TotalEnergies SE (TTE) 2014 Q3 法說會逐字稿

Ladies and gentlemen, welcome to the Total third quarter results conference call with Patrick Pouyanne, the new CEO of Total, and Patrick de La Chevardiere, CFO.

Mr. de La Chevardiere, the floor is yours.

Thank you.

Patrick de La Chevardiere here.

Let me begin by saying that following the loss of Christophe de Margerie, we appreciate the very strong showing of respect and sympathy and I'd like again to thank you for your support.

As you know, the Board moved quickly and named Thierry Desmarest as Chairman and Patrick Pouyanne as CEO.

Thierry Desmarest is well known and we are fortunate to have him ready and able to step in as Chairman.

Acting on the succession plans that were already in place, the Board selected Patrick Pouyanne as the CEO, which follows our practice of promoting from within to ensure a smooth transition and continuity of strategy and execution.

I worked closely with Patrick for many years.

He made a strong, positive impression on everyone when he was the head of finance and then strategy in the E&P segment.

Later, when we worked together in the Executive Committee, Patrick did a brilliant job managing the restructuring of the Refining & Chemicals segment and now I am very happy to be working with him in his new role as CEO.

And under the circumstances, we thought it would be best to use this conference call to give Patrick Pouyanne an opportunity to present himself.

He will comment on the strategy and the environment and I will present the results.

The two of us will share the Q&A.

And the first challenge for us to overcome today will be to know which Patrick you are talking to but, don't worry, we will make it.

So now let me introduce to you the new Chief Executive Officer of Total, Patrick Pouyanne.

Thank you, Patrick.

So it's Patrick Pouyanne here.

I'm happy to participate in this session today, knowing it will be an exception as normally Patrick, the other one, will manage them in the future, because the circumstances are exceptional.

So to start with, I would like to express my sense of profound sadness at the loss of Christophe de Margerie.

As you probably know, I was myself quite close to Christophe who promoted me in the Company since we first met in 2000.

Christophe's legacy is a vision he had for the future of Total and in the Executive Committee we all work together to transform his vision into a strategy that we could implement.

Christophe is gone, but I can assure you that, despite this tragic event, all teams in Total are more united than ever and that I feel a very strong support coming from everyone.

For the past three years my focus has been the restructuring of Refining & Chemicals segment after a long experience in Upstream.

And our experience shows how much value we can unlock by exercising discipline and following the right plan.

As the CEO, I define my role as managing the Company, its people and its resources to successfully deliver on our strategy to transform Total into a larger and more profitable company.

The way forward is clear.

We are nearing the end of the intensive investment phase and we are going into a period of rapid growth for the Upstream, that comes from a portfolio of major projects.

The Downstream is improving and we continue to implement the restructuring plan.

The recent volatility in the environment has raised questions so let me address that now.

First, despite the drop in oil prices we see no reason to change our long-term outlook.

Ultimately, oil prices must settle in a range that incentivize the development of the 50 million barrel per day of new production needed to meet the future demand by 2030 and we believe that the $80 per barrel range is too low to promote the development of sufficient resources.

We also believe that eventually OPEC will support the oil price as they have done consistently in the past.

And I remind you that our production growth comes from a portfolio of projects that are resilient at $80 per barrel.

Second, as you know, Total moved early and launched programs to reduce CapEx and OpEx, so our initial response to volatile Brent prices is already in progress.

As we said in September during the strategy presentation, our CapEx peaked in 2013 at $28 billion and we are committed to reduce CapEx to $26 billion this year and $25 billion for the following years, by 2017.

Total already has the lowest technical costs among the majors but, nonetheless, we have initiated a company-wide cost reduction program that will begin to bear fruit starting next year.

The situation today is clearly not business as usual and, in the event that oil prices remain lower for longer, we'll have to adapt.

Where we have flexibility we will consider using it, mainly in terms of delaying or deferring activity.

We will also use this opportunity to negotiate better terms for suppliers and service companies and all pending projects will be carefully reexamined.

We are in the early days of a dynamic situation so we will watch very closely the environment and the evolution of our projected cash flow allocation.

More specifically, I required for the coming budget sessions that each branch, each division, must identify all flexibility they have in their spending CapEx and OpEx.

Our priority in any case is to concentrate on the execution and delivery of development projects which is well underway and will soon start to deliver significant cash flow growth.

Four key words for me: safety, deliver, costs and cash.

I look forward to updating you in February at our Investor Day presentation and at that time we'll present our outlook including the 2015 CapEx and exploration budgets.

So now I will turn the program over to Patrick, our CFO.

Thanks.

Thank you.

We are pleased, I think, to report a clean set of solid third quarter results.

The Upstream reported an increase in production and Downstream performed very well.

Looking at the third quarter environment, Brent averaged $102 per barrel, reflecting weakness only very late in the quarter.

European refining margin recovered nearly tripling to $30 per ton.

In this context, we reported a 13% increase in results compared to the previous quarter.

Adjusted net income was $3.6 billion and adjusted earnings per share was $1.56 per share.

Let's move to the Upstream.

Upstream segment generated adjusted net operating income of $2.8 billion in the third quarter.

Production was 2.1 million barrels per day, an increase of 3% compared to second quarter, reflecting mainly the ramp up to plateau and ahead of schedule of the deep offshore CLOV field and lower maintenance, which more than offset the normal decline.

