Shake Shack Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
April 27, 2023

There are 16 speakers on the call.

Operator

Welcome to Total Energy's First Quarter 2023 Results Conference Call. At this time, all participants are in a listen only mode. After the speech, there will be a question and answer session. I must advise you that this conference is being recorded today, 27th April, 2023. Thank you for holding.

Operator

The conference will start shortly. Ladies and gentlemen, welcome to Total Energy's First Quarter 2023 Results conference call. I now hand over to Patrick Pouillane, CEO and Jean Pierre Dreher, CFO, who will lead you through this call. Sir, please go ahead.

Speaker 1

Hello, everyone. Good morning or good afternoon wherever you are. I'm here today together with Jean Pierre who will give you, I would say a review of the very good quarter that we had on the first Quarter of 2023, I just wanted as an introduction to comment the other news, which came this morning around about The future of our Canadian assets, as you know, we explained that in September at our CMD, we are planning To organize a spin off of our Canadian assets, we went through the process. And in the meantime, because Fundamentally, I think we are very serious about making this spin off a reality. We attracted some unsolicited offers in the last months.

Speaker 1

And one of them Has materialized, and I think it's a value which is quite attractive, dollars 5,500,000,000 Cash plus CAD600 1,000,000 of additional payments under certain conditions, the value which is fitting with the Expectations of the initial quotation, which were given to us between C5 $1,000,000,000 to C6 $1,000,000,000 And of course, it's coming from Suncor, who knows very well one of our 2 assets. And Sankar will comment a little later in the day his own view of the deal. For us, so it's fitting the value. It's a straightforward, I would say a way to divest the assets as we are planning to do it straight away. And from so from the company and from the shareholders' point of view, the Board considered that it was these alternatives It was worth to be considered and approved yesterday to move forward with this transaction.

Speaker 1

Of course, the most important part of the discussion beyond this comparing both alternatives was about So distribution to shareholders, because as you know, a spin off was meant in fact a distribution in kind of some shares of the NewCo. So we are more perfectly as that in mind. And the guidance that we have Decided to give to our shareholders today is that last year, we We put higher guidance on the payout to shareholders of 35% to 40% of cash flow from operations, Which we're down in 22%, 37%. There, because we'll have, I would say, additional proceeds from this Sales, the divestments, the guidance we gave you today is at least 40%. I mean, that means, by the way, I told you before, but it was not There was no ceiling.

Speaker 1

The 35%, 40% was the range of target. Today, we told you that the Board decided that to increase To enhance, I would say for 2023, this distribution to shareholders with at least 40%, So consider 40% plus, you have to guess a plus, something at least 40% of the Maintain the course of the company. You have noticed that on the Q1, we maintained the Buyback of €2,000,000,000 like last year's last quarter. In the second quarter, we repeated €2,000,000,000 So I think it gives this Guidance for the distribution to shareholders for 2023 at least 40% of our cash flow from operations Should give you some comfort about the will of the Board to have, I would say, to maintain or to develop even an attractive Return for shareholders. So I will not be longer.

Speaker 1

I think I will give the floor to Jean Pierre, We'll be happy for the first time of our as you know, today, we disclosed the integrated LNG and integrated Power Segment results for the first time. I told you during the last Investment Day But we should we are targeting 10%. In TotalEnergies, we are not 10%, but at 9.9%. So but It's, I think, comforting some expectations about the investments we are doing in this Integrated Power segment. Jean Pierre, the floor is yours.

Speaker 2

Yes. Thank you, Patrick. So 2023 is off to a good start. Once again, I think we demonstrate our ability to generate strong results even

Operator

Ladies and gentlemen, please hold the line. The conference will resume shortly.

Speaker 2

Okay. So quarter to quarter Brent was down 9% to 80 1 Dollar per barrel and European gas dropped by 50% to $16 per 1,000,000,000 per day. In this context, Total Energy reported Q1 2020 3 adjusted net income of $6,500,000,000 a decrease of only 13% And a strong cash conversion with a debt adjusted cash flow, DRCF, close to $10,000,000,000 We Brent About $18 per barrel and European Gas above $15 per millimeter, still high by historical standards. We are continuing to deliver excellent profitability with 25 percent ROACE in the Q1. Commodity prices have been volatile, albeit still at high levels.

Speaker 2

Oil prices fell briefly below $17.5 per barrel in March, Largely on fears of economic slowdown before rebounding in April on news and OPEC plus quota reductions. Refining margins are easing down after several quarters of exceptionally high diesel cracks In the same context of fears of economic slowdown, high product inventories largely fueled by Chinese exports And the quicker than expected reorganization of Russian flows following the European embargo. Gas prices fell due to mild weather. We expect prices to remain stable and still restocking gebelin in the second half of the year. Future markets are anticipating prices next to $20 per 1,000,000 TEU for this winter.

Speaker 2

For the first time, as announced, we are reporting Integrated LNG and Integrated Power as independent segments. These two growing segments are, as you know, at the core of our transition strategy. The restated historical data for 20 1 full year 22 quarters is available in the result press release. In terms of scale, integration and performance, We are unmatched among our peers in both of these activities. We are already widely recognized as having a very strong performing globally integrated LNG portfolio in that business.

Speaker 2

Mainly through countercyclical acquisition, we have achieved our position As the largest lifter of low cost U. S. LNG more than 10,000,000 tonnes and the largest regas provider in premium priced European markets, Around 20,000,000 tons after the recent start up of the SSRU in Germany in Lublin. Our unmatched access to the European markets creates a competitive advantage for our trading operations and makes us more competitive As a partner in securing future resources, for example, our recent contract awards in Qatar. We launched this quarter the FEED for Papua LNG and this will contribute to the future growth of our portfolio With close to 2,000,000 tonne equity production.

Speaker 2

Last year, with LNG sales of 48,000,000 tonne, this business We generated $10,000,000,000 of cash flow. In the Q1, sales were 11,000,000 tons and cash flow was $2,100,000,000 In the Q1 of 2023, LNG sales were down 17% quarter to quarter and 13% year on year, reflecting mainly The decrease in spot sales due to lower LNG demand in Europe linked to the mild weather. Integrated LNG generated adjusted net Operating income of $2,100,000,000 down only by 10% compared to the previous quarter excluding Novatek, mainly due to lower prices. Given the evolution of oil and gas prices in recent months and the lag effect on price formulas, We anticipate that our average LNG selling price might decrease by another 10%, 15% in the second quarter Because of this time lag versus $13.3 per 1000000 this quarter. Operationally, we expect to benefit from the restart of Freeport LNG in our Q2, 2023 LNG sales.

Speaker 2

And with 2 new segments, Integrated Power is the newer business activity in the company, Mainly through a smart acquisition of early stage development projects, we have grown this business to 18 gigawatts Of growth installed renewable power generation, our 2 largest markets being Europe and the U. S. And we are solidly on track To reach 13.8 gigawatts by 25 gigawatts and then 100 gigawatts by 2,030. Our flexible power generation capacity and growing positions in energy storage are fully integrated into the business strategy, allowing our traders to maximize our performance. Developing power projects, generating electricity as well as integrating the trading And selling of power, as we do over energy commodities, is a natural extension of our business.

