation ratio coming from the impact coming from that.

In terms of liquid and gas, I have not the precise --

I will answer.

I took the time to read my notes, Yves-Louis, just to help you, not to take the lead but I think it's more interesting by the way to get the split on resources and on 1p as Yves-Louis explained.

Because the 1p on a one-year basis being 1p doesn't mean anything and for instance in 2011, it has played an important role.

It is officially more gas than oil but economically, it's more oil than gas for (inaudible)

First the liquid content is very high.

And second, all the gas is sold on the crude reference, so at the end of the day, it's not a real gas project even if we are producing gas.

On the resources, the figure of 40 years resource life on the slide you have the OECD countries 35%; long-term plateaus 35%; Canada, Australia, Russia, 30%.

But in terms of splits between oil and gas, it's 55% oil and 45% gas.

So it's roughly where we are today in terms of production and when I am asked what is your target?

As I said to the Board yesterday, so I have the same answers for you and the Board, I said 50-50.

Why?

Because I cannot say more than this.

But today it's true that definitely even on a long-term view, it's roughly 50-50 and on the resource base, 45-55.

It will be more interesting for you to get into the details of what is gas linked with the US, what is gas linked with the UK, and what is gas linked with the (inaudible)?

And that's then passed to you to be studied on a case-by-case basis.

But roughly with 45-55, you are in the market.

Oswald Clint of Sanford Bernstein.

Christophe, one of the charts I liked last was in September was the decrease in cost and timing overruns relative to budgets like you were doing back in September from 2005 to 2010 and the decreasing trend.

Could you just say whether that's still the case in 2011 or you expect it to be the case?

There's no -- what sort of pressure are you seeing from your service contractors?

Because it allows us to build confidence in the returns and in the organic growth potential of the Company.

Secondly it's actually back to Jon's question about unconventional gas North America.

Your entering mechanism is always through the middleman, through Chesapeake, etc., whereas in Europe and South America, you seem to go into a private company or directly through a license right.

Why is it that you have to pay that more expensive entry price when you're looking at US unconventional base?

Can you not go in almost below the radar?

Well, I will leave Yves-Louis on the first two questions.

But even if you are to follow what I said last time, but I think you know what it is in terms of contractor and inflation.

On the last one, this question of do we pay more or less is always fascinating because it always depends what you buy and how you make it, and we are always very transparent in the way we are announcing our contracts and our agreements.

It's true that when there is a carry, we say there is a carry it's carried, it's added to the cost of acquisition up front.

And then it is used by some of you as being the total amount and you divide by X or Z and you find a price which is your price.

I'm surprised when we've been ourselves making all comparisons with all the other buyers, petrol and others.

I think that for our liquid content project, Utica is one of the cheapest acquisition.

So it will be interesting to compare our views but I can tell you we don't think that Utica has been done on a high-priced level.

Is it true that Chesapeake when they acquired the [Serfex] in the year I don't know when -- we're happy to do it and clever?

It is true that Total is not an expert in buying farms and land, and our expertise is much more in producing, but when you look at everybody being in the industry like us, nobody has been in the lab business.

We all have been acquiring -- most of us have been acquiring assets from those smallest -- smaller companies which at the same time cannot develop the assets without us, so it's a good win-win.

I don't know what is a price in terms of per barrel cost of acquisition, Yves-Louis, on Utica, but it's what -- what?

(inaudible -- microphone inaccessible)

No, no, in terms of dollar per dollar because I don't care about whatever by square meters.

I don't understands -- yes.

I would like to be in this business but we are not.

So in terms -- 3?

Okay.

So I mean, 3 -- is it good or bad?

I don't know.

I think it's a good acquisition and I think that all the others and to start with the biggest one, XTO, I think Utica is more interesting.

Now it's my view let's share it in making our comparison.

But it's true that reading sometimes certain of your papers and ours I have a difficulty to understand why we are so different.

But when we take the price we paid first, then the carry for our [line], there is a certain limit.

They have to do X less than that, otherwise they don't get it.

And if we take everything into account while it depreciates at Utica, is a good deal.

Now was it better three years ago?

Yes, certainly.

Is that a reason not to do it today?

Certainly not.

Or you never do anything when you've lost it one day.

And on Novatek, we raised it.

We could have done it at a far better price but we didn't.

Has it been a good reason to say as far as we couldn't get it at that price, we would never acquire it?

No.

So okay, sometimes we're late, sometimes we are newcomers.

In Angola we are coming along the first of those new pre-salt.

Same in Ivory Coast and Brazil.

Later (inaudible) are good but the way company is driven, but on Utica, I think we made a deal which is extremely lucrative thanks to this liquid content.

It's true that if you use $60 for the liquids then it's a bad deal.

So it all depends on what are your assumptions on the price of oil, because it's a very rich content.

I mean as rich, but it's true even if we have been at the time trying to think about it, we consider that our job is not to acquire land for that specific business.

It's true that at the end you pay more but again, it's not our business.

And I don't think that a lot of big companies will find themselves in a good position in making these land acquisitions.

The cost is to pay the price for somebody who has been doing an interesting job, but as far as we are not Marxists, we don't care that Chesapeake is doing a good deal as far as we are doing a good deal too.