We said that second quarter 2014 would be the low point for production and I would say now that we are well positioned to begin a long progression of year-over-year production increases.

The success of CLOV demonstrates our ability to execute and deliver on major projects.

Looking at the start-up schedule for the coming years, Ofon II is nearing flaring out; Laggan/Tormore is back on track and scheduled to start up in first quarter 2015; Eldfisk II is on schedule to start up this winter, gas in has started on the pipeline feeding GLNG.

The Surmont steam in phase is expected in mid-2015 and Termokarstovoye and Vega Pleyade are on schedule.

We will be at around 2.2 million barrels per day by the end of this year and our target for 2015 is 2.3 million barrels per day with no contribution from Kashagan, ADCO and Angola LNG.

To finish the Upstream story, we have recruited a new head of exploration and launched a review of our process and our inventory of acreage and prospects.

Frankly, we believe we can do more with less so we expect this will lead to a more focused program and lower exploration outlays.

Moving to the downstream, adjusted net operating income for the combined Downstream segments was $1.2 billion, an increase of 50% compared to the second quarter; implementing our restructuring strategy has reduced our breakeven for refining to less than $25 per ton; and in the third quarter the European Refining Margin Indicator averaged $30 per ton.

Equally important, thanks to the efforts made to improve the reliability and availability, the Refining & Chemicals segment was able to move quickly and capture margins when they were good.

In addition to the strong performance from refining, petrochemicals are continuing to do well and marketing has been stable at a good level.

Just as a reminder, one of the benefits of the integrated model is that the downstream can capture significant value when oil prices are volatile.

This is one of the strengths that make us resilient.

Finally, on the corporate side adjusted cash flow from operations for the third quarter was $6.7 billion.

Organic CapEx was $7 billion in the third quarter, bringing the year-to-date total to $19 billion, in line with our budget.

Gearing at the end of the third quarter was 27.8%.

The gearing does not take into account the pending asset sales.

Since the start of our 2012-2014 asset sales program we have completed more than $16 billion of sales, which puts us comfortably in the $15 billion - $20 billion target range.

On top of this we have recently signed agreement for other sales, including Bostik and another tranche of onshore SPDC assets in Nigeria.

That represents more than $4 billion of asset sales.

As you would expect, there are other potential sales in progress.

So in terms of the gearing, recall that each additional $1 billion of asset sales represent a reduction in gearing of about 1 point.

The asset sales program is generating significant amounts of cash to fund development projects and future growth while streamlining the Company across all segments to focus on our core businesses.

Asset sales are fully integrated in our strategy.

And while we are transitioning out of the intensive investment phase of our plan, we will use asset sales, as well as gearing, to balance our cash flow allocation.

So to summarize, solid third quarter results and on track with our strategy.

That concludes the prepared remarks.

Patrick Pouyanne and I are ready to begin the Q&A.

And please limit yourself to one question at a time so that everyone has a chance to participate.

Thank you.

(Operator Instructions) Oswald Clint, Sanford Bernstein.

Yes, good afternoon.

Thank you very much.

And obviously, my sincere condolences for Total's tragic loss last week.

Maybe my first question maybe to the new Chief Executive.

You've clearly been very successful streamlining costs in the refining business and Total have laid out their cost reduction plan for the rest of the group.

Could you maybe talk about how difficult or how easy you think it might be to actually execute that cost plan across the other businesses, especially the kind of upstream business?

Thank you.

I think it's probably easier in the upstream than it is downstream.

In the downstream you have clearly a cost-culture was existing, but it was existing before I came and we just put some emphasis on it.

We have plans coming from the bottom up, having a clear target.

To be honest with you, I think in the upstream there was 15 years ago quite a good sense of cost culture.

In fact, cost culture, when I joined the oil and gas industry, the cost culture was dominant in the end of the 1990s.

Of course, since 2004 or 2005 we considered rightly that the priority should be given to growth, to additional wealth, to brownfield development, to greenfield because the price was going up.

And today, in fact, what we face in the upstream is that we are back to the profitability that we were in the last of the 1990s, in the end of the 1990s.

So the cost culture is for us possible.

We have quite an important room for improvement and I strongly believe that it is just a question of mobilizing the team.

So we put a plan in place, which was presented to you in September with some targets.

And I know that Arnaud Breuillac, the E&P President, is mobilizing his teams and we will follow all that carefully.

But frankly, it's a question of mobilizing, following up quarter after quarter the results, monitoring them and, as we demonstrated in the Refining & Chemicals, we will continue.

I would add on that, that of course it's even more important today in this volatile environment this cost control policy, strategy, because it's the best answer we can bring to the volatility of the barrel.

Lowering the breakeven is for sure the industrial answer we must bring by spending less.

And my experience in Downstream, when you are faced with a margin business, with very little margins it's obvious.

Today we'll have to convince , but I think the whole company is (inaudible) including the Upstream, but we need to have the same attitude.

Just to add one point is that Patrick is modest.

Honestly, synergiesand efficiencies achieved in advance in the Refining & Chemical and that was a very strong achievement.

Thank you.

Nitin Sharma, JPMorgan.

Afternoon, gentlemen.

Firstly, please accept my condolences on the tragic news.

Questions for Patrick de La Chevardiere.