Speaker 2

Last year, with net power production of 33 terawatters, this business generated about $1,000,000 of cash flow. For the 12 months ended March 23, Integrated Power generated a ROACE of 9.9%, Next to 10%, consistent with our stated objectives to achieve double digit profitability for this activity. Going into the details of the results of these new segments now. Renewable power generation capacity was 18 gigawatts at the end of this quarter, An increase of more than 1 gigawatt quarter to quarter, thanks to 0.6 gigawatt from the acquisition of Casa dos Santos in Brazil And 0.3 gigawatts from the connection of the Seagreen offshore wind farm in the UK. For the Integrated Power results, the best reference for comparison is Q1 2022 since like For the Marketing and Services business, the Gas and Power Marketing business is seasonal.

Speaker 2

Net electricity generation was 8.4 terawatt hour in the Q1, up 10% year on year due to growing electricity generation from renewable, offsetting the lower generation from flexible capacity in a context of lower demand. Integrated Power posted adjusted net operating income of $170,000,000 This figure is significantly higher compared to the Q1 of 2022 adjusted net operating income, which was negative at minus $82,000,000 Last year was heavily impacted by a huge increase of supply costs. This year, all segments have done better. Gas, fire and power plants, renewable, supply and trading, Despite the negative impact of winter seasonality of supply in the power marketing business, higher cost of supply in winter versus equal invoicing along the year for many customers. Now moving to the oil parts of our business.

Speaker 2

Operationally, our oil and gas production was 2,520,000 barrels of oil equivalent per day, up 2% quarter to quarter excluding Novatek. This includes the acquisition of a 20% interest in the Saabou Mulu already producing oilfield in the Emirates starting from mid March. The production also benefits from new project contribution, notably the start up of gas production of Bloctane in Oman And the ramp up of Johan Verdup Phase 2 in Norway. Production for Q2 2023 is expected at around €2,500,000 equivalent per day. Exploration and production reported adjusted net operating income of $2,700,000,000 down 22% quarter to quarter excluding Novatek due to lower oil and gas prices.

Speaker 2

In the downstream now, Refining and Chemicals contributed $1,600,000,000 of adjusted net operating income, up 9% Quarter to quarter and 44 year on year despite the pension law protests that were ongoing

Speaker 1

in France

Speaker 2

At the end of the quarter, thanks to the strong refining margins. Refinery utilization rate was at 78%. For Q2 2023, we expect the refining utilization rates to increase above 80% given the end of strikes in France. Marketing and services results are stabilizing At a level around $300,000,000 of adjusted net operating income, dollars 280,000,000 for the Q1 of 2023, up 3% year on year despite sales being 6% lower. This demonstrates that our strategy of value over volumes is working.

Speaker 2

Overall, at company level, CFFO pre working cap was $9,600,000,000 in the 1st quarter, Plus 5% quarter on quarter despite the lower price environment I already commented as the Q4 2022 was impacted by Exceptional taxes, notably the €1,100,000,000 European solidarity contribution, mainly impacting R and C and E and P to a lesser extent. There was a $4,500,000,000 working capital in this Q1 2023. This is an exceptionally high build for our Q1, mainly related to Higher crude and petroleum products inventories on water, notably due to the impacts of the pension law protest in France. This is an exceptional element, which explains $1,400,000,000 of working cap build and will disappear next quarter. 2nd factor is the seasonality of the Gas and Power Marketing Businesses, the gap between the seasonal cost of supply And the fixed monthly B2C clients' payments.

Speaker 2

And of course, you have more traditional effects of lower prices on tax and trade Variables that explain this working cap build in the Q1 of 2023. Note that part of these working capital will reverse in the next quarter, notably the higher inventories related to protests in France And the impact of seasonality for the Gas and Power Marketing Business. Also, there was higher net investment in the Q1 at $6,400,000,000 including $3,300,000,000 for acquisition, mainly the acquisition of a 20% interest in Saab Mulu concession, The payment relating to the acquisition of a stake in Northeast project in Qatar and the stake in the joint venture with Casa Doventos in Brazil. Our guidance for 23 net investments remain unchanged at $16,000,000,000 to $18,000,000,000 Net investments include acquisition and divestments. So the sales of our Canadian assets that Patrick commented For $4,100,000,000 with the closing expected in Q3 should be counted in the envelope.

Speaker 2

The recently announced sale to Alimantas Yum Cousteard for $3,100,000,000 is also expected to be closed by Yvonne. Encouraged by the strong first quarter results, the Board confirmed the 7 point 25% increase for the 1st interim dividend €23,000,000 to 0.74 per share as well as the repurchase of $2,000,000,000 shares in the Q2 of 2023. And I think now we can go to the Q and A Thank you. Thank you.

Operator

Ladies and gentlemen, this concludes the sorry. Thank you, ladies and gentlemen. We'll now begin the question and answer session. The first question is from Oswald Clint of Bernstein. Please go ahead.

Speaker 3

Good afternoon and thank you very much for the time. Yes, I'm happy to guess the plus on the 40%. And If I was to go up into the mid-40s, I guess the issue is no, but The range we

Speaker 1

got At least 40, at least 40. Forget the plus. At least 40. I think some of your colleagues have found it. I found what it means.

Speaker 1

So you can guess.

Speaker 3

But I guess the question is, is the 40% a number we could think about when you have good divestments topping it up? And if not, we should think more around the 35%. And then the other just related to that, Is there any Novatek dividends included here? I know Novatek declared a dividend last week. It's up quite materially.

Speaker 3

Do Total expect to get anything in 2023 in terms of the cash flow? And then the second one is just Mozambique LNG, lots of momentum, lots of discussion from the President recently. I think you're still hoping to secure some of the favorable cost terms, construction terms. Any update You could provide us on that side of it, please. Thank

Speaker 1

you. Okay. No. Oswald, we gave you a guidance, 35, OT telling you that it's neither EUR 35,000,000 is a flow, but there is nothing. And last year, we've done EUR 37,000,000.

Speaker 1

So that means that, in fact, it's not monitored by Specific figures, so it's not 35 certain time and 40 over time. The only point today which makes a difference is that we have So board announced the spin off, so it was a dividend in kind. So we have a sort of form of commitment from the board to our shareholders. And so the discussion that we As soon as we decided to take the route of direct sales, we are committed somewhere to have a reward to our shareholders. And so The decision yesterday was at this stage, we don't know if it will go through buybacks or special dividend.

