Total’s Board of Directors met on July 29, 2020, the chairmanship of CEO Patrick Pouyanné, to approve the Group’s accounts in the 2020 quarter. On this occasion, Patrick Pouyanné said:
“During the quarter, the Group faced exceptional circumstances: COVID-19’s fitness crisis with its effects has an effect on the global economy and the oil market crisis with a sharp drop in Brent to $30/b on average, fuel costs falling to historic lows and refining margins collapsed due to weak demand.
However, moderation in OPEC production has contributed to the market recovery since June, with an average Brent value of more than $40/b. The field with which the countries implemented the quotas reduced the Group’s production from almost one hundred kbep/d in the quarter to 2.85 Mboe/d, and the Group now expects year-round production in diversity from 2.9 to 2.95 Mboe/d in 2020
Due to the significant slowdown in the closure of the European economy, the Group’s distribution networks saw an average decrease in demand for petroleum products of around 30% in the quarter, and the usage rate of its European refineries fell to around 60%. By contrast, June experienced an uptick in activity in Europe at 90% of its pre-crisis point for retail networks and 97% for its fuel and electric power marketing business.
In this traditionally challenging environment, the Group is demonstrating its resilience with $3.6 billion in money, a positive adjusted net income source and a controlled debt point. These effects are generated specifically through the superior performance of commercial activities, demonstrating once again the relevance of Total’s built-in model, and through the effectiveness of the action plan launched at the beginning of the crisis, adding the spending field.
Given this resilience, the Board of Directors keeps the initial dividend payment at the time at $0.66 consistent with a consistent percentage and reaffirms its sustainability in an Brent environment at $40/b.
This quarter once again shows the quality of the Group’s portfolio with a stop of less than $25/b, reaping benefits from the strategy of concentrating on cheap assets, i.e. in the Middle East. Active portfolio control continues with the sale of untapped assets in Gabon and the Lindsey refinery in the UK.
Amid these short-term challenges, the Group is resolutely implementing its new climate ambition, announced on May 5, 2020 with access to a giant offshore wind power allocation in the North Sea, as well as the acquisition in Spain of a portfolio of 2. five million residential fuel and electricity consumers plus electricity generation capacity. Investments in low-carbon electric power will be close to $2 billion and will account for about 1% of Capex by 2020. In line with this ambition, the Group reviewed assets that may have been described as ‘failed assets’. The only assets in question are the Canadian oil sands allocations and the Board of Directors has to write down those assets in Canada for $7 billion2. »»
Key figures for group and production.
The average LNG promotion value decreased by 30% in the 2020 quarter compared to the previous quarter. The percentage of volumes sold at higher spot value at the time of the 2020 quarter compared to the first quarter of 2020 due to the postponement of LNG levies through buyers of long-term contracts, while the average promotion value of LNG long-term LNG contracts decreased by only 16% due to the deferred effects having an effect on the decrease in the decreased oil values.
Production
Analysis of business segments
Integrated gas, renewable energy and electric power (iGRP)
> Liquefied natural gas (LNG) production and sales and low carbon electricity
Hydrocarbon production for LNG was stable in the first half compared to last year.
Total LNG sales increased by 22% in the second quarter compared to last year, notably due to an increase in trading activities. For the first half, total sales increased by 24% year-on-year for the same reason and thanks to the ramp-up of Yamal LNG and Ichthys plus the start-up of the first two Cameron LNG trains in the US.
Gross installed renewable power generation capacity rose to 5.1 GW in the second quarter, a strong 97% increase year-on-year, notably thanks to the acquisition in India of 50% of a portfolio of more than 2 GW from the Adani Group.
The Group continues its strategy of integration along the electricity and fuel chain in Europe and saw the number of fuel and electric power consumers grew in the quarter to 5.9 million, an increase of 7% compared to the previous year. Gas and electricity sales fell by 3%, impacted by falling blocking demand in Europe.
Results
In the first part of 2020, the adjusted net operating source of revenue for the iGRP segment was $1.239 million, an increase of 21% over last year, mainly due to a strong 24% expansion in LNG sales.
Exploration and Production
The adjusted net operating loss for exploration and production was $209 million in the quarter, compared to the previous year’s adjusted net revenue stream of revenue due to a sharp decrease in oil and fuel costs and declining production. The cash from operations prior to capital adjustments was $1.810 million in the quarter, compared to $4.882 million the previous year for the same reasons.
The refinery’s production volumes decreased by 22% in the quarter and the first part of 2020 year after year, mainly due to the planned closure in Feyzin, France, the resolution of not restarting Grandpuits after a primary change in graciously decreased call and the closure of the Normandy platform distillation unit after an incident at the end of 2019.
The adjusted net operating source of refining and chemical revenue was 20% 20% reduced to $575 million in the 2020 quarter compared to the previous year. This minimization is specifically due to an even more degraded refining margin environment in the quarter and the low use of the 59% plant, partially offset by the strength of petrochemical margins and the superior performance of commercial activities.
Operating cash flow before working capital changes was $996 million in the second quarter of 2020, up 24% year- on-year for the reasons above as well as the receipt in the second quarter of the dividend from HTC.
In the first half 2020, Refining & Chemicals adjusted net operating income was $1 billion, down 35% compared to a year ago, and operating cash flow before working capital changes decreased by 13% to $1.7 billion. This decrease was notably linked to the degraded refining margin environment in the first half and to the weak plant utilization rate of 64%, partially offset by resilient petrochemical margins and very good performance of the trading activities.
Marketing & Services
Petroleum product sales volumes fell by 30% in the quarter and by 20% in the first half year-on-year notably due to the impact of the lockdown on demand.
Adjusted net operating source of revenue $129 million in the current quarter of 2020, 70% minimized due to minimizing volumes. It was minimized by 44% in the first part of the year compared to last year for the same reason.
Operating money before adjustments to working capital was $492 million in the 2020 quarter and $882 million in the first half.
Group results
The adjusted net source of income excludes the effect of after-tax stock, special parts, and the effect of fair price changes9.
Total changes in net income10 were: $8.495 million in the current quarter of 2020, of which $8,101 million per impairment.
The Group’s effective tax rate -6.8% in the current quarter of 2020, compared to 30% in the last quarter. The negative rate is due to the adjusted net operating loss in exploration and production, which has a maximum tax rate, and is not offset by the positive effects on the downstream phase, which has a declining tax rate.
The number of fully diluted shares is 2605 million as of June 30, 2020.