On operating cash flow, adjusted operating cash flow in 9 months is $18.9 billion, down 8% on 9 months of 2013.

How should we be thinking about 2015, assuming no major change in macro factor?

Any guidance on this, please?

And maybe could you also comment on higher discount of Brent in terms of liquid realizations in Q3 and what do you deem as sustainable levels?

Thanks.

Thank you, Nitin, for your condolence.

In 2015 at $100 per barrel we plan to generate about $7 billion to $8 billion of cash flow.

As you know, a reduction of $10 per barrel in the oil price decrease the cash flow by $1.8 billion in 2014.

It might be a little bit higher in 2015 because we will have more production, but that's the range, $1.8 billion I am still giving you.

We are studying some option in terms of OpEx and CapEx flexibility, as Patrick mentioned in his speech, along the same line as what we did in 2009 to be implemented if oil price was to remain at the low level of $80-$90 per barrel.

Among those there is a further reduction in our exploration budget which can be implemented; a delay of CapEx on operated projects; optimization of the CapEx and OpEx spending; and the renegotiation with contractors to reduce costs.

I like to add one thing, is that we do not manage our company according to the evolution of price over the short term and I do not want to get into a debate about theoretical oil price evolution.

What has happened over the last few weeks is a successive indication of both weaker than expected demand and higher supply which put pressure on prices.

But the resulting sharp selloff has driven Brent down from recent highs about 100 to 80, which is today 87, I think.

And keep in mind that the main sensitivity for us is $10 per barrel equal to $1.8 billion of cash flow.

And a comment on discount in Q3, liquid realizations?

It's a mix effect, honestly.

There were lower differentials in Nigeria, Libya and Norway.

That's basically from where it is coming.

It's also an over-supply lifting issue.

Thank you.

Thank you.

Lydia Rainforth, Barclays.

Thanks, gentlemen.

And just one question for me, please, if I could, for the new CEO.

What do you consider the biggest challenge that you face running Total?

Is it sort of around driving the cost agenda?

Is it delivering on the existing projects or is it about how you think about Total post-2017?

Thank you.

Well, I think on the short term, clearly my message internally, I use four key words in my speech: safety first, obviously; and then deliver; deliver the projects which are being developing, that are developed; execution delivery, deliver the restructuring of the downstream.

Then we have the cost.

Capital discipline is important in my view and we have committed to reduce our CapEx and we will do it, so controlling CapEx.

And also implementing our reduction of OpEx in order to deliver additional cash as we stated in September.

And the last word is cash management.

I will mobilize the Company and my teams on managing the cash of the Company because in these times of turbulence it's very important in my view.

Then of course my second priority or my equal priority -- because the job of the management is to prepare the future.

I'm not myself running the plants.

I'm not myself on the fields.

But my other task of course obviously is to prepare the future.

We are in a long-term industry and so as a project and the impact of the top management of the Company is to give clear directions on the short term, but also to prepare the future of the Company because finding new resources, preparing the future projects is also of essence for an oil and gas major company like us.

So for today I think the roadmap on the short term is clear.

I will act in the continuity of what was presented to you in September.

Difficult for me not to do it because I was a member of the Executive Committee team.

I was myself in charge of strategy and business development for the Upstream during five years so I cannot deny it and I strongly believe it's a good strategy.

So that's my -- would say my priorities.

That's great.

Thank you very much.

Martijn Rats, Morgan Stanley.

Yes, good afternoon.

There were two I wanted to ask you very briefly.

First of all, Mr. Pouyanne, you mentioned in your comments the portfolio's resilient at $80.

And we hear sort of observation like that with some regularity.

I just wanted to ask what that actually means in the sense that does that mean all projects are NPV positive at $80 or all projects are cash generative at $80?

What's the yardstick to judge resilience by in that context?

And secondly, maybe for Patrick de La Chevardiere, I noticed capital employed in the Downstream had contracted a fair bit.

I was just wondering if that's just disposals or whether there's something else going on.

First of all, thank you, Martijn, for your questions.

The portfolio resilient at $80 per barrel.

That means that the Executive Committee, each time that a project is presented and we stick on this I would say discipline, we look not only at our -- I would say base assumption, of $100 per barrel, but we also carefully look for each project at what happens at $80 per barrel.

Of course the NPV is positive and the result is positive at $80 per barrel, otherwise it does not meet our thresholds.

So that was why I told you it's resilient.

And even -- I would say the most capital intensive project should meet these targets and they met them in the past.

I will hand over to Patrick on the Downstream capital employed.

Even if I could answer, but it's no more my job so Patrick will take it.

Just one additional comment on the resilience at $80, and you will be able to check that with your figure, is that by 2017 at $80 we Total are able to organically cover the dividend.

So moving to the second question, the Downstream capital employed, this is the impact of the Brent price, which is decreasing the inventories, basically.

Okay - not more complicated than that.

Okay, thank you.

That's useful.

Jon Rigby, UBS.

Yes, thank you.

I think my question is for Patrick P. rather than Patrick C de V.

So it's P1 and P2.

Yes, exactly.

But which one's which, though?

You can choose.

You can choose, Jon.

It's up to you.

I think -- my observation was in the transition from Mr. Desmarest to Christophe that the messaging changed a little bit.

I think the basic strategy was the same, but clearly Christophe was a man of very strong opinions and his view and the message about Total and what Total was doing began to change.