Speaker 1

Let's look to what will be at the beginning of the year As always, the proceeds of the sales are not yet, I would say, in the treasury of Jean Pierre. So let's close and let's take time to see where we go in the year. But the It's an opportunity and to commitment link, I would say, to the decision of the spin offs of the sort of dividend in kind. We translate that as we go beyond what was announced, so at least 40%. So at least 40% means 40% plus and then as I and so it will be then discussed either buyback or dividends.

Speaker 1

We have noticed that for the time being, we have maintained The buyback at €2,000,000,000 per quarter for the 1st 2 quarters despite the fact that the environment has softened, We did not decrease it. So there might be a chance that we could maintain the $2,000,000,000 around along the year. And then I think if you make some math in your model, you will find something above 40%. Novatek, I don't know. Again, you know my question.

Speaker 1

The question is and you have news, permanent news coming From Russia, yesterday, I've seen that the Russian authorities wanted to sanction some more European Western companies. So I don't know. So it's difficult to answer to you. Yes, there was again, we are no more in the governance of Novatek. As you know, we are just we are Out of that, it's no more consolidated in our accounts.

Speaker 1

So yes, we have seen that there was a decision of a dividend. Can it go Up to the accounts of Total Energy, we'll see along the year. I cannot just tell you today, we know we have decided that Russia is We do not plan the future. We just monitor day after day, week after week, once a month after half. And If it comes, it comes.

Speaker 1

If it does not come, it's not in the plan, I would say. Mozambique LNG, It's a good question, update on the cost terms. You have understood that it's the last step before to restart. So some I commented recently that we need the contractors to be reasonable. Some of them are not.

Speaker 1

So we will rebate some of the Packages, because there is no way for us to accept some undue costs. We have paid what we had to pay because we stopped the project and we have to restart the project, but that had an impact obviously, the stop and restart. We don't see why we should pay more than that. And so that's where we progress. So I think when we'll be Reddy, we'll come back to you on the but I think today it's premature again because we are our teams the project team is working with the With a view to be able to launch a project, but under the conditions that the costs are controlled, That's fundamental to us.

Speaker 3

Excellent. Thank you.

Operator

The next question is from Christopher Kaplan of Bank of America. Please go ahead.

Speaker 4

Thank you very much. Patrick, I'm going to ask you probably the same question again, if you don't mind. I think what I've heard, looking for clarification, is the decision before the disposal The sum call was to basically give proceeds to shareholders directly. Is that the principle we should continue to talk about and to consider the EUR 4,000,000,000 As effectively an add on, and then we can run our CFFO payout numbers as long as we like. So that's My question, just looking for confirmation.

Speaker 4

And lastly, second question, slightly connected to that. You've done, as you've highlighted, more than EUR 3,000,000,000 of acquisition In the Q1, you've announced disposals that go well beyond this. But if we accept that the EUR 4,000,000,000 disposals ought to be Distributed to shareholders, you're kind of running on an even number for the full year. And I appreciate you're not Likely to give us a number, but I wonder how big the total AREN completion Looms and whether you can confirm that that is baked into your EUR 16,000,000,000 to EUR 18,000,000,000 guidance? That would be it.

Speaker 4

Thank you.

Speaker 1

Okay. Now, Chris, I need to clarify. We never said that the €4,000,000,000 will go back to shareholders. By the way, it was not the case in the spin off scheme, If you remember correctly, first, there is an enterprise value of Which was around CAD 5,000,000,000 to CAD 6,000,000,000 let's say CAD 4,000,000,000 to CAD 5,000,000,000 where this company would have a debt, which would have been left Proceed for the company. Then we were ready to spin off to keep 30% on our side.

Speaker 1

So if you make your math, you are far from the €4,000,000,000 And again, It's not the way we expressed it. We expressed it and I can only repeat what we've said. Is that the decision of the Board? Is that and so by the way, second remark, profit of sales does not impact The cash flow from operations, the cash flow from operations as it is stated in all the way we communicate and in our results and accounts do not Integrate the cash from divestments. So we have an amount of cash flow from operations.

Speaker 1

You know perfectly, last year, we had $46,000,000,000 at $100 per barrel. At 8, I think, we'll be between $45,000,000,000 $40,000,000,000 So then probably more. In this environment of the Q1 of this quarter, the cash flow from operation, I think, is something like €9,500,000,000 no. So if we have 4 quarters of €9,500,000,000 it will make €38,000,000,000 If you make 40% plus, you can find What will be the guidance of payout to shareholders? You deduct the dividend, which is more or less between according to the You have all the figures on the dividend.

Speaker 1

We have you can even calculate it for all the quarters. We have the last payment of €0.74 The only unknown is exchange rate €1, so that's and then you will find what could be the amount. The question for the Board was, is it for buyback shares or is it Through share buyback or through special dividend that will be discussed and we'll see along the year. The feeling on our side is that as we consider that the share The company is low compared to some U. S.

Speaker 1

Peers and there is room for improvement, increasing I mean Maintaining, not included, but maintaining the share buyback is probably a good investment and demonstrating the trust to our shareholders and to investors In the future of the company. Your favorite questions, yes, there were some acquisitions this year, but you That's 20 3rd quarter by quarter. There were also 2 big announcements of sales announcements, the divestments of the European network plus the Canadian divestments, so we are supposed to see it. Total Iran, there is no secret. I think It was mentioned, of course, Totalire and Novak is integrated in $16,000,000,000 $18,000,000,000 guidance, but we don't change the guidance, neither on Huawei and the other way, Because I'm not fully sure about all the proceeds.

Speaker 1

I think Canada should come this year because it's quite an easy process in fact. But on the other side, the European network has more to do, in fact, on car working, etcetera. So Everybody is working to close the deal before year end and both parties want to do it, but sometimes there's uncertainty. So Total Rental is integrated and Total Rental, I think, in cash is something around €1,500,000,000 to €2,000,000,000 I think we already mentioned that.

Speaker 4

That's great. Thank you very much, Patrick, for the clarification. May I add one quick follow-up? Could you give us Details around the carrying value of your Canadian assets that are to be sold.

Speaker 1

What is the carrying value? You mean the capital employed in the balance sheet?

Speaker 4

Yes. It's around

Speaker 1

EUR 5,000,000,000

Speaker 2

Perfect. Thank you.

Speaker 1

There will be a capital gain. I mean, there will be a positive result in our account, but you know it's I would say it's Exceptional results? Yes. I mean, under control of my CF.

Speaker 2

Yes, yes. It will be treated as An

Speaker 1

adjustment, yes. An adjustment, yes.

Speaker 2

In our accounts. Okay. Thank you. When it comes.

Speaker 4

Thanks.

Operator

The next question is from Irene Himona of Societe Generale. Please go ahead.

Speaker 5

Thank you very much. Good afternoon. Two questions. First of all, on your E and P tax rate, please, which Increased in the quarter. Can you remind us what is included in the Q1 in terms of Upstream windfall taxes.

Speaker 5

And then at current price levels, what should we anticipate for that average E and P tax for the full year? And then secondly, you referred to the significant inflation in renewables. Could you possibly talk around Inflationary pressures you're seeing in your upstream operations, please? Thank you.

