Total: First quarter 2021 results

The Board of Directors of Total SE, meeting on April 28, 2021, under the chairmanship of Chairman and Chief Executive Officer Patrick Pouyanné, approved the Group’s first quarter 2021 accounts. On this occasion, Patrick Pouyanné said:

« In the first quarter, the Group fully benefited from rising oil and gas prices, up 38% and 24%, respectively quarter-to-quarter, and its strategy to grow LNG and Renewables and Electricity.

The Group reported adjusted net income of $3 billion, above the pre-crisis first quarter of 2019, despite a less favorable environment by taking advantage of the action plans implemented during the crisis. Cash flow (DACF) increased to $5.8 billion and gearing already decreased to less than 20% in the first quarter of 2021, validating the strategy of resilience and maintaining the dividend driven by the Board of Directors during the 2020 crisis. The Board of Directors confirms the objective of anchoring the Group’s gearing sustainably below 20%. The organic cash breakeven was less than $25/b in the first quarter.

The iGRP segment reported adjusted net operating income of $1 billion, the highest in its history, and generated cash flow of more than $1 billion, thanks to growing LNG sales and the positive contribution from Renewables and Electricity, which had an EBITDA of nearly $350 million. Over the past year, gross installed renewable power generation capacity grew from 3 GW to 7.8 GW, renewable power production more than doubled, net power production increased by more than 60% and the Group now has more than 5 million customers in France. With more than $2 billion invested in renewables, including the acquisition of a 20% stake in Adani Green Energy Ltd in India, in the first quarter of 2021, the Group is accelerating its transformation into a broad energy company.

With an adjusted net operating income of $2 billion, Exploration & Production fully captured the higher oil price and provided a strong cash flow contribution of $3.8 billion. Given the OPEC+ quota implementation, the Group’s production, as announced, increased slightly to 2.86 Mboe/d (0.8%). With the launch of the Lake Albert project in Uganda and Tanzania, the Group is implementing its strategy to invest in resilient low-breakeven projects that reduce the carbon intensity of its portfolio.

The improved Upstream environment contrasts with depressed European refining margins, down 80% from a year ago, reflecting weak demand for petroleum products of 13 Mb/d in the first quarter 2021 versus 15 Mb/d a year earlier. Downstream adjusted net operating income was more than $500 million, supported by strong petrochemicals performance and resilient Marketing & Services.

Strengthened by these excellent results and confident in the fundamentals of the Group, the Board of Directors decided to distribute a first interim dividend for fiscal year 2021 stable at €0.66 / share. »

Highlights3

Sustainability

Total’s Board of Directors takes the initiative to submit a resolution on the Company’s ambition for sustainable development and energy transition toward carbon neutrality
Consistent with its climate policy, the Group withdraws from the American Petroleum Institute
Inauguration of L’Industreet, a campus for training young people in the industry profession, Total’s flagship action for social responsibility in France

Renewables and Electricity

Acquired in India 20% of Adani Green Energy Limited (AGEL), the largest solar developer in the world
Secured with Macquarie rights to seabed lease to jointly develop 1.5 GW offshore wind project in the UK
Acquired 4 GW portfolio of solar and energy storage projects in the US
Partnered with Microsoft to support digital innovation and carbon neutrality goals
Signed major green power sale agreement to Orange to develop 80 MW of solar farms in France
Farmed down 50% of two renewables portfolios in France representing close to 340 MW

LNG

Declaration of force majeure on Mozambique LNG project considering the security situation in the northern Cabo Delgado
Signed agreements with Shenergy Group for the supply of up to 1.4 Mt/y of LNG in China
Obtained supplier license for marine bunker LNG in Singapore
Signed technical collaboration agreement with Siemens Energy to reduce CO2 emissions related to LNG

Upstream

Signed definitive agreements enabling the launch of Tilenga and Kingfisher upstream oil projects and construction of East African Crude Oil Pipeline in Uganda and Tanzania
Published societal and environmental studies relating to the Tilenga and EACOP projects in Uganda and Tanzania

Downstream

Started production of sustainable aviation fuel in France at the La Mède biorefinery and at the Oudalle facility (Seine-Maritime)

Carbon Capture

Investment to plant 40,000-hectare forest in Republic of Congo that will create a carbon sink to sequester more than 10 million tons of CO2 over 20 years
Creation of the joint-venture development of the Northern Lights CO2 sequestration project in the northern North Sea

From 2019, data takes into account the impact of the IFRS16 “Leases” rule, effective January 1, 2019.
* Average €-$ exchange rate: 1.2048 in the first quarter 2021.
** 1Q20 and 1Q19 data restated.