And you laid out your priorities for the strategy, which are clearly in line with sort of the collective decision making that fed into September.

But at the margin can we expect to hear some sort of change of message, a different view about the world and maybe a slow evolution of Total's direction over time under your control?

I think first of all, again, once again, we had a strong shared vision internally under the leadership of Christophe.

And myself participated to the building of this vision and so we worked very closely during the last 12 years.

So don't expect from me certainly to tell you the strategy is wrong.

I stick to -- I will stick because, by the way, we are on a long-term industry and we don't change the direction of the big boat in a few minutes.

Secondly, because I think -- as you can understand easily, but in this quite difficult time at Total my first thinking is to stabilize the Company.

The Board has taken very quickly some very important decision and send us, the management, a strong message and to the outside world that we are a strong company, well organized.

And so today my priority internally is to say, yes, we are stable, we are organized.

And so I will not do it; I will not change anything quickly.

Of course we have -- because in the world of oil and gas the landscape is moving very quickly.

The landscape in 2015 has nothing to see but what it was in 2005.

There's plenty of news from around the world.

And so we have to listen to what is happening around us, and particularly these days where we see an evolution of the price so we could have to adapt it.

For the time being, I don't think we have too urgent that.

We have to speak on what we see, but monitoring carefully, of course, the short term.

That's my feeling.

And then you will see step-after-step probably the management style will change because I'm not Christophe, as you know.

I have some qualities.

I have some defaults, also, like him.

Nobody's perfect.

I think I have a different experience myself with the Company.

I will try to use it for the benefit of the whole Company.

But you can -- don't expect to see a big fundamental change in the fundamentals views.

Continuity I think is good in our own -- on the business.

And I would like also to add that I have two other message.

I have a strong team around me.

Patrick, of course, is one of them and a key person on the team, but my other colleagues are the strong team.

And we have also -- and it was important, the Board on the Wednesday morning when he met, he told us that he had full confidence in us and that the decisions have been taken unanimously, which for us was also important for the management of the Company.

Okay.

That's great.

Thank you.

Lucas Herrmann, Deutsche Bank.

Afternoon, gentlemen.

Wow, that was quick.

And as with the others, condolences on Christophe's -- or your loss and the loss of Christophe.

Patrick number one, I think, but Patrick P., just going back to the business that you're moving on from, refining, I wonder if you can give us a sense of the extent to which the improvement we've seen in this quarter is coming from the actions that you've taken and are therefore sustainable against a margin environment which clearly may deteriorate?

And secondly, staying with that business, whether you could talk at all about the associate line which seems I'd say relatively modest given the full commissioning of Satorp, but also the historical contributions from Qatofin and the Samsung business.

Okay.

So the first question first of all.

As you know -- thank you, Lucas.

As you know, we all -- we had a plan to improve by efficiencies and synergies programs, which is supposed to deliver $650 million of net results in 2015 compared to 2010; 2010, yes.

And so it's an additional net result per year of $200 million for 2014.

And so this is embedded in the result that you have under your eyes and it's clearly there.

And it's -- what happened during the quarter, that's true that the margins were high, but we successfully implemented our improvement on the costs, but also on the program on availability and reliability.

And what has been great is that in August and September we captured all the margin available, no problem, through our plants.

So I think this -- the cost-saving program, it is clearly sustainable, but also this progress will be able to repeated.

We have been (inaudible).

Of course the margin will just stay where it was.

It's already decreased.

But the average for October should be around 25 so the progress will be good.

And you have also to keep in mind that we have a good portfolio in the US and where the margins are very good.

And our results is also benefiting from the US results in petrochemicals and also in refining and this is even more sustainable than the European margins.

On equity affiliates contribution I would say Qatar is very stable and is delivering every quarter a very good results and profitability.

Satorp is in the early days.

So as you know, Satorp today is technically fitted.

It's every units are running well, 92% for the conversion units.

And we reached an average of 400,000 barrel per day in terms of distillation units.

Then we have to concentrate now on the way that the economic result is delivered.

And by the way, we have to -- we are going from a project team to more business teams now.

This is the focus for us, so there is some contribution.

What is sure is that I can tell you, but of course what I said to you during the field trip, for those who participated in November last year, is that the basic advantage, the structural advantage on the energy price and on the crude purchasing price are there.

Then of course the Asian markets and the Asian products, are markets are not so good but we are confident that we can deliver the figures that we mentioned to you last year.

Even if in the quarterly result for Satorp, it's still small because it's the early stage.

Patrick, is it small positive?

Because what I can't quite understand about the refining results given the robustness we've seen historically from Qatofin and Samsung is the absence of any progress in the environment which actually seems to be relatively favorable for chemicals and refining, both Asia and Europe.

I think, Lucas, we cannot answer these questions right now.

That's fine.

But Martin will be back to you.

Alright.

Gentlemen, thank you.

And Patrick, every -- Patrick number one, every success in the future.

Thank you, Lucas.

Thank you.

Theepan Jothilingam, Nomura.

Yes, hi.

Good afternoon, gentlemen.

I just wanted to also convey my deep sadness at last week's news.

If I could ask one question on LNG, just firstly in terms of the profits LNG contributed for this quarter, and just an extension of that in terms of Yamal LNG.

Do you have any sort of clearer directions on the impacts of sanctions on that Russian project and when you might need to rethink on financing or re-scoping of that project?