Speaker 2

So perhaps I will take the first question regarding the tax rate. So of course, the Q1 has been prepared the same way as the 2022 accounts. And at that time, I explained to you That the EPS or a repo tax policy in the U. K. Is treated in the adjusted net income.

Speaker 2

So it impacts It has an impact in the 2022 tax rate. And of course, it has an impact in the Q1 2023 Tax rates. And so the amounts representing in relation with this with this tax is $400,000,000 just to give you one figure. On the opposite, all the exceptional contribution in relation with European decision to put in place an exceptional contribution 2022 was treated in 2022 as an exceptional element because it's an exceptional element. So of course, we continue with these treatments, so Not impacting the tax rate in the Q1 of 2023.

Speaker 1

Cost inflation? Cost inflation in the 3. I mean, again, it's I think For timing, our OpEx per barrel is at $5.5 per barrel. So in our operations, I do not see impact, which is, by the way, Very good performance from the team. On the rigs, yes, we know that there are rigs for the poultry rigs that are more expensive, but we Benefiting of the fact that we had quite a number of long term and medium term contracts.

Speaker 1

So we have seen some impact that is limited. And then you have the where we had some inflation was more on the steel last year. We resisted by the way, we are right because It went down again. So the again, the question is more I think that we are facing the will of some contractors To get some money back from, I would say, bad years, they look to our results and so they want So share of the case, but again, it's a question of supply and demand for me at the end. There is no reason to accept to pay more If the supply and demand is not stretched, and I think it's not stretched on many elements, which is why I was mentioning Mozambique, We will go to repeat when we have the feeling that the contractor which were awarded the contract tried to benefit from the situation.

Speaker 1

We are not in a hurry. And to go where the market is based is to go to tender. So this is what we will do on this project. But For me, and honestly, source of inflation last year was where more of the steel and all that came down. We have observed it in our By the way, in our Uganda projects, we were very right last year not to place the order for steel.

Speaker 1

I think we have Saved a lot of money just to resist to the temptation. And so it's again, it's an arbitration for me between value And it's a question of managing that. So I don't see much inflation today, even if we have to resist, Which by the way is another good message to us, which is simplifying the projects and that's good for everybody.

Speaker 5

Okay. Thank you.

Operator

The next question is from Martin Ratz

Speaker 6

Triggers or the drivers that would lead to the full payment in the disposal to Suncor. I've noticed that the Press release wasn't really sort of all that clear, but if you could say a few words about that, that will be helpful. And secondly, I wanted to ask if you could Perhaps share some of your thoughts on the global LNG market. I noticed that on Thursday and Friday last week, Europe enjoyed All time high LNG imports, which is, of course, a little bit surprising given that the price has been going lower and yet the LNG keeps coming. And it sort of it doesn't look like Asian demand is sort of picking up all that much, at least looking at the data that we have access to.

Speaker 6

But perhaps in your business, you have Earlier insights. So I was wondering if you're seeing anything in terms of an Asian demand pickup, for example. Thank you.

Speaker 1

Okay. The additional payments, yes, to be honest, it's quite nothing. It's classic, I would say. It's a there is a price threshold About which, if we make it's a monthly payment, monthly calculation is the price of WCS Reaching a certain level then there is a multiplier effect by the dollar per barrel and Depending also on the production, I would say, of the field. So it's quite it's a classical CVR.

Speaker 1

What is good, I mean, what is Good from my point of view is that we have 5 years. So it's 60 months of, I would say, As you know, so it's a good there is a good chance to get some of it. Just to let you know a calculation, If we would have 1 year like 2022, we would have got the full $600,000,000 That's the point. Okay. Okay.

Speaker 1

Interesting. Interesting, yes. Global Energy Market, To be honest, it varies by our mix. Yes, we've seen at the beginning of the quarter some demand, even short term demand picking up. On the price, it's clear that today the market is better.

Speaker 1

It's a good time to sign to try to sign some long term contract and we are back to Better percentage of brands than in the last year. By the way, this is what we want to do on P and GLNG. Today, we are benefiting Marketing of PNG LNG in this type of environment is a good timing for us. In fact, we have a delay, but we benefit From that, and I think we are targeting to finalize some long term sales contract to cover our share of PNG LNG. Then on the other side, on the global market, Europe was more softened than last year because The weather was mild in winter.

Speaker 1

The storage is limited in capacity. So when the storage are full, difficult to put more. So if you have limited and it's a problem for by the way for me for Europe, but we don't have a very large capacity of underground storage in fact in Europe. So when it's full so that's why, By the way, we see that in the figures of Total Energy, there were less spot deals being done. There was another reason, by the way, it's about the spot deals, but Some strikes in France, the terminal LNG the Egas terminals in France were in fact shut down not shut down, but were not accessible from few Almost a month.

Speaker 1

But otherwise, I would say, do we see today, if your question is more Chinese demand? It's not too clear to me, to be honest. There is more than last year, but are we back to the 2021 level of Chinese LNG demand? It's not it's a little premature to answer you positively. So we are in between, I would say, at this stage 2022 2021 for This is Asia demand.

Speaker 1

But more appetite for many players and including, by the way, Chinese players, you have seen that they have signed some long term contracts with Qatar. It's clearly because they are very willing to I think to ensure the security of supply. China is importing 40% of Natural gas. So it's a good opportunity and Qatar is benefiting of it and we are working with them in order to We'll try to secure on the long term the supply for natural gas. So it's good for LNG.

Speaker 6

Wonderful. Thank you.

Operator

The next question is from Biraj Borktaria

Speaker 7

Just on Mozambique, appreciate your restarting there. On the other side, there were it seems like the operator was considering a second I was just wondering from the Total point of view, is that something you've looked at or something you're considering? And then the second question is just could you just walk me through the kind of plans for 2023 for both Namibia and Suriname? And what are the next That's

Speaker 2

clear,

Speaker 7

heading towards development. Thank you.

Speaker 1

No, I mean, honestly, when you have Mozambique LNG, Huge reserves. The question for us is to develop a scheme where we can really have the potential to To take the most of these reserves and so the floating LNG concept, which is honestly not fully adapted, I think it was quite adapted 1st development because it was a part of the reservoir, which was not related to the big, Big heads above that we want to develop. But for us, honestly, in terms of allocation of capital, if I want to do LNG, I prefer to allocate capital for LNG to projects with the potential of upside, because you make much more value with additional Trains on the green on the brownfield way and on the greenfield project. And the limitation for me on the floating LNG scheme In fact, you have the CapEx and then you cannot expand it. You cannot benefit from the additional reserves.

Speaker 1

So We have enough projects in our portfolio, LNG projects portfolio, not to allocate capital to floating LNG, Because we don't see the upside. And again, for me, LNG is a good cash machine when you can add additional trends. Namibia and Suriname, Namibia we are drilling just now. So you know we have In fact, in 2023, we spent $300,000,000 We have 3 wells to be doing. We have 2 rigs, 3 wells, 3 tests.

