Lucas Herrmann

Lucas Herrmann (Exane BNP Paribas) inquired about the outlook for TotalEnergies' chemicals business, including potential upside from market normalization and signs of industry shutdowns, and asked about the company's LNG contracting strategy, specifically if it's broadly done fixing contracts given its achieved length in Brent.

Answer

Patrick Pouyanné, Chairman and CEO of TotalEnergies, noted large overcapacities from China impacting chemicals, differentiating between uncompetitive European NAFTA-based petrochemicals (managing pain, some shutdowns) and competitive ethane-based petrochemicals (US, Saudi Arabia, Qatar) which are profitable. The net result for chemicals in 2025 was positive $500 million. Stéphane Michel, President, Gas, Renewables & Power, TotalEnergies, confirmed satisfaction with the LNG portfolio balance until 2030, having sold over 8 million tons, but noted ongoing work for post-2030 contracts.

Lucas Herrmann asked about the outlook for TotalEnergies' chemicals business, including potential upside if the chemical cycle normalizes and signs of industry shutdowns due to overcapacity. He also inquired about the LNG portfolio's contracting strategy, specifically if the company is comfortable with its current position of 8-10 million tons of length in Brent-linked contracts.

Answer

Chairman and CEO Patrick Pouyanné explained that the chemicals business, primarily polymers, faces large overcapacities from China, particularly impacting Korean platforms. He differentiated between European naphtha-based crackers, which are uncompetitive and being scaled down (e.g., Antwerp cracker shutdown), and ethane-based petrochemicals in the U.S., Saudi Arabia, and Qatar, which remain competitive due to feedstock advantages and are profitable. He noted that the overall chemicals net result in 2025 was positive. President, Gas, Renewables & Power Stéphane Michel confirmed comfort with the current LNG portfolio balance until 2030, having sold over 8 million tons on a spot basis in Asia, but acknowledged ongoing work for post-2030 contracts due to expiring agreements and new production.

Lucas Herrmann posed a generic question about the difficulties faced by the chemicals sector, asking if TotalEnergies observes signs of industry restructuring to improve profits and what proportion of the refining and chemicals business profit comes from chemicals, given the challenging environment.

Answer

Patrick Pouyanné, Chairman and CEO, acknowledged the severe competition in petrochemicals, particularly for European naphtha crackers, due to China's increased capacity and cost advantages of U.S. and Middle East ethane/LPG. He reiterated TotalEnergies' strategy of investing in competitive crackers (U.S., Saudi Arabia) and shutting down less competitive ones in Europe. He noted that chemicals are not a major part of the downstream results or cash flow, with most coming from refining and trading.

Lucas Herrmann asked for TotalEnergies' thoughts on the challenges facing the chemicals industry, particularly regarding restructuring and improving margins, and the proportion of profit derived from chemicals within the refining and chemicals business.

Answer

Patrick Pouyanné, Chairman and CEO, acknowledged the difficult situation in the petrochemicals industry, especially for naphtha crackers in Europe, due to increased Chinese capacity and competition from U.S. and Middle East ethane crackers. He reiterated TotalEnergies' strategy to invest in feedstock-advantaged crackers (U.S., Saudi Arabia) and shut down less competitive ones (France). He stated that chemicals are not a major part of downstream results and cash flow, with most coming from refining and trading.

Lucas Herrmann of BNP Paribas followed up on the Mozambique LNG project, asking for clarity on the 'misalignment' with the government, and inquired about the performance and strategic fit of the Hutchinson manufacturing business within TotalEnergies' portfolio.

Answer

Patrick Pouyanné, Chairman & CEO, clarified his Mozambique comment was positive, meaning that achieving strong alignment is a prerequisite to restarting a major project, not that there is a negative misalignment. On Hutchinson, he stated the business is performing very well and fits comfortably in the portfolio, adding that he spends little time on it and is focused on more strategic M&A in core areas like oil, gas, and integrated power.

Lucas Herrmann asked about the impact of currency fluctuations, specifically a strengthening euro, on the company's dollar-reported debt. He also inquired about the expected full-year net contribution from associate companies.