Thank you.

Okay.

Let's start -- thank you, Theepan, for your support and let's start with the LNG contribution.

Last quarter LNG represented about 20% of our production and between 25% and 30% of the upstream result, which is in line with second quarter 2014 and third quarter 2013.

Last quarter LNG sales were stable compared to second quarter at close to three tons.

And LNG trading activities were slightly up from 25 cargos in second quarter to 27 cargos, so a slight increase.

I remind you that LNG, together with deep offshore represents 30% of our production and more than 50% of our upstream result.

Let's talk about Yamal.

The main consequences of the sanction currently on Yamal is that the project will not be able to raise US-dollar financing.

So basically, the financing will be delayed.

Works on site are continuing as per program at the moment.

We are working in another type of financing, including Chinese and Russian banks and some export credit agencies from Europe.

This will take some time.

We target some success by mid-2015.

And we hope and are working on the euro-denominated financing.

Thank you, Patrick.

Is for next year most of the CapEx is equity financed.

At the moment it is, yes.

Okay, perfect.

And also to Patrick Pouyanne, I look forward to seeing you February and certainly welcome your message on focusing on cost margins, particularly in E&P.

Thank you, Theepan.

Irene Himona, Societe Generale.

Thank you.

Good afternoon, gentlemen.

Our deepest sympathies.

My first question to Patrick Pouyanne.

Patrick, you mentioned execution as one of the four key areas.

And I wanted to ask about Libra very briefly, if you can share with us whether it's fast tracked.

It feels like a fast-track project.

But what will be the timetable in terms of FID and potential first production?

And secondly, a question for Patrick de La Chevardiere; a financial question.

Why was your net interest charge so low this quarter as a percentage of your net debt and what can we expect going forward?

And then secondly, in Q2 you flagged that you have now started recognizing more tax in the French downstream.

Can you talk about what happened in Q3 and perhaps how we should think about this and your tax rate in a world of a little bit higher refining margins?

Thank you.

Libra first.

On Libra -- and thank you, Irene for your questions.

To be honest with you, I followed Libra as an Executive Committee member, but since -- when I was there I did not have any business review on Libra.

But what I understand, because I went to Brazil for my downstream business in June and I had a presentation, is that, yes, we are progressing first of all on appraisal.

And we intend, in fact, to make sort of an early production system.

So we'll have -- and we have ordered -- by the way, we have sanctioned recently in the Executive Committee of Total and it has been sanctioned at the JV level, the order for an early production system which will allow us to make some extended well test, but which would provide some early production, something like 50,000 barrels per day and allow us to have some cash out and to finance the exploration program.

So that's what is going quickly.

It's a small FPSO of 50,000 barrels per day.

For the full -- I mean for the rest of the development, because it's a huge development with potentially many FPSOs, I think we need to carefully look to that before to take the big decisions.

There is a central and a core area which will be developed first.

And I think the planning is to have some production coming on stream by 2017.

2017, I think, yes, is the date that they have in mind on Libra.

So first of all -- first, appraisal phase, extended well test to production and early production and then moving to the first sanction for production in 2017.

But you know it's a huge field and it will be a staged development FPSO after FPSO.

That's the strategy that we want to put in place.

So thank you, Irene, for having asked only one question.

The first one will be the net interest charge.

As per accounting rules, cost of net debt include mark-to-market on convertible bonds.

SunPower, which is fully consolidated in our account has convertible bonds.

During last quarter the share price of SunPower decreased down to $36 per share from the high second quarter level, which was $43.

The intrinsic value of the conversion of the option decreased and generated a gain in the profit and loss account and that's it basically, it's a non-cash issue.

The second question or the third question was about tax recognition.

You know that in France we have a consolidation for tax purposes among French subsidiaries.

We monitor every quarter the overall result for tax purposes of the French subsidiaries.

Last quarter, thanks to the results made by the Refining & Chemical, the tax result in France was close to zero.

So basically, we didn't write off any asset related to those losses in the third quarter, a slight amount of about $10 million; something like this.

Thank you very much.

Bertrand Hodee, Raymond James.

Good afternoon, gentlemen.

I have one question around OPEC.

There's a lot of talks around the market currently about the possible shift from traditional Saudi Arabia policy, with the latest report indicating that Saudi Arabia could be or is unwilling to cut production at this stage.

I would like to have your thoughts on that and if you have any, I would say, internal indication of possible Saudi cuts.

Thank you.

First of all, there is a lot of noise in the market and rumors, but the Saudis do not speak a lot.

So we have to be -- and we - I think what we observe from them is that the Saudis have always been master in order to manage the right timing for what they will announce.

You know that there is an OPEC meeting by November 27th in Vienna.

What we notice also is that they published recently the last production since (inaudible) domestically in September were lower than the one in August.

The published figures of 9.36 million barrel per day compared to 9.78 million barrel per day in August, which tend to go (inaudible) with the market.

So I think -- as I told you before, consistently OPEC has well managed the market.

That's true that the decrease and the volatility was very high during the last 30 days, in fact; since beginning of October, end of September.

So probably they considered that it was not the right time to speak.

But OPEC will remain a market mover and we believe that they will continue to manage the resources strategically and eventually defend prior oil price, so let's listen to them.

But the basics are there.