Speaker 1

So in fact, it's a critical year. We are just making a second exploration well. Then we'll make an appraisal well of the first discovery and We have a very well, if the second half we have a well either on the first discovery or on the second Discovery, if it's a discovery. So it will test because it's fundamental. We have some good static, I would say, That's our last year, so very encouraging.

Speaker 1

That's why we have decided to commit almost half of our exploration budget in 20, 2023. But we need the dynamic test results, because when you are by 3,000 meter watts a day, however, it's If it's 15,000 barrel per day per well or 5,000, we don't have the same economics, so it's an economics. So the plan is there. My view is that with all this data, we'll be in a position to have by the end of 2023, maybe earlier, but either of 2023 to have A good idea of what we have in hand and can we accelerate the time to market to develop the first discovery. On Suriname, Suriname, I think, the last appraisal well is just being drilled.

Speaker 1

So the good news is that we are trying to develop an oil pool. The difficulty in Suriname is that the All together, the gas ratio is quite high. But so what we want is to identify, all pool with a lower CGR In order to be able to have an efficient development, it's a development which we combine 2 discoveries. So first, two appraisal wells of these two discoveries are a bit positive. So today, it's a pool of around 500 Plus 1,000,000 barrels of oil.

Speaker 1

We are waiting for the last oil well in order to reach 650. And then it will be time to go to development, I would say, after these appraisal wells. We'll have again there a good vision In order to move forward to the next step. So mid year 2023 for both Namibia and Suriname is very important because for us it could be it will be the next wave of Going to FID for growing our oil business in the coming in the future years.

Speaker 7

Thank you for the details.

Operator

The next question is from Michele Della Vigna of Goldman Sachs. Please go ahead.

Speaker 8

Patrick and Jean Pierre, congratulations on the strong results despite the deteriorating macro. I really had one question. We've seen a major shift in the renewable power strategies, both of the oil companies, Some of whom are deemphasizing that investment, but also from the utilities who are more focused on financial delevering. And I'm wondering whether you're seeing signs that this shift is starting to restore better profitability, especially in wind, but also in solar and perhaps opening up better opportunities for you as well.

Speaker 1

I think it's a little premature. What we drive, it's clear that today with you had last year some higher Costs from the supply chain. Then of course, we have the interest rate, which are going up. And you know it's a highly leveraged industry. So of course, if you want at the end of the day to restore profitability, you have to put the price up, which is good I think For me, it might for players like us, it will create opportunity for sure.

Speaker 1

We've seen as well on some tenders, to be honest, some price, Which we are very aggressive in our flow range, which we do not understand, which we are probably too low. I don't know what is behind. So it's difficult to tell you, I would say, to have a clear cut answer. I think this will come. We see Higher prices in the negotiation of corporate PPAs in the U.

Speaker 1

S. Clearly, people are more reasonable. And I think on both sides, by the way, The customers and the sellers, because everybody when you have direct discussions with some Industries or some customers, it's a way to restore profitability. So there is good signal from this point of view. Sometimes in tenders, it's difficult.

Speaker 1

What we try to do, by the way, on the corporate PPA in order to restore part of the profitability as well to introduce not only a fixed price PPA for 15 years or 10 years, which honestly It's not the best, but to introduce some elements of some merchant elements in order to share some upside, downside with the customer, Which we like knowing our model of Total Energy. And this environment gave us more capacity to propose this type of Perfect. So I think what is true to come back to you is that I think there is a feeling that the race is more today not to volume, but to value. And it's It's like I think the shale oil industry in the past. So there are more players looking to profitability.

Speaker 1

It's why we When we announced that we are targeting more than 10% for integrated power, I know that people have some doubts, but And again, it's integrated because of full value chain, but I'm fully convinced that this will come. It's capital intensive industry and there is no way Just to think and when the money cost of the money was almost 0, we could find plenty of people ready to accept When the price of the money is at 4%, 5%, you have to add some 4%, 5% if you want to reach the same profitability. So I think All that will probably help us to restore the profitability and to move from, I would say, an infant industry to a little more mature

Speaker 8

Thank you.

Operator

The next question is from Lydia Rainforth of Barclays. Please go ahead.

Speaker 9

Thank you and good afternoon. Two questions, if And I did want to come back to the Suncor divestment proceeds. Given that you've kept the net investment number the same, Is this effectively giving you more acquisition capacity? I just want to double check where we are on that. And then the second one was just coming back to the Integrated The Power business, obviously, you've given us lots of helpful data and kind of splitting that out.

Speaker 9

It has been very volatile. So when we're looking at that business, kind of what are the key things that you actually want us to think about from that side? Thanks.

Speaker 1

On the first one, I would say yes and no, because again, in our view, When we put our budget for 2023, we planned the spin off. We planned the spin off and the company Total Energies was planning to allocate part of a certain amount of debt, let's say, dollars 2,000,000,000 more or less To the spin off, so this $2,000,000,000 were the proceeds which was integrated in our budget. So I would say so it does not change from the majority The view we have of our guidance for CapEx, dollars 60,000,000,000 to $18,000,000,000 So yes, of course, we have room For both, again, divestment and acquisitions, we knew that this year that we will have some, I would say higher proceeds of divestment, but we have also look, we have already spent some money for acquisition. We've done the Abu Dhabi deal, we've done the we will have total year end. We'll have Because we have some renewable deal which were introduced and the Qatar, we might have this year by the way, it's not a question of Question of passcode, but in 2023, we'll have NFE was delayed to January, And we might have as well NFS.

Speaker 1

So all that is integrated. And again, do not consider The $4,500,000,000 of proceeds from Canada are extra. By the way, we also committed today For announcement that the payout will be increased, but part of this process will go to shareholders like it was. So that's I think the point on the first one. On the second one, Yes, it's volatile.

Speaker 1

Okay. It's volatile, but going up. So it's volatile going up. The year 2022 on the supply side, to be honest, like Jean Pierre told you, was complex because you know all these European governments wanted to put some ceiling. So introducing in our account the ceiling effects and When you have some supply, which are done on the spot created the quarter by quarter results were not, I would say, a smooth exercise last year.

Speaker 1

This year, I have the impression that we are more, I would say, in a stable environment even if you still have some governments which are putting some different schemes, but it's more stable. And so I'm expecting more stability from this from last year from this supply and supply business. Renewable parts is growing, so I'm expecting more in 2023 than in 2022. And then part of what could be volatile is linked to the gas 5 plants, which were last year run at a very high rate. This Q1 was Good, but not as high as last year because of mild weather.

Speaker 1

So this is part of, we would say, volatile results. So We'll see. I mean, we are it's the beginning of the story. And we'll see quarter after quarter. And to give you some more elements, what Jean Pierre and his teams have done and delivered to you.

