Irene Himona

Irene Himona (Sanford C. Bernstein & Co., LLC) questioned the free cash flow generation of TotalEnergies' new barrels compared to legacy oil and gas, and sought to understand how the company's integrated power business achieved free cash flow positive status, unlike many other utilities.

Answer

Patrick Pouyanné, Chairman and CEO of TotalEnergies, explained that the integrated power business's success stems from CapEx recycling, with $2 billion of renewables sold in 2025 financing 70-80% of organic CapEx. He also highlighted the industrialization of farm-downs and a focus on fewer, more efficient countries as key differentiators.

Irene Himona asked about the free cash flow generation of TotalEnergies' new barrels, specifically comparing their CapEx to legacy oil and gas projects. She also sought to understand how TotalEnergies' integrated power business achieved free cash flow positive status, differentiating its approach from other utilities that remain cash negative.

Answer

Chairman and CEO Patrick Pouyanné explained that the integrated power business's success stems from a mix of upstream (renewables and gas-fired power plants) and downstream (customer sales and trading) contributions. He highlighted the strategy of recycling CapEx through farm-downs, which financed a significant portion of organic CapEx, and a focus on fewer, more efficient geographies. He noted that the company is becoming more selective and focused, aiming for efficiency in megawatt per staff.

Irene Himona of Bernstein questioned the company's balance sheet strategy, asking for a reasonable normalized gearing range in a $70/bbl environment and seeking reassurance on the 2028 cash flow guidance for the Integrated Gas division, given its H1 decline.

Answer

Patrick Pouyanné, Chairman & CEO, stated that the Board is comfortable with a normalized gearing of 15% at $70/bbl oil. He expressed confidence in the long-term Integrated LNG cash flow guidance, attributing the recent slight miss to low volatility in European gas markets, which limited trading opportunities, and confirmed the growth trajectory from new projects remains intact.

Irene Himona asked if there is a specific normalized gearing level that would cause the Board to reconsider its $2 billion quarterly buyback and requested an update on the project timeline for the Namibia discovery.

Answer

CEO Patrick Pouyanné reiterated that the Board is comfortable with a normalized gearing of around 14% in a $65/barrel oil environment but would "obviously" revisit the buyback if prices fell to the $50-$55 range for a sustained period. Regarding Namibia, he confirmed visiting the country and noted that while the project holds significant resources (~750 million barrels), its deep-water and low-permeability nature presents challenges. He stated that reaching a Final Investment Decision (FID) depends on finding common ground with the government to ensure the project meets TotalEnergies' IRR targets.

Irene Himona of Bernstein asked for clarification on the underlying performance of the Marketing segment excluding the Couche-Tard disposal and questioned potential concerns regarding recent French political volatility.

Answer

CEO Patrick Pouyanné quantified the Couche-Tard disposal impact at approximately $60 million for the quarter, stating that underlying marketing performance was equivalent to the previous year. Regarding French politics, he expressed confidence, noting that a 'golden share' was previously ruled against by the European Court of Justice and that the company will engage with any new government, not expecting fundamental impacts.

Irene Himona from AllianceBernstein asked for specific details on the Venus discovery in Namibia, including the resource size for the 2025 FID, reservoir thickness, and flow rates from the recent appraisal.

Answer

CEO Patrick Pouyanné declined to share proprietary technical data but confirmed the company is targeting a development of 150,000 to 180,000 barrels per day. He emphasized that the project meets their profitability criteria, with a breakeven cost below $30 per barrel, and highlighted Namibia as a key future growth area where they aim to be the first producer.

Irene Himona from Sanford C. Bernstein asked whether the 4% ROACE enhancement from trading over the last six years was primarily from legacy oil and gas, or if new businesses like Archaea, biogas, and Lightsource had contributed to this profitability.

Answer

Carol Howle, Interim Chief Executive Officer, confirmed the 4% ROACE enhancement from supply, trading, and shipping for the sixth consecutive year, across various commodity cycles. She explained that the team optimizes BP's asset base (2%), with 1% from optimization and 1% from value trading. She noted that they work with Archaea on routes to market and support refineries and oil/gas businesses, but the impairment of Archaea reflects difficult choices for higher returns elsewhere.