The OPEC countries, and Saudi Arabia in particular, now they need for their budget some quite high pricing for budgeting reasons to manage their countries.

Okay, thank you.

And one -- another question, if I may.

What is roughly your -- Total's flexibility in terms of CapEx for 2015, 2016 and 2017?

In other words, how much of your CapEx is already committed for those respective years?

As I told you during my introductory speech, what I have done was beginning of this week on my first message to my colleagues in charge of the business units branch has been to ask them to come to the budget sessions by end of November with all the -- flexibility -- all the flexibility we will have for 2015 on CapEx and OpEx.

So let's -- you need to wait a little to get more guidance on that, but of course we have clearly this question in our minds.

I remind you that in 2009 when we had the crisis we were able to use this type of flexibilities for one year.

And honestly, and it's also my experience in downstream and as personal motto, maybe, if you want to do it you can do it.

And I would be surprised that in the middle of $26 billion of CapEx we cannot find what we want through some flexibilities.

It will be strange to me.

So this will be difficult to convince me that there is no flexibility.

We have flexibilities, but to commit you have to wait because you can understand but we are just -- I'm just coming in.

You have to wait for February to have a more precise guidance.

But you can trust us, but I am and we are at the Comex executive team fully mobilized with Patrick, with Arnaud and with Philippe -- and the two Philippes.

You have two Patricks and two Philippes.

We are fully mobilized on this question under the guidance of our board.

Okay, fair enough.

Thank you very much.

Jason Kenney, Santander.

Good afternoon and my sincere thoughts also to all at Total.

I think Christophe was a significant force in the oil industry and he's going to be greatly missed, but Total is still very strong so stick with it and keep the faith.

I have one question to P1, if I may, and one clarification for P2.

Firstly, to Patrick Pouyanne, do you have line of sight beyond the potential $3 billion of bolt-on acquisitions that were assumed in the 2015-2017 period?

What I'm kind of digging for here is are you being approached to buy things at this juncture?

And then on a clarification to Patrick de La Chevardiere, you mentioned covering organic -- or dividends at $80 per barrel at 2017.

I'm assuming that's under a $25 per ton ERMI or refining margin.

What kind of oil price is needed in 2015 to cover CapEx and dividends?

First of all, (inaudible) our situation in terms of resources is - I'm quite comfortable.

We have plenty of resources in our portfolio that we acquired in the last five years.

And I participated to that when I was the head of the business development in upstream.

So we have plenty of resources.

Today my main priority is to deliver the production from these resources.

Secondly, I think, as I told you, that I'm also focused on the cash management in the Company and that it's one of the priority.

On acquisition, I am a pragmatic guy, like Christophe was.

We never say never.

It depends on opportunities, but it's not today very high on the agenda.

We have also a sale program that we have extended to 2015-2017 and this program is necessary for the cash management of the Company.

It could also help in case we find good, opportunisitic acquisitions.

So I don't really tell you no, it's not a priority, but if something is coming on our table which seems to be interesting for the future of the Company, we'll -- we can move, or like we moved in 2014 on the Libra entrance.

I was -- I can tell you I was a strong supporter in the Executive Committee to enter into Libra.

I told to Christophe, looking for such a huge resource is found is very rare.

Since I've been in the Company I've seen that twice in my life.

So we should not avoid to try to take it.

But there again, it's not high on my agenda today.

And I have the feeling that the Company has enough resources to fill our future, but -- so a pragmatic approach.

So your question about what scenario we need to cover CapEx and dividend.

I remind you -- and we gave that guidance at the last road show, that using $100 per barrel and the $25 per ton refining margin in 2017 was giving $15 billion of cash flow, prior dividend.

And after asset sale, the asset sale was between $2 billion and $3 billion that year.

I gave you the sensitivity for $10 per barrel so -- which was about 1.8.

So losing $20, which is roughly between $3.5 billion and $4 billion of cash flow less than expected at $100.

So the net result is $15 billion minus $2 billion to $3 billion minus $3 billion to $4 billion.

This is in the range of $8 billion to $10 billion at $80, organic with a $25 per ton refining margin.

So that's enough to cover the dividend, which is $7 billion.

And that works for 2015 as well?

In 2015 the cash flow was not $15 billion.

If you will remember it was about $7 billion.

Yes.

So that was the question.

Yes, okay.

Sorry, I didn't catch it.

Okay.

I'll talk with all of you all later, thanks.

Thank you.

Iain Reid, BMO.

Yes, hi, gentlemen.

And again, condolences from us for the huge loss of Christophe.

Can I just ask one question to Patrick Pouyanne?

Total has a lot of targets compared to your peers.

I would say none other of the large majors has such a wide variety of targets.

Obviously, some kind of outcomes and some inputs into what you're trying to achieve.

But when oil prices fall quite so quickly as they have recently, obviously that puts a focus on what is your real target.

Like, what's the key thing out there in-between your production CapEx, free cash flow, OpEx, returns and the downstream disposals?

Cash.

Cash.

Yes, absolutely.

So just moving on from that--.

Cash.

At the end of the day, all these targets are moving to deliver more cash to our shareholders.

Let's be clear.

Yes.

So, remember what I said.

That is why I have four key words is cash.

We want to grow the production not only to have a big figure and to be the number three or four in the industry, we want to grow the production and we have the projects to deliver more cash.