Speaker 1

I think it's at the end of the press release. We restated The year 2021 and all the quarters of 2022 in this segment and other and I think it's good But you can engage with my IR team. They will be happy to give you more indications or maybe not by the way, Just to help you to see what they can explain to you. But I think by the way, the volatility, the answer will be more From growing and developing the business, it's a question of size of this business. But you have noticed that almost $400,000,000 I think $370,000,000 is quite sizable.

Speaker 1

The result is even larger than the one of And services, after 5 years of development, I think it's a good achievement. So we look to that positively and it will be a source of growth in the future, That's helpful.

Speaker 9

That's great. Thanks very much.

Operator

The next question is from Lucas Herman of Exane. Please go ahead.

Speaker 10

Yes, thanks very much and thanks for the opportunity. Patrick, I wanted to ask you two questions on the LNG business. The first, there's clearly been increasing talk in Europe of Yes, banning or doing something to stop Russian LNG imports into Europe. I just wonder whether you could make some observations around what's your understanding, And whether well, just your position on that. I'm a little confused actually as to whether you were obliged To take volumes into Europe to regasify through the original contract, but anyway.

Speaker 10

And the second, staying with LNG, is it goes back to Mozambique. And you have heads of agreement or you have contracts signed for pretty much all of the offtake from Mozambique. How is that impacted If at all, how those agreements impacted, if at all, as a consequence of push outs, redoing feed, retendering, etcetera, etcetera, And the delays are clearly apparent for the offtakers. That was it. Thank you.

Speaker 1

The Mozambique LNG, I would say LNG contracts have not been affected until now By all that, the buyers are still maintaining all the I think we did not reach any, I would say a date where we would have to commit on something different. I think my view is you know that the buyers when you look to different contracts, we have good contracts where they are in the market. And so we are not, I would say, there is no impact at this stage of this delay on the LNG contract, sales contract. By the way, TotalEnergies, we have only today, we one of the contract was Discussed or negotiated, but TotalEnergies took some volumes and we are ready to take more volumes of Mozambique LNG on our side. On the Russian imports, we are, I would say, like to know, we have some long term contract.

Speaker 1

Part of this long term have a destination close, which is Europe, to be clear. Most of them, by the way, out of the 5,000,000 tons of long term contracts that we have committed to, I think, at least 3 or 4, 3 or 4, are the destination close to Europe. There is also a 4th measure clause, which means that if Europe decides to ban LNG risk and LNG import, then we would exercise the 4th measure close and we stop importing LNG from Russia to Europe. I have the impression when I'm reading what is it of course, there is a debate. The debate has rebounded, of course, first, because There is not much improvement on the situation, on the war, I would say.

Speaker 1

And second, because the European leaders think that today We have taken actions that may be banning Russian and engineering process possible. It's not a unanimous position. Some countries are more concerned than others. What is being discussed today, if I understand correctly, the regulation which is put on the table, which will go to the European Parliament, which could take time, in fact. Because sanctions require unanimity, and we'll not go full sanction.

Speaker 1

There is no unanimity in Brussels on that. But if it goes to the if I understand the position, it's more about trying to regulate the capacity of Russian players to, I would say, wanted to book some re gas capacities in Western Europe, Future, future re gas capacity. So if it is the case, it's not a ban. And by the way, it does not really affect It will not affect our position, to be clear. Then you know our position on that.

Speaker 1

We will respect all the sanctions. But at this stage, as you know, we have a long term contract. It's a commitment. It's a huge contract, and we have no other way than expecting this It's a take or pay contract. So if we don't take, we'll pay.

Speaker 1

And again, in the balance Of Europe, it was not neutral. And last year, it was something around 15,000,000 tons, I think, more or less, which were imported from Russia to Europe. So again, we are monitoring that week after week. And we will execute you. I remember you that we don't hedge All these LNG contracts because we perfectly know that maybe it would happen to us that we'd have to stop.

Speaker 1

So there is no market position being taken on the LNG from Russia.

Speaker 10

I'm sorry, just to go back to Mozambique and the volumes that you've now taken into portfolio, can you quantify the number?

Speaker 1

Quantify what?

Speaker 10

Quantify the amount of LNG that you effectively will take into your marketing business.

Speaker 1

At this stage, I think it's something Like 700,000 tons for TotalEnergies. But again, if some buyers want orders that they prefer to draw, we are ready to take more. So we are open to that. But some Japanese buyers are also ready to take more. Our Japanese friends of Mitsui are also keen.

Speaker 1

So There are some very some appetite. Mozambique LNG is not only a huge reserve, it's well located. It's Directly on the Indian Ocean, to go to some Asian countries, it's quite Indian players by the way. So I think it's a good geographical position, so there is no I'm not afraid about selling this Mozambique engine. And again, The buyers did not exercise any clause visavisa project.

Speaker 4

Okay. Patrick, thank you.

Operator

The next question is from Matt Lofting of JPMorgan. Please go ahead.

Speaker 8

Hi, thanks for taking the questions. 2, if I could, please. First, on demand, Patrick, I think you talked to LNG specifically earlier. But to the extent Financial markets are putting something of a burden of proof on the resilience of global oil and energy demand more broadly here. Are there any areas or subsectors through Total's extensive global downstream business, were you seeing any early warning signs on the rate of change in demand manifesting?

Speaker 8

And then secondly, Could you share any sense of the strength of contribution from the oil and products trading business within the 1st quarter refining and chemicals result and perhaps how you see that trending going forward as the industry moves through the immediate effects of the Embargo on Russian oil products? Thank you.

Speaker 1

Honestly, there is no I mean, what we observed in Europe was, of course, Some, I would say, energy saving, energy efficiency effect last year, price were very high. So I would say Europe has saved 15% of energy demand because of price wise, we are so high that a lot of industries, but also by the way, B2C customers, I've saved some energy. We've done a sort of we have allocated to our customers in France a bonus If they were saving more than 5% of their electricity during wintertime, we are ready to share with them part of the profit that we are gaining From the, I would say, forward supply and half of our customers, more than 1,000,000 customer, 1 point 1,300,000 customers have saved an average of 15%. By the way, it's more or less the same figure, but we observed on the manufacturing side, I mean, the industry side. So There were some impacts on energy saving.

Speaker 1

Will it last? I think this is really I think it was really a reaction to the Very high price. The gas price was almost $200 per barrel last year in New York. So today, it has softened and we begin to see some demand coming back, I would say, so I think there was a is it shorter? This is fundamental and not clear.

Speaker 1

Otherwise, no, I would say, we don't see some softening of energy Demand and the expectation from the own market are still high. On the second question about Russian ban, what is It's been a surprise. A surprise has been, but really there are many effects on the brand. Big surprise, but in fact, The diesel from Russia was very much quicker than expected. I think the market Some impact on the diesel trucks, which are integrated probably.