Otherwise if you say okay, they are making too much money, so we are not going to participate to the deal, that's Marxism.

My view, Marxism.

Last one?

To answer, it's important but I think the question has been heard by our team and let's check your figures between what we have and what you have.

I think it's always interesting especially to get your notes and I would say myself, I would be interesting to get yours but I can't understand why we have maybe a difference of opinion.

So interesting.

Last one?

Nitin Sharma of J.P.

Morgan.

When you think of reserve replacement, how important or how much emphasis do you place on organics as a replacement especially in light of recent increase in your exploration spend?

And is there a target or an ambition that you've got for organic reserve replacement even on an average -- three-year average, five-year average basis?

All questions about organic versus nonorganic.

Frankly, I think we have to move a little bit on that [forwarding] discussion because I am a little bit surprised to see so much question on organic when it was organic only you were seeing worries on nonorganic.

And then when we are buying assets, then they become reserves, so that's why we buy them.

So it's good at the end they become reserves.

So if they are coming from whatever, what counts is how much cash it will deliver at what price you will acquire them.

If it's coming from explorations, it's true that normally it's better but at the end, what is exploration?

It's to get access to exploration blocks, you have to pay for it, so what means organic?

It means organic is something you are doing by yourself.

Well, at the end, there is very little you are doing by yourself because usually you don't create organic reserves from existing fields except when you are good as (inaudible) in the North Sea, when you are capable from oilfields to revise the fields and to find new 2p's and 1p's with new technology.

That is a real organic is when you are capable from oil in place and gas in place to increase your reserves.

That is organic.

All the rest is nonorganic.

Exploration is not organic.

The DRO to please Yves-Louis, which is the third type in the old Total, that's why we have a new division, which means acquiring resources not only not developed but also not even 2p or 1p if not organic but it's oil based on the technology of Total.

So at the end what counts is -- what kind of 1p reserves do you have?

How much cash they will bring and how much capacity we have to bring additional reserves in our portfolio.

But this organic, nonorganic, I will leave it to the finance division because frankly I don't think as a CEO of Total I am bringing more on okay, I'm doing better in organic than in inorganic.

I'm doing better when I deliver growth and profits.

If it's coming from organic or not I will leave it to the experts.

How much confidence can you place on the strategy that is reliant on acquisitions in terms of growth?

Well, in the old days, because I am a young old man, maybe we are talking about organic and nonorganic.

We're talking about reserves.

And Total was known as extremely good because its capacity to make those good acquisitions of non-developed resources by their finished resources are not developed and that was our expertise.

Then of course we are now doing it too with exploration.

But I mean, what is important in a company is to prove that we can make acquisitions.

Patrick Pouyanne was in charge of the new acquisitions in E&P and the result of this has been positive.

Well, you could say it's Siberia because it's not the E&P but frankly that's the way it is.

The capacity is now resources based is to see what is coming from organic and nonorganic and all of what we have in terms of resources are not all organic.

But I'm sorry to be a little bit not following your point.

I will leave it to others.

It might be of interest but frankly, this new approach of organic -- [let it be cash].

Now you all want to talk about cash, let's talk about cash but with organic and nonorganic, I'm not sure that we are going to make money, but what's important is how much we believe that our resource base will become 1p and 2p.

Is it organic or not?

If you give me the definition of what is organic on your side, I might answer because frankly maybe what I am but I don't understand the importance of what it means.

Uganda is not organic.

Is the new view we have on Argentina in the shale gas, is it organic?

I don't know.

When we acquired the blocks it was not for the unconventional.

It was for the conventional.

Now we find there is unconventional.

Is it organic, Yves-Louis?

It's organic.

You see?

But I would say it's not.

But again, I don't think it's important how much we believe that we would be able to continue to improve our replacement reserves very strongly.

And do I think this is a one spot?

No, as has been said by already (inaudible) and his team, when you look at all the acquisition we've made, which are whatever that resource is, there will be change in 2p's and 1p and then 1p developed and that will be the real base for growth and cash of the Company.

But again to say that there is a magic number for percentage of replacement in organic for 1p, I don't we have any target, do we?

Okay.

But again, yes, we are very optimistic and to deliver additional 1p reserves in the years to come.

But we will do our best to explain them that if is coming from one side or another side.

Okay, I'm sorry but I think we have to stop there and have a chance to have a drink.

Thank you for joining us.

Your questions are always of interest because I can understand where you are expecting something new from Total or more investment.

It's clear, cash -- everybody is asking the same.

Do you consider that it's worse believing in high price of energy?

Because it is for me a very important point.

Yes, we don't change our vision.

We still believe that energy especially hydrocarbons will remain high and maybe higher.

It doesn't mean that we will be using more than a 180 to launch our project but we strongly believe that it will be becoming more and more difficult not for us but generally speaking, to have access to reserves and that's why the price will remain high.

So if we are capable to maintain our cost low, if we are capable to definitely control the management of our project and at the end putting the utmost priority on security and accessibility, yes, we will deliver the growth you expect from Total.

And yes definitely, even I know that I shouldn't end with this, yes, I strongly believe that the share of Total is strongly undervalued.

Thank you.