Irene Himona from Sanford C. Bernstein asked if the 4% enhancement to Group ROACE from BP's supply, trading, and shipping business over the last six years was primarily from legacy oil and gas, or if impaired businesses like Archaea and Lightsource bp contributed to this profitability.

Answer

Carol Howle, Interim CEO, confirmed the consistent 4% uplift from supply, trading, and shipping across various commodity cycles, attributing it to a competitively advantaged team optimizing BP's asset base. She noted that the trading team supports businesses like Archaea with routes to market and works with refineries and oil and gas, but did not specify the exact contribution from impaired businesses.

Irene Himona asked for an approximate timing for concrete announcements regarding BP's further portfolio simplification and restructuring.

Answer

Murray Auchincloss (CEO, BP) explained that the portfolio review is ongoing with Albert Manifold, driven by significant exploration success, including 12 discoveries this year. He emphasized a focus on value and returns, allocating capital to high-quality opportunities. BP will provide updates as decisions are made, citing recent examples like the Tiber sanction, Killeen field divestment, and stopping the Rotterdam Biofuels refinery.

Irene Himona asked for an approximate timeline for BP to make concrete announcements regarding further portfolio simplification and restructuring.

Answer

Murray Auchincloss (CEO, BP) stated that the portfolio review, led by Albert Nucher, is driven by recent exploration success, including 12 discoveries this year. He indicated that updates would be provided as decisions are made, citing recent actions like the Tiber sanction and Killeen field divestment.

Irene Himona from Bernstein commented on the impressive $500 million Q1 cost reduction and asked for examples of where these savings are coming from. She also questioned if the large Q1 adjusting item related to the U.K. energy profits levy was a one-off event or if more charges were expected.

Answer

Executive Katherine Thomson confirmed the U.K. levy charge was a one-off accounting adjustment for the full extension of the EPL, which was enacted in Q1. Regarding cost savings, she credited progress across all businesses, particularly in customer and products and corporate functions. She highlighted the removal of around 3,000 contractors and the use of technology to review thousands more roles as a key driver of the reductions.

Irene Himona from Bernstein requested a breakdown of the bioenergy EBITDA, specifically the split between biofuels and biogas, and whether Archaea's performance improved despite weak biofuels margins.

Answer

CEO Murray Auchincloss confirmed that Archaea's performance is improving, with 12 new plants established, though progress is about 12 months behind schedule. He acknowledged that biofuels, particularly in Europe, remain challenging, leading to caution on sanctioning new plants.

Irene Himona inquired about the financial impacts of the Adura joint venture in the U.K. for 2026 on Shell's key metrics, such as cash dividend receipts and upstream tax rates. She also questioned Shell's strategy for controlling chemicals losses amid a prolonged downcycle and the progress of the announced chemicals restructuring at CMD25.

Answer

CFO Sinead Gorman stated that the Adura joint venture, a standalone entity, will result in reduced production in Shell's Q1 outlook but is expected to generate considerable dividends. CEO Wael Sawan addressed the group's ROACE, noting an increase to 9.4% in 2025 despite lower oil prices, with improvements in mobility and lubricants. For chemicals, he reiterated patience for strategic divestments to avoid selling at cycle lows, while emphasizing internal self-help measures, including identifying several hundred million dollars in cost and CapEx reductions to achieve free cash flow neutrality.

Irene Himona asked about the key financial impacts of the Adura joint venture in the UK for 2026, including cash dividend receipts and upstream tax rates. She also questioned the group's return on capital (ROACE) being below double digits, particularly due to prolonged chemicals losses, and sought an update on the chemicals restructuring announced at CMD25.

Answer

CFO Sinead Gorman stated that the Adura JV, a standalone entity, would lead to reduced production in Shell's Q1 outlook but is expected to generate considerable dividends. CEO Wael Sawan addressed ROACE, noting an increase to 9.4% in 2025 despite a $10 oil price drop, with improvements in mobility, lubricants, and RES. For chemicals, he reiterated strategic patience for divestment to avoid selling at bottom-of-cycle conditions and highlighted self-help measures, including several hundred million dollars in cost and CapEx reductions, to achieve free cash flow neutrality in a difficult macro environment.

Irene Himona asked about the drivers behind the substantially higher unit EBITDA in Lubricants on flat volumes and its sustainability. She also requested a breakdown of the moving parts in Mobility's record-high margin and whether that performance can be sustained.