Speaker 1

We've seen a lot of players Making inventories of diesel before the ban. And in fact, the surprise of this coming month is that the diesel of Russia was quickly routed To Africa and South America, that was obvious because they were the 2 importing markets, but also to the Middle East We have some producing countries prefer to buy some diesel with a good discount and to sell their food with no discount, which By the way, a good transfer of value from Russia to some Middle East countries. That It's a surprise, which means that by the way the diesel crack is softening clearly because there were high inventories. No, Russian diesel is there. And the Chinese refineries are back Full speed because also they benefit by the way from Russian crude with a discount.

Speaker 1

So this But these I would say these cuts on the Russian crude in diesel has so many effects on different parts of the world and some impact From the global market, this is what we observe. All trading, all traders, they love volatility. There is a lot of volatility. And so I would say, we have good results, but in fact, we have very good results almost every quarter. So I hope that they will Continue.

Speaker 1

That's my comment.

Speaker 7

Very good. Thank you, Patrick.

Operator

The next Question is from Kim Suttiere of HSBC. Please go ahead.

Speaker 11

Hi, good afternoon and thank you for taking my question. I've got 2, if I may. First one is, I appreciate that you don't comment on rumors, but I'm just curious to hear any thoughts that you can share on the attractiveness of Corporate upstream M and A and particularly for producing assets given that Total has recently been linked to a certain private E and P company. I guess another way of asking that question is hypothetically, what would you need to see in order to pull the trigger on, let's say, a $5,000,000,000 deal in the upstream? And my second question is on Iraq.

Speaker 11

I just wondered if you could walk us through the updated Iraq integrated energy deal that was announced earlier this month. It seems to be a $10,000,000,000 headline investment, but just how is that CapEx going to be phased over the years? Thank you.

Speaker 1

Okay. Iraq, yes, that was good news after my comments in London. I I don't know if some people listen to my comments, but clearly the government of Iraq confirms the whole contract No modification at all. So I would say sanctity of contract went through a chamber of government. It was for me fundamental.

Speaker 1

So that was for me more than a good news. And secondly, we reached an agreement on the way that Participating interest could be allocated to an Iraqi party. You have seen that we will invite also our Partners from Qatar Energy to join us. So that I think is a good setup. We are finalizing all the paperwork that I think is launched.

Speaker 1

You know the EUR 10,000,000,000 we spent fundamentally about among, let's say, 4 years. 4 years we need to Because it's part of our phase. By the way, phase is the way that the gas clearing, we have to build some trains to fare down the gas That will take 2 phase. And also on the old part, by the way, increasing the production will be done in 2 phases. So let's consider 4 years We will ramp up along the years.

Speaker 1

So that's the point. On a few remaining, I don't believe our rumors. People love We have demonstrated, I think, in the past that we are able to make good deals when the price is good. So I think it's price of acquisition. And second, I think it's a matter for me as well of synergies.

Speaker 1

Can you find some synergies in the acquisitions, which will deliver additional value? And the other point, which of course is important for us is that the deal I mean, how does it make Can it fit with our portfolio according to our different position? So we are not trying to fill the gaps generally. We are more trying to be consistent with the strategy. So we'll see.

Speaker 1

So don't believe our rumors.

Operator

The next question is from Amy Wong of Credit Suisse. Please go ahead.

Speaker 12

Hi, good afternoon and thanks for taking my questions. I have 2 of them, please. So one of them is just continuing along the lines of M and A strategy, you've made quite a few, chunky, pretty large acquisitions this quarter, An interesting mix across E and P, power, integrated gas. So can we take that as an indication of kind of how you're thinking along the lines in the near future? And then as a follow-up to that, just think tying that with your scope 1, 2, 3 emissions targets that you've talked about.

Speaker 12

And how are those targets into any degree, if any at all, restricting the way you're looking at Acquisitions at the moment, the need to comply with some of those, 25, 2,030 targets that you've put out? Thank you.

Speaker 1

The second question is easy. There is no constraint of absolute value. We have a commitment, In particular, when we look to hydrocarbons, that any project either by the way Organic 1 or acquisition Must have an intensity scope 1 and 2 intensity of CO2 lower than the average of the company, the average Company of 19, so any target, any project, any M and A should be should enhance the position in intensity. That's my question mark. And then we manage.

Speaker 1

And if it's good for the shareholder, it delivers value, we will manage the absolute objective. It's up to us to make the effort On the projects. And I think we have demonstrated our capacity to have not only to acquire, but to divest some assets Like we are doing today, by the way, the exit of the Canadian oil sands from that perspective, pure CO2 budget, I would say, are giving us some space in terms of CO2. But it's again, don't consider that there is a link more for me when we are developing Our integrated power strategy is very clear that this is clear that we want to be able to offer to our customers More decarbonized, I mean lower range of products, oil, gas and some electricity, that's clear, but it is a strategy. But by the way, the first question, we have demonstrated, I think, this quarter is a perfect demonstration of the balance of our strategy.

Speaker 1

We can use M and A or organic developments, either to grow the oil back in Abu Dhabi because we have the opportunity To put in our portfolio a very low cost, low CO2, by the way, asset, I think the cost of per barrel is on price per barrel of production It's around $7, $8 per barrel. We paid, of course, more or less of $4 per barrel. So it's fitting very well price For the upper bound, so it's fitting perfectly with the strategy. So oil is good when it's fitting the strategy. We have the LNG in Qatar, which was I I mean, the investments which were the results of last year positioning, and again, it's LNG clear, and we have some renewables.

Speaker 1

So we'll continue Do, I would say, feed with organic or M and A, All the segments of the company, if there are good opportunities, so for me, it's my question when we look to M and A. And again, it's not today we have more look recently to divestment than the merger of an acquisition, I would say. But it's we are looking to that. What is the value creation that we can get not only by paying, but beyond, I would say the initial acquisition payment, that's what we look at it.

Operator

Thank you. The next question is from Paul Cheng of Scotiabank. Please go ahead.

Speaker 13

Hi, thank you. Patrick, just if you don't mind, I want to go back into the oil change asset sales. Is that a competitive or that You get some unsolicited offer, but did you go out and put it as a result that put it as a competitive bid Or that is purely that is coming in from other people? And have you looked at to break up the asset

Speaker 1

No, no, it's clear. No, no, I mean, as we I think everything is the statement. In the press release, you just have to read my thoughts. I think we said in the statement, we launched the spin off. There was no bid organized at all, and we received And solicited, several unsolicited offers.

Speaker 1

So several is a it means many. So several players, not only one. We did not look at them. We look at them only in the last month when they began and the one off Suncor begin to reach a level where we Very comfortable enough to go to the Board and to say to the Board, look, we have this offer, which again 5,500,000,000 to 6,000,000,000. And at the same time, as we're working on and we're already I spent a week last 2 weeks ago, I went Toronto in order to meet some stock exchange management team.