I want to reduce the CapEx.

I want to control my CapEx and CapEx discipline because I need to focus on cash.

So all the strategy for us, let's be clear, is not just all these targets.

Maybe we give you too much indication.

I could give you in the future only a cash target.

I'm sure you will not be happy if you cannot answer all the figures in your models, but it's cash.

And the other big priority for me is safety, not surprisingly to you, because what could be the story for me, and in particular these days, I would not like to have an accident.

So safety and cash, if you have two words to remember.

And that's -- so if you prefer to forget plenty of figures I will give you some cash figures in the future.

No, I'm not suggesting -- I wasn't suggesting it.

The figures that we gave you as a target is more for you to understand the model and the strategy to decline it.

It's also because sometimes you need to mobilize your teams on some target so the -- and the upstream guys, they consider, they understand what means production, they will also understand what means costs quickly.

And the downstream guys, they consider what means availability and costs, and the marketing guys will cash -- cash is a good by the way driver for marketing teams as well.

Okay.

I think you've laid it out very well.

I'm not trying to encourage you to get rid of any of these things, because we find them very useful, but it's always nice to know what the key focus is on all these things.

Okay.

Thank you.

Thomas Adolff, Credit Suisse.

Good afternoon.

My sincere condolences again.

Just one question for Monsieur de La Chevardiere and then a quick one for Monsieur Pouyanne.

The first one I guess is Patrick are often fixated on the credit rating and you don't want to go through the experiences of 2008, 2009; none of us do.

But let's say we average $80 for the next three or four years.

I wondered what sort of flexibility you have financially without disposals and let's say keeping CapEx unchanged and keeping your credit rating.

And in this instance, if you are indeed comfortable -- and coming back to Jason's point earlier, as one of your competitors also said, a lower oil price could be used to add resources where you have gaps; in your instance, perhaps the lower 48, especially if your view is oil prices should be higher than today.

The second one for Monsieur Pouyanne -- and thanks for taking the second one.

If you say $80 is too low to develop sufficient resources globally, despite the fact that we are seeing costs coming out for future developments, and you also say your portfolio is resilient at $80, and apparently also so for BP, is the industry really asking Saudi to subsidize the industry while also allowing the industry over time to take market share away from them?

Thank you.

Okay.

The question about credit rating and the financial flexibility.

We are currently rated AA.

AA-plus with Moody's and AA-minus with Standard & Poor's.

My objective is to remain in the AA range; that's the objective.

And I think we can leverage a little bit more the Company if needed and maintain a type of AA rating.

The second question about acquisition, I think Patrick wanted to answer it.

About acquisition, I think your question was about -- I'm sorry, I was thinking to the first question, because you had three questions, in fact.

US lower 48, what should we do about it?

I think that, once again, we have a lot of resources in the portfolio.

I know that a lot of things are happening there in the US.

We are -- I answered just before that we are pragmatic and if there is a good acquisition, why not?

But for the time being, honestly the various projects which have been presented to the Comex are not really fitting with our criteria.

But again, once again, why not?

I'm not against that.

We have already, by the way, some projects in the US.

Now we have a project in Utica, which is progressing well.

And we look at it -- but we look -- we always look to many opportunities, but I already answered previously on the acquisition policy to one of your colleague.

Your question is a little provocative about why do we advocate for a higher price.

It's again -- once again, if the price remains at $80 per barrel, I suspect that we have some players which could lower their global investment programs, like we could do it, we could have to do it.

And in particular in the US, you could have independent producers.

They have hedged frequently their production, but it's generally for six months.

Beyond this period of time they will reconsider some investment program.

Maybe the bankers who are financing them will also reconsider their loans.

And so in that case, I think it will damage the global capacity of the industry to meet the demand by the offer.

And we could see then it stays for some few years.

We could see a rebound for higher oil price, which would be detrimental for the world economy.

So this is why we think -- and there again, I'm not sure Saudi Arabia needs to subsidize the IOC, Saudi Arabia would think first to its own interests and to its own economic budget balances and to its own -- again, to its own interests.

Perfect.

Thank you very much and look forward to seeing you in February.

Thanks.

Thank you.

Biraj Borkhataria, RBC.

Hi, gentlemen.

Once again, condolences for the loss of Christophe.

I had two questions, if I may.

Firstly, on the upstream.

We're seeing the capital employed continue to rise as you go through your investment phase.

Would you be able to tell us the level of unproductive capital you have right now and how you expect this to evolve going forward?

The second question was on the downstream.

Obviously, a very strong performance from the Refining & Chemical segment.

Could you talk a little bit about the outlook there and if you're seeing any changes at the start of Q4?

Thanks.

Let's talk about the unproductive so-called capital employed, which is currently at a very high level of 40%, including Kashagan, which is one of the main reasons of this high level of nonproductive capital employed.

By 2017 the objective is to reduce this down to the range of 20% to 25%.

The upstream ROACE will not increase as quickly as cash flows, but should get back above 15% in the medium term.

For outlook for downstream I think, as I told you, the margin were quite good in October.

We see them weakening in Europe on the European margin since middle of October.

So the October results will be in line with what we had in the third quarter.

I suspectthat November and December will be lower if we stay around $15 to $20 per ton.

In the US petrochemicals are quite good; like in Europe, by the way.