* Group production = E&P production + iGRP production

Hydrocarbon production was 2,863 thousand barrels of oil equivalent per day (kboe/d) in the first quarter 2021, a decrease of 7% year-on-year, comprised of:

-3% due to compliance with OPEC+ quotas, notably in Nigeria, the United Arab Emirates and Kazakhstan,
+2% due to resumption of production in Libya,
+2% due to the start-up and ramp-up of projects, notably North Russkoye in Russia, Culzean in the United Kingdom, Johan Sverdrup in Norway and Iara in Brazil,
-2% due to portfolio effect, notably the sales of assets in the United Kingdom and Block CA1 in Brunei,
-3% due to unplanned maintenance shut-downs notably in Norway,
-3% due to the natural decline of fields.

Analysis of business segments

Integrated Gas, Renewables & Power (iGRP)

* The Group’s equity production may be sold by Total or by the joint ventures.

Despite hydrocarbon production for LNG in the first quarter of 2021, down 6% year-over-year, mainly due to the shutdown of the Snøhvit LNG plant following a fire at the end of September 2020, total LNG sales were stable in the first quarter of 2021.

1Includes 20% of Adani Green Energy Ltd gross capacity effective first quarter 2021.
2 End of period data.
3 Solar, wind, biogas, hydroelectric and combined-cycle gas turbine (CCGT) plants.
4 Group’s share (% interest) of EBITDA in Renewables and Electricity affiliates, regardless of consolidation method and including gains on asset sales.
EBITDA: “Earnings Before Interest, Tax, Depreciation and Amortization »

Gross installed renewable power generation capacity grew to 7.8 GW at the end of the first quarter 2021, in line with the target of 10 GW by end-2021.

The portfolio of power capacity in operation, in construction and in development for 2025 has more than doubled from a year ago. It grew by 10 GW in the first quarter 2021 to 36 GW gross and 28 GW net, including the 20% interest in Adani Green Energy Limited (AGEL) and the acquisition of a 4 GW portfolio of solar projects in the US.

Net electricity production was 4.7 TWh in the first quarter 2021, an increase of 61% year-over-year, notably due to doubling production from renewable sources and the acquisition of four CCGT in France and Spain in the fourth quarter 2020.

Sales of electricity and gas in the first quarter 2021 increased by 13% and 8%, respectively, compared to the first quarter 2020 thanks to the growth in the number of customers.

The Group’s share of EBITDA for the Renewables and Electricity activity was $344 million in the first quarter 2021, an increase of 38% year-on-year, driven by the growth in electricity production, mainly from renewables, and the number of gas and electricity customers.

* Detail of adjustment items shown in the business segment information annex to financial statements.
** Excluding financial expenses, except those related to lease contracts, excluding the impact of contracts recognized at fair value for the sector and including capital gains on the sale of renewable projects. 1Q20 and 1Q19 data restated (see note 10 on page 3).
*** Excluding financial charges, except those related to leases.

Adjusted net operating income for the iGRP segment was $985 million in the first quarter, a new record high. The year-on-year increase of 8%, despite the lower price of LNG, reflects the growing contribution of the Renewables and Electricity activity and good performance of trading.

Operating cash flow before working capital changes was $1,059 million in the first quarter 2021, an increase of 76% compared to the first quarter 2020, for the same reasons.

Exploration & Production

* Details on adjustment items are shown in the business segment information annex to financial statements.
** Tax on adjusted net operating income / (adjusted net operating income – income from equity affiliates – dividends received from investments – impairment of goodwill + tax on adjusted net operating income).
*** Excluding financial charges, except those related to leases.

Adjusted net operating income for the Exploration & Production segment was $1,975 million in the first quarter 2021, nearly triple the first quarter 2020, due to the sharp rebound in oil and gas prices.

Operating cash flow before working capital changes increased by 48% year-over-year to $3,824 million in the first quarter 2021 for the same reasons.

Downstream (Refining & Chemicals and Marketing & Services)

Results

* Detail of adjustment items shown in the business segment information annex to financial statements.
** Excluding financial charges, except those related to leases.

Refining & Chemicals

* Olefins.
** Based on olefins production from steamcrackers and their treatment capacity at the start of the year.

Refinery throughput volumes fell by 21% in the first quarter 2021 compared to a year ago due to the voluntary economic shutdown of the Donges refinery given the low margins, the shutdown of the Grandpuits refinery before its conversion to a zero-oil platform and the sale of the Lindsey refinery in the United Kingdom. The temporary shutdown of the Port Arthur platform in the US due to Storm Uri also contributed to the decline.

Production of monomers and polymers was stable compared to a year ago. The effect of strong demand was partially offset by the temporary shutdown of facilities in the US due to Storm Uri in Texas.

* Detail of adjustment items shown in the business segment information annex to financial statements.
** Excluding financial charges, except those related to leases.

Adjusted net operating income for the Refining & Chemicals segment fell by 36% year-on-year to $243 million in the first quarter 2021. The drop was driven by European refining margins, which are still very poor, due to high oil prices and weak demand, particularly for distillates, due to reduced aviation activity.

Operating cash flow before working capital changes fell by 42% year-on-year to $394 million in the first quarter 2021 for the same reasons.

Cash flow from operations increased by $2,179 million to $996 million in the first quarter 2021 notably due to the decrease in working capital in the first quarter 2021, despite the low first quarter 2020 inventory values that reflected the sharp drop in oil prices.