Speaker 1

So we are working hard. So we had a good view of what could be From one side,

Speaker 2

we have the alternative. Pure

Speaker 1

alternative and then we have the alternative freight. Of course, we were to push it's our job to push But I think at the end of the day, again, I prefer Suncor to management to comment on their motivation To make the acquisition on BEST side, on North side, again, we think through this process We're both organizing a bid process, but just being very, I would say, determined to make the spin off, we created an alternative Like by the way, I met several shareholders after our last event in London and Some of them were expecting a possible outcome from this nature. So I mean, it's so much what we can say. So that's what we've done.

Speaker 13

Okay. And that in the past, a lot of time you guys comment on that what is the trading We saw the trading environment in the quarter, and you haven't mentioned anything in the Q1. So we just assume Trading results is more or less average and nothing spectacular in the upside of the plan.

Speaker 1

You understand You understand. When is this spectacular? We warned you because in the trading statement. If we say nothing, as I said before, But this batch is very good, but nothing spectacular.

Speaker 13

Okay. Very good. Thank you.

Operator

The next question is from Henri Patricot of UBS. Please go ahead.

Speaker 13

Yes. Hi, everyone. Thank you for taking the question. Just one left for me on biofuels. We've seen Some high targets from the EU in recent weeks and including this week on SAF.

Speaker 13

I was wondering when I look at your 2,030 targets, you mentioned 10% market share with 1,500,000 tons. Are these numbers Could these numbers go up both for the overall market size and for your own capacity? Or do you see too much of a constraint when it comes to feedstocks?

Speaker 1

I think, yes, you're right, 15%, but the volume was 2,000,000 tons, which was actually the target, 2,000,000 tons of staff. There is Europe on one side. There is the U. S. On the other side.

Speaker 1

No, I think we have a plan. We are working in order to develop units either in the U. S. Where the high rate by the way giving an interesting framework. So there is a plan to develop a project around both Arthur.

Speaker 1

We have all the plants in Europe, like Grand Prix, like Lambert, but we are looking to other opportunities to develop. It's an attractive Market, having said that, as you know, the constraint is more on the feedstock because you need to find, I would say the secular economy, so you need to use lighter waste or 2nd generation. So today, the constraint is more the filter, but We are I think our colleagues or people are reaching this target of 2,000,000 tonnes per year by 2,030 seems to be Positive. No? Is that true?

Speaker 1

Or maybe 1.5? I don't okay, we'll see. But don't worry. We are working on it.

Operator

The next

Speaker 14

And a little bit the rationale that

Speaker 1

led you to increase the yield

Speaker 14

payout as a result of the Canadian Divestments rather than committing to a fixed payout. And the other question I have, it's more general It's around the emerging legislation in France and I'd like to hear your thoughts about the Tightening the investment criteria for Article 9 tonnes and explicitly to exclude explicitly investments in fossil fuels. And just trying to understand whether you are any sort of involved in discussion with the governments in trying to Make any changes here. It's obviously, totality in our screen is the most popular name for Article 9 funds investments in oil and gas. So just trying to A little bit your thoughts here and whether you are engaged in discussion with the government.

Speaker 1

Okay. On the first question, no, I think it's again, I We planned the spin off. It was announced to our shareholders. So that means that there was a distribution of the dividend in kind So it was a form of commitment. So we don't do the service commission in kind.

Speaker 1

So strongly, we had Feeling to respect our word and so it will be done through either I mean a distribution for the payout, Cash payout to whoever buybacks or special dividend, that's the point. So I think it's quite logic. And so we translated it at this stage because we prefer to observe what will happen during the year by giving you Guidance on the payout, a positive one. I think it's more than 40%, at least 40%. So I think it's positive.

Speaker 1

So I think that's demonstrated that the Board is very committed to the return of shareholders like we said last year. The The second question, Article 9, no Brexit debate. I'm not sure that exclusion will make the progress of the transition, in particular, because I'm Convinced by players like Total Energies are very well positioned to reallocate part of our cash flows to accelerate this transition. If people want to exclude, they exclude. The only argument I have for me is that you are different for SyFuchs company.

Speaker 1

You are the one who are in transition, which we can I'm not a big fan of taxonomy, to be honest, because of that is just classification. But I hope so that in some countries like Belgium, They make some caveats on the rule stating that if some companies are really serious about the transition, then it's They have to be considered. I'm more in favor, I would say, on the best in class philosophy than the banning philosophy. This is what you repeat. I think it should be more encouraging.

Speaker 1

Then if it's not Article 9, it will be Article 8. And I think that there are also, I would say, From I'm not I think Investo Port au may might be willing to have a pure category of, I would say very clean assets, okay. But it's a question for me more of organizing the marketing To investors, one really a question of regulation. And I think there is a confusion to try to Regulate the transition or to organize the transition through financial regulations, I'm not sure it's the best way to do it. Again, we are on our side.

Speaker 1

This does not affect our strategy, which is very clear and

Operator

The next question is from Jason Gabelman of TD Cowen. Please go ahead.

Speaker 15

Yes. Hey, thanks for taking my questions. I wanted to go back to M and A for a minute. Last year at your Analyst Day, you talked about an interest in growing your U. S.

Speaker 15

LNG integrated gas footprint. And I'm wondering, as we try to figure out the use of proceeds from The Oil Sands asset sale, if that's an area that looks attractive to you, either moving into the upstream gas, Further into upstream gas in the U. S. And or partnering on an LNG project or 2 there? And then my second question is on Kazakhstan.

Speaker 15

Some news out of there regarding a potential lawsuit Related to recouping costs from the Cashagan project, which you have an interest in. I was wondering if you could provide some comments around that, where that lawsuit sits potential liabilities arising from that lawsuit. Thanks.

Speaker 1

Our second question, I have no news more than what you learned. I mean, it seems that the government at Kazakhstan wants We open all discussions. It's not the first time, but the cost recovery From Kazakhstan, I think my opinion is that the 5 IOCs are really united. And so we'll face and we'll have a contract there again. And we will, of course, find the contract be Affected by all the parties.

Speaker 1

So that's my only comments, no overview on it. On the first one, I mean, Again, don't consider because we divest who are not sure if you spend the money tomorrow. I mean, we can be we can also Well, I commented already, I think, last during our last investor meeting, but it's true, but We are looking to see if we can more integrate those various positions, the U. S. Positions.

Speaker 1

The price of the ENRIEV is quite low, but people are still Dreaming of the price of last year, so let's be patient. Things are possible. You know our area of interest, so our area of interest Understandably, but I repeat it just before. It's good oil. It's LNG.

Speaker 1

It's also a renewable large range. So we are Booking to different opportunities in order to create value from the global portfolio.

Operator

Thanks. Gentlemen, there are no more questions registered at this time.

Speaker 1

Okay. So thank you very much. Jean Pierre, I will tell you all the figures. The results were good. Thank you to all the teams.

Speaker 1

And thank you for your questions. And see you soon to all of you.

Operator

Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now

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Earnings Conference Call
Shake Shack Q1 2023
00:00 / 00:00
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