We should do a very good petrochemical results again this quarter because the naphtha at this time so it's driving the refining margins downstream.

But the integrating model there again is working on the petrochemical, even in Europe.

So I think that by the end of the day we should be able by the end of the year to have a ROACE on the downstream on the Refining & Chemicals above 10% this year, with our roadmap.

And results above $2 billion for the whole year in the Refining & Chemical.

Today just a figure, the European Margin Index is around $17 per ton.

That's great.

Thanks.

Jean-Luc Romain, CMC Securities.

Good afternoon and condolences on loss of Christophe.

My question relates to Brazil.

You had a (inaudible).

I understand (inaudible) layers there.

Could you elaborate a little on (inaudible)?

Could it be one of the elephants which have eluded Total for some time now?

Okay.

On the (inaudible) we are happy with that.

We will check if and when it is developable or not.

And honestly, we made very little work on it.

At the moment we are more focusing on Libra and that's it.

There it is a small thing.

It's a pink elephant.

Thank you.

Anish Kapadia, TPH.

I just had a question on the major projects that you've got in plan to sanction over the next year and if you could just run through those and which one or two that are potentially most at risk of slippage or looking to kind of reengineer reduce costs on.

The next project to be a FID now will be Libra.

And I'll remind you, as Patrick told you, the early production scheme has been already sanctioned; the full field by 2017.

Then you have PNG later on, not for next year.

And then you have Uganda, not for next year also.

So basically, we already sanctioned the early production scheme for Libra and we are studying and reassessing the project for eventual flexibility as it was mentioned to you by Patrick.

Could I just ask a quick follow on.

Just on Angola, I think you've had a couple of dry holes with Dilolo and Puma in Angola.

Just wondering how that kind of -- what kind of takeaways you've got from that and how that changes your exploration strategy in terms of Angola pre-salt because I think it was an area that was kind of -- that you were very positive on in the past.

Thank you.

No, that's true, but the Kwanza basin Angola has not been as successful as expected.

There was the bet, the idea that we could find in Angola the equivalent base, the pre-saltBasin] that we found -- that existed in Brazil.

Unfortunately -- and not only for Total, but for most of the operators.

And so no, the wells are not positive.

We find some hydrocrabons, but there's plenty of CO2 so it's not very good.

And so we still have -- it's not finished totally.

We still have a well which we consider of interest on the Block 40.

So we'll drill one of these wells coming soon.

But it's a pre-salt province, potentially pre-salt province.

Was considered also as a frontier exploration.

It gives me the opportunity to speak a little about exploration, but we have a new head of exploration.

What we have asked him is to make during the -- it will be on stage.

He will in charge from January 1st.

So we ask him during the first three months in Total to take the time to reassess the portfolio and the activities that we have in our portfolio in order to give his views and what were the priorities.

Didn't have his -- he did not give me any -- we didn't have -- we asked him to come by by December so it's early stage.

But once again, what we have told to you from Patrick and I on exploration is that I've asked Arnaud Breuillac and Kevin McLachlan to work on many scenarios for the next budget.

But all of them are under $2.5 billion in any case.

And we'll come back to -- I personally think strongly that in exploration you have some -- the more you add money, the less you make success.

The last dollars are not as successful as the first dollars.

It is decreasing -- "C'est des rendements decroissants en Francais." And so what -- you can maybe not do more with less, but you can be as successful as you are with less.

So it's a diminishing return.

So we'll work on that but, once again, I give them the guidance, asking them several scenarios -- flexibility.

And I also expect that we have the views on Kevin McLachlan on what is the strength of the portfolio, what does he want to drill, what does he don't want to drill and what are his own ideas on the portfolio.

So, that's the situation for exploration.

Thank you.

That was very clear.

We have no other questions.

Gentlemen, the floor is yours for the conclusion.

Thank you.

Since we have you here today, Patrick, perhaps you can make some closing remarks.

Yes.

Thank you, Patrick.

I think we shared this conference call quite efficiently, both of us.

I strongly believe that to manage such a company like Total you need a strong team at the head of the Company.

I have been chosen by the Board as the CEO, but I can tell you that I will rely upon my colleagues in charge of branches and of course also on Patrick, our CFO, who has a huge experience.

And thank you to all of you because -- participating to such conference call.

It's always very instructive for a CEO listening to your questions.

I will share that with my colleagues of the Executive Committee, Obviously.

These past days, as you imagine, have been quite difficult at Total, but I think we demonstrated once again that the governance of the Company is strong.

We have been able to react.

We have a very united company.

And we are going -- also that's true -- through other challenges because there are turbulent times in the market.

My message for today is that we know the way forward.

We have a roadmap.

We will stick to that.

We have demonstrated the discipline needed to reach our objectives.

Portfolio in upstream development project is unmatched.

We have 10 projects coming on stream in coming months and years and we are fast approaching the time when these projects will be starting, one after the other.

As we start up these projects and reducing our costs we will increase our cash flow as we move forward.

And once again, our priority is cash.

So we will coming back to you in February with our next review and outlook presentations and I'm looking forward to seeing you then if not before.

And in fact, will be for you -- some of you before as I intend, of course, to share some discussion with some of my shareholders in the coming weeks.

Thank you.

Thank you.

Bye, now.

Thank you.

Ladies and gentlemen, this concludes the conference call.

Thank you all for your participation.

You may now disconnect.