The Shareholders' Newsletter SN#64

© REAL-Total

With its strategy to become a multi-energy company while offering a high-yield dividend, Total is a compelling investment case supporting stock rerating.”

Patrick Pouyanné,
Chairman and Chief Executive Officer of Total

Dear Shareholders,

On our last Investors’ Day on Monday, September 30, we presented Total’s strategy and outlook. Growing energy demand and getting to Net Zero are the two global trends underpinning the Total Energy Outlook, and thus the development prospects of the world energy markets that Total integrates into its strategy.

Increasing energy while decreasing emissions. Total’s strategy is to transform itself into a broad energy company by profitably growing energy production from liquefied natural gas (LNG), and renewables and electricity, the two fastest-growing energy markets, aiming to create long term value for its shareholders. In the next decade, Total’s energy production will grow by one third, half from LNG, half from electricity, mainly from renewables. We are the second world LNG player and our ambition is to be in the top five producers of renewables. The Group will progressively scale up profitable investments in renewables and electricity, from 2 to 3 billion dollars per year, representing more than 20% of its capital investments in 2030. Total is also committing more than 1 billion dollars over the next ten years to the e‑mobility revolution, by investing in battery manufacturing and EV charging. In parallel, the Group will focus on low-cost oil projects, privileging value over volume. Total will adapt refining capacity and petroleum product sales to demand, by decarbonizing part of its products by increasing the biofuels share, particularly in Europe.

Total confirms its ambition to get to Net Zero by 2050, together with society for its global business. Total will reduce the emissions related to products used by its clients in Europe by 30%, in absolute value, by 2030. This decrease in Europe allows Total to take the new commitment to reduce the absolute level of the worldwide emissions of its customers in 2030 compared to 2015. Total’s sales mix will become 30% oil products, 5% biofuels, 50% gas (including biomethane and low-carbon hydrogen) and 15% electrons, essentially renewables.

In the current uncertain environment, Total remains focused on what it controls (Health Safety Environment, delivery, costs and cash) with a view to continuously improve its organic breakeven below 25 dollars per barrel oil equivalent. Discipline and flexibility will be maintained on capital investments with 13‑16 billion dollars over 2022‑2025 assuming an oil price between 50 ‑ 60 dollars per barrel. Considering the short-term uncertainty and the low price environment, capital investment dollars while maintaining investments in low carbon electricity at 2 billion dollars.

Accelerating its shift to low carbon business while growing its Upstream production by around 2% per year between 2019 and 2025, the Group confirms a cash flow growth of 5 billion dollars by 2025 and a return on equity greater than 10% in a 50 dollars per barrel environment.

Based on this outlook and given the resilience shown by the Group, the Board reaffirms its confidence in the Group’s fundamentals and confirms that the dividend is supported at 40 dollars per barrel.

Being a Total shareholder means being a privileged player in the energy transition. Thank you for your loyalty.

Patrick Pouyanné