The Shareholders' Newsletter #63

Chairman’s Message : Patrick Pouyanné

CHAIRMAN’S MESSAGE

portrait of Patrick Pouyanné

© REA-Total

Dear Shareholders,

As I made clear during our Annual Shareholders’ Meeting, which many of you more than 1,700 followed via our website, this is an exceptional period. In addition to the health crisis associated with the Covid-19 pandemic, we’re also facing an oil and gas market crisis and, of course, the major challenge of climate change.

First, I’d like to point out that the strategy implemented by Total since the last major oil crisis in 2015-2016 has made us more resilient during this period, thanks to our solid fundamentals.
These include:

  • Oil production costs that are close to $5 per barrel,
  • A disciplined approach to our organic investments, which are $10 billion lower than in 2014-2015,
  • A cash organic breakeven point that is less than $25 per barrel,
  • A solid balance sheet and a net-debt-to-capital ratio below 20%.

In our response to the crisis caused by the pandemic, Total’s priority is to protect the health of our employees and ensure the continuity of our operations in safe conditions. We have put in place with discipline the necessary health measures. The Group has also shown solidarity with the communities in our host countries. In France, for example, we provided €50 million worth of gasoline vouchers to healthcare professionals working in hospitals and nursing homes.

Lockdown measures have led to a decline in demand that represents a loss of earnings from our operations of at least $3 billion in 2020. At the same time, certain producing countries have increased their production, causing oil prices to plunge. If prices average $30 a barrel between March and December 2020, instead of the $60 a barrel forecast at the beginning of the year, the plunge in oil and gas prices will reduce our cash flow for 2020 by around $9 billion.


Your Group has reacted quickly, implementing an action plan designed to preserve $7.5 billion of our cash. To achieve this, we’re leveraging our culture of industrial excellence and focusing on the factors we can control safety, availability, costs and cash. In keeping with Total’s corporate culture, we will rely first and foremost on our own capabilities. I have therefore announced that Total will not apply for any support from the French government. Total is strong enough to remain independent.

In addition to meeting these short-term challenges, Total is also resolutely pursuing its medium- and long-term strategy as a major player in the energy transition. We’ve adopted a new climate policy, with the ambition of achieving net-zero emissions across all our operations by 2050 alongside the broader community. It’s a strong, demanding ambition that we won’t achieve alone, but with our customers and with the communities and governments in our host countries. We’re already putting this ambition into action by developing into a multi-energy group with an integrated strategy. We firmly believe that our low-carbon strategy gives us a competitive advantage that will create value for our shareholders over the long term.


As for the shareholder return policy, I’ll sum up our approach in four key words: confidence first; then responsibility and caution; and finally, dialogue, which is a constant. We attach great value to our long-term relationships with our shareholders, particularly our individual shareholders who form a loyal and stable group. For us, it’s a question of confidence. Our shareholders believe in us, and we want them to keep believing. We therefore leverage the confidence we have in our business and financial fundamentals to maintain the confidence of our shareholders.

Confidence has led us to maintain the first interim dividend for 2020 at the same level as in 2019, at €0.66 per share. However, responsibility and caution have compelled us to abandon the 5% annual growth objective, which was announced back in September 2019 under very different circumstances. Similarly, confidence has allowed us to maintain the 2019 dividend as planned prior to the pandemic, at €2.68 per share in total, representing a final dividend of €0.68 per share, while responsibility and caution have prompted us to offer you the option of receiving the final dividend for 2019 in new shares. The Board and I are counting on you to consider this option carefully. It’s also a way of rewarding our loyal shareholders, because those who opt for the stock dividend will benefit from a 10% discount the maximum allowed with the price per share set at €28.80.

The Group’s employees once again confirmed their attachment to Total this year by participating massively in the annual capital increase reserved for employees. This makes me very proud. It also strengthens my conviction that, together, we’ll be able to get through this extraordinary chapter in our history.

Thank you for your loyalty.

Patrick Pouyanné
Chairman and Chief Executive Officer of Total