Answer

CFO Sinead Gorman attributed the strong Lubricants performance to a focus on premium products, stable base oil pricing, and disciplined OpEx control. For Mobility, she highlighted the contribution from premium fuels, which were up over 1% quarter-on-quarter, and a country-by-country strategy to maximize value. CEO Wael Sawan added that he believes there is 'more to go' in the Marketing business turnaround.

Irene Himona inquired about the drivers behind the materially higher unit EBITDA in both the Lubricants and Mobility businesses and asked about the sustainability of these improved margins.

Answer

CFO Sinead Gorman attributed the strong performance to a focus on premium products, stable base oil pricing in Lubricants, and a country-by-country value extraction strategy in Mobility. CEO Wael Sawan added that he believes there is "more to go" in turning around these underperforming businesses and unlocking further value.

Irene Himona of AllianceBernstein asked if the high-grading of the Mobility portfolio could lead to further margin improvement and questioned the below-90% asset availability in the Upstream segment, asking if it indicated an underlying issue.

Answer

Executive Sinead Gorman confirmed that the strategy of divesting lower-margin sites while acquiring high-margin ones is expected to support further margin growth. Executive Wael Sawan explained that the Upstream metric is availability, which is impacted by planned turnarounds, and that the company sees significant opportunity for improvement through technology and operational excellence.

Irene Himona from Sanford C. Bernstein inquired about the cancellation of the German biofuels plant, asking whether it was driven by technology or market conditions. She also asked for Shell's outlook on its Integrated Gas business amid a potential global LNG oversupply and spot price weakness.

Answer

CEO Wael Sawan explained the decision to pause the biofuels plant was a combination of market conditions, including softening mandates, and project-specific engineering and execution challenges. Regarding LNG, he expressed long-term bullishness, stating that market cycles create opportunities for a player like Shell to leverage its global portfolio to manage supply and demand, and that the company is well-balanced with a mix of long-term and spot exposure.

Irene Himona sought clarification on Equinor's definition of 'integrated power' and how its stake in Ørsted fits into this strategy, and asked why the long-term sustainable share buyback guidance was lowered from $2 billion to $1.5 billion.

Answer

President and CEO Anders Opedal defined 'integrated power' as combining intermittent power (offshore/onshore wind, solar) with flexible power (batteries, CCGTs), all integrated by Danske Commodities to add value. He noted Ørsted fits into this through collaboration. CFO Torgrim Reitan clarified that the previous 'sustainable level' was $1.2 billion, and $1.5 billion is above that. He explained that share buybacks are a regular part of capital distribution, on top of the bankable cash dividend, but are more dependent on the macro environment.

Irene Himona sought clarification on Equinor's definition of 'integrated power' and how its ownership in Ørsted fits into this strategy. She also asked why the long-term sustainable share buyback guidance was lowered to $1.5 billion from a previous $2 billion.

Answer

CEO Anders Opedal defined 'integrated power' as combining intermittent power (offshore/onshore wind, solar) with flexible power (batteries, CCGTs), all integrated into one business area with Danske Commodities adding value. He stated that collaboration with Ørsted fits into this strategy. CFO Torgrim Reitan clarified that the previous 'sustainable level' for share buybacks was $1.2 billion, which has been retired, and $1.5 billion is above that. He explained that after returning $54 billion over the last three years, the balance sheet is now normalized, and while Equinor will lean on the balance sheet in 2026, stronger free cash flow is expected in 2027, making the share buyback more dependent on the macro environment.

Irene Himona from Sanford C. Bernstein & Co., LLC inquired about the 13% increase in Equinor's unit depreciation charge in Norway from Q2 to Q3, asking if this represents a new normal. She also sought elaboration on Equinor's decision to take a more active role, including a board seat, in Ørsted, and the envisioned industrial cooperation.

Answer

Torgrim Reitan, CFO, explained that the higher unit depreciation in EPN was driven by new assets like Johan Castberg coming on stream, with a gradual reduction expected. Regarding Ørsted, Mr. Reitan stated Equinor's recommitment as a supportive shareholder, aiming for closer industrial and strategic collaboration to create value for both companies, while emphasizing caution on new offshore wind capital commitments in the current challenging environment.