Answer

CEO Patrick Pouyanné noted that a weak dollar is beneficial as it lowers the dollar cost of the euro-denominated dividend. CFO Jean-Pierre Sbraire clarified that the company's debt is effectively all in dollars, as any euro-denominated bonds are swapped to dollars, resulting in very limited FX exposure on debt. Regarding associates, Pouyanné explained that the lack of Q1 dividends from some JVs like Nigeria LNG is a timing issue, as they operate on different payment schedules, and he expects the cash to come through later in the year.

Lucas Herrmann of BNP Paribas asked about the future redemption schedule for hybrid bonds and sought an outlook on the development of Chinese oil demand.

Answer

CFO Jean-Pierre Sbraire explained that the company used its flexibility to not renew €1.5 billion in hybrids and will discuss future redemptions with rating agencies. CEO Patrick Pouyanné commented on China, stating that while EV sales are impressive, oil demand continues to be driven by China and India. He believes a global demand growth assumption of around 1% per year remains reasonable and cautioned against overstating the slowdown in the Chinese economy.

Lucas Herrmann from BNP Paribas inquired about the progress and cost developments in the offshore wind business, asking about the potential timing for final investment decisions (FIDs) in Europe and North Asia.

Answer

CEO Patrick Pouyanné emphasized a strict, CapEx-driven approach, stating the company will not proceed with overly costly projects and is not in a rush to meet 2030 targets at the expense of profitability. He noted that offshore wind must be competitive in a merchant power market and that the company will be selective with its many options. He identified Germany and the U.K. as potentially attractive markets.

Lucas Herrmann from BNP Paribas asked for BP's investment case, given the near-term focus on balance sheet strengthening and the lack of immediate increased shareholder distributions, seeking reasons to believe in growth and a higher stock multiple.

Answer

Carol Howle, Interim CEO, affirmed the strategic direction and focus on delivering primary targets, emphasizing BP's differentiated portfolio of upstream exploration and access opportunities created at the drill bit. Gordon Birrell, Executive Vice President of Production and Operations, outlined short-term (strong base, efficient infill), medium-term (BPX growth, Paleogene ramp-up), and long-term (Bumerangue, Namibia, more Paleogene) growth cases, citing strong IRRs for BPX.

Lucas Herrmann from BNP Paribas asked for BP's investment case, given the near-term focus on balance sheet strengthening and the request for equity holders to await greater distributions, inquiring about the expected growth opportunities.

Answer

Carol Howle, Interim Chief Executive Officer, affirmed the strategic direction and focus on primary targets, emphasizing improved performance, competitiveness, and safety. Gordon Birrell, Executive Vice President, Production and Operations, outlined short-term (strong base, efficient infill program), medium-term (BPX growth to 650,000 boepd with 45% IRR, Paleogene ramp-up), and long-term (Bumerangue, Azule, more Paleogene) growth opportunities, highlighting BP's differentiated portfolio and project execution capability.

Lucas Herrmann inquired about the BPX CapEx profile, noting that an expected step-down in spending hasn't occurred, and asked Kate Thomson about the pension fund buy-in with Legal & General, specifically why it stopped and future expectations.

Answer

Kate Thomson (CFO, BP) explained the pension buy-in as a de-risking decision by the Pension Trustee Board, offering no further guidance on future actions. Murray Auchincloss (CEO, BP) clarified that BPX CapEx remains around $2.5 billion annually, driven by significant productivity improvements (30% in completions, 15% in drilling) and strong liquids growth in the Permian and Eagle Ford.

Lucas Herrmann asked about the CapEx profile for BPX, questioning why spending isn't stepping down despite processing facilities completion, and sought an update on the pension fund buy-in with Legal & General.

Answer

Murray Auchincloss (CEO, BP) stated BPX CapEx is around EUR 2.5 billion annually, with flexibility. He highlighted significant productivity improvements (30% in completions, 15% in drilling) and record-setting wells, like a