Marketing & Services

* Excludes trading and bulk refining sales

Petroleum product sales volumes decreased by 13% year-over-year because of the Covid-19 pandemic-related lockdowns and the 50% drop in aviation activity.

* Detail of adjustment items shown in the business segment information annex to financial statements.
** Excluding financial charges, except those related to leases

Adjusted net operating income was $284 million in the first quarter 2021, a decrease of 6% compared to a year ago, mainly due to lower worldwide sales volumes for the reasons indicated above.

Operating cash flow before working capital changes was $478 million in the first quarter 2021, an increase of 23%, notably due to the negative impact in the first quarter 2020 of the revaluation of futures contracts.

Group results

> Adjusted net operating income from business segments

Adjusted net operating income from the business segments was $3,487 million in the first quarter 2021, an increase of 52% year-on-year due to the increase in oil and gas prices.

> Adjusted net income (Group share)

Adjusted net income (Group share) was $3,003 million in the first quarter 2021 compared to $1,781 million in the first quarter 2020, an increase of 69%, due to the increase in oil and gas prices.

Adjusted net income excludes the after-tax inventory effect, special items and the impact of effects of changes in fair value12.

Total net income adjustments13 were $341 million in the first quarter 2021, comprised of a positive stock effect of close to $700 million, restructuring charges related to voluntary departures in France and Belgium and an impairment related to end of the Qatargas 1 contract.

The effective tax rate for the Group was 34.6% in the first quarter 2021 versus 30% in the first quarter 2020.

> Adjusted earnings per share

Adjusted fully-diluted earnings per share was $1.10 in the first quarter 2021, calculated based on 2,645 million weighted-average shares, versus $0.66 in the first quarter 2020.

> Acquisitions – asset sales

Acquisitions were $2,208 million in the first quarter 2021 and include notably the acquisition for $2 billion of a 20% interest in the renewable energy project developer in India, Adani Green Energy Limited.

Asset sales were $618 million in the first quarter 2021 and include notably the 50% farm down in France of a portfolio of renewable projects with total capacity of 285 MW (100%), the sale of a 10% interest in the onshore OML 17 block in Nigeria, a price supplement to the sale of Block CA1 in Brunei and the disposal of the Lindsey refinery in the United Kingdom.

> Net cash flow

Net cash flow14 for the Group was $1,397 million in the first quarter 2021 compared to $140 million in the first quarter 2020, which takes into account the increase in operating cash flow before changes in working capital to $5,366 million from $3,765 million and stable net investments of $3,969 million in the first quarter 2021 compared to $3,625 million a year ago.

> Profitability

The return on equity was 4.9% for the twelve months ended March 31, 2021.

Total SE accounts

Net income for Total SE, the parent company, was €1,472 million in the first quarter 2021 compared to €1,718 in the first quarter 2020.

2021 Sensitivities*

* Sensitivities are revised once per year upon publication of the previous year’s fourth quarter results. Sensitivities are estimates based on assumptions about the Group’s portfolio in 2021. Actual results could vary significantly from estimates based on the application of these sensitivities. The impact of the $-€ sensitivity on adjusted net operating income is essentially attributable to Refining & Chemicals. Please find the indicators detailed page 19.
** In a 50 $/b Brent environment.

Summary and outlook

Supported by the OPEC+ active policy to reduce inventories by adapting supply to demand, the oil price has remained above $60/b since the beginning of February 2021. However, the oil environment remains volatile and dependent on the global demand recovery, still affected by the Covid-19 pandemic.

The Group maintains its expectation for stable hydrocarbon production in 2021 compared to 2020, benefiting from the resumption of production in Libya.

Total anticipates that the increase in the oil price observed in the first quarter will have a positive impact on its average LNG selling price over the next six months, given the lag effect on pricing formulas.

Given the high level of distillate inventories, European refining margins remain fragile.

Faced with uncertainties in the environment, the Group maintains spending discipline with an operating cost savings target of $0.5 billion in 2021 and production costs close to $5/boe. Net investments are expected to be between $12-13 billion in 2021, half to maintain the Group’s activities and half for growth. Nearly 50% of these growth investments will be allocated to renewables and electricity.

The Group’s teams are fully committed to the four priorities of HSE including the objectives in terms of CO2 emission reductions, operational excellence, cost reduction and cash flow generation.

In a 2021 hydrocarbon price environment maintained at the level of the first quarter (Brent at $60/b, European gas at $6/Mbtu), and with European refining margins at $10-15/t, the Group would expect to generate cash flow (DACF) on the order of $24 billion and a return on capital employed of close to 10%.

The Group confirms its priorities in terms of cash flow allocation: investing in profitable projects to implement its strategy to transform the Group into a broad-energy company, supporting the dividend through economic cycles, and maintaining a solid balance sheet with a minimum long-term “A” rating, by deleveraging to anchor the net debt-to-capital ratio sustainably below 20%Full Report

Source: Total

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