TotalEnergies SE (TTE) CEO Patrick Pouyanné on Q2 2022 Results - Earnings Call Transcript

TotalEnergies SE (NYSE:TTE) Q2 2022 Earnings Conference Call July 28, 2022 7:30 AM ET

Company Participants

Patrick Pouyanné - Chief Executive Officer

Jean-Pierre Sbraire - Chief Financial Officer

Conference Call Participants

Christyan Malek - JPMorgan

Irene Himona - Societe Generale

Lydia Rainforth - Barclays

Martijn Rats - Morgan Stanley

Lucas Herrmann - BNP

Biraj Borkhataria - RBC

Bertrand Hodee - Kepler Cheuvreux

Christopher Kuplent - Bank of America

Kim Fustier - HSBC

Amy Wong - Credit Suisse

Paul Cheng - Scotiabank

Henri Patricot - UBS

Patrick Pouyanné

Hello, everyone. Patrick Pouyanné here. I am happy to join you today for this call to comment our results together with Jean-Pierre. Our TotalEnergies are taking action to take the most out of the very favorable environment for energy companies. I will also comment, of course, the actions we are taking to execute and deliver on our strategy in such an environment. And Jean-Pierre will review the results and then we will go to the Q&A.

So of course, the environment is obviously very supportive, the price of oil, the price of European gas, the price of LNG and the refining margins for this quarter. It is the first time in 25 years in the industry that I am observing such an environment where all segments of our company are benefiting at the same time of strong prices or margin. And – but as Jean-Pierre will show you our ability to fully leverage the commodity price environment is significantly strengthening our balance sheet and increasing our cash flow to record cash flows for the quarter and we are performing very well and using this opportunity to accelerate our transformation and benefit our shareholders.

TotalEnergies is indeed fundamentally a commodity company and we recognize that we are high in the commodity price cycle. On the supply side, the global system will struggle over the coming year to develop additional spare production capacity for both oil and LNG and this implies medium-term support for high prices. On the demand side, global demand is increasing as economies continues to reopen, but the freight is a potential slide into recession because of inflation.

The Russia-Ukraine conflict and sanctions have pushed refining margins for this quarter to the sky during the second quarter. They have been falling sharply, quite sharply in July, but still remain high. This obviously had a strong impact on gasoline prices at the pump for our customers. And in this context, TotalEnergies extended the fuel price reduction program for its entire network in France through the end of the year. We prefer indeed to share the benefit immediately and directly to our customers rather than to make ourselves a target for additional taxation in this current environment. Ultimately, energy prices and we should not forget this, are cyclical. So we do not expect to remain at the top of the cycle for the long-term. We have been for these type of cycles before and we are taking a balanced approach to best execute and deliver on our strategy to profitably grow the company for energy transportation.