Irene Himona asked about the unit depreciation charge in Norway, specifically if the Q3 level represents a new normal, and sought clarification on Equinor's decision to become an active shareholder in Ørsted, including the envisioned industrial cooperation and areas for improvement.

Answer

CFO Torgrim Reitan explained that the increased unit depreciation charge in EPN was due to new assets like Johan Castberg coming on stream, with a gradual reduction expected. Regarding Ørsted, he stated Equinor's participation in the rights issue was a recommitment, aiming for an active board role to provide long-term industrial perspective and leverage Equinor's project development and risk management competencies. He emphasized limiting new significant capital commitments to offshore wind in the current challenging environment, focusing on existing projects like Empire Wind, Dogger Bank, and Baltic.

Irene Himona from Bernstein sought clarification on the new 10-installment tax payment schedule in Norway and questioned if the company's gearing, now at the low end of its 15-30% range, should have a tighter target given market volatility.

Answer

EVP & CFO Torgrim Reitan detailed that the new tax schedule spreads payments evenly with five installments in H2 2024 and five in H1 2025. Regarding gearing, he stated the 15-30% range is not a target but a guide consistent with rating ambitions, and the company has no plans to change it. He emphasized a commitment to a robust balance sheet and competitive distributions, noting there is no direct mathematical link between gearing and buybacks.

Irene Himona from Bernstein sought clarification on the new Norwegian tax payment schedule and questioned if the 15% gearing level, at the low end of the target range, suggests a preference for a tighter 15-20% range for setting distributions.

Answer

EVP & CFO Torgrim Reitan explained the new tax system spreads payments more evenly, with five installments in H2 2024 and five in H1 2025. He stated there is no intention to change the 15-30% gearing range, emphasizing it's not a rigid target but a guide for rating ambitions, and that capital distribution is not mathematically linked to it, allowing for balance sheet flexibility.

Irene Himona of Bernstein asked for a timeline on when the Plenitude satellite is expected to become cash flow neutral. She also requested details on the near-term materiality of the new Indonesian upstream satellite, specifically its impact on 2026 production and CFFO.

Answer

Stefano Goberti, CEO of Plenitude, explained that as a growth company, Plenitude will turn cash flow positive before 2035-2040, once its renewable production can serve its retail client base. CEO Claudio Descalzi described the Indonesian project as transformational but stated that specific financial and production uplift figures for 2026 would be disclosed in the February full-year plan.

Irene Himona of Bernstein asked how much cash from recent disposals is expected to be booked in the second quarter. She also inquired if the sequential improvement in underlying E&P EBIT margin is a structural trend that can continue through portfolio high-grading.

Answer

Executive Francesco Gattei confirmed EUR 600 million from the KKR deal was already received in Q2, with the Vitol deal potentially closing in Q2 or Q3. He also noted the Plenitude stake sale process is advancing. Executive Guido Brusco affirmed that the margin improvement is structural, driven by a strategy of developing high-value barrels and divesting lower-value ones, a trend he expects to continue.

Irene Himona asked about the current oversupply in the biofuels market, the timeline for rebalancing, and the rationale for flagging a potential future increase to the share buyback program.

Answer

Enilive CEO Stefano Ballista described the current biofuels market as a challenging but temporary "transition period" due to oversupply, expecting a rebalancing in 2025 driven by new regulations like ReFuel Aviation and RED3. Eni Executive Claudio Descalzi added that Enilive's integrated value chain provided resilience. CFO Francesco Gattei explained the potential buyback increase is linked to the accelerated disposal plan strengthening the balance sheet, allowing a review in Q3 to potentially raise the shareholder distribution to the 35% CFFO ceiling.

Irene Himona from Bernstein asked about the performance of the marketing business within Enilive and the progress on integrating agri-feedstocks. She also questioned Eni's confidence in its ambitious four-year, €8-10 billion asset disposal plan compared to past achievements.

Answer

Executive Francesco Gattei expressed high confidence in the disposal plan, noting the previous €10 billion was achieved in a concentrated 4-5 year period and the current plan has more opportunities. Stefano Ballista of Enilive reported strong marketing performance, while Guido Brusco, Head of Natural Resources, confirmed agri-feedstock integration is ramping up as planned, with production growing significantly across projects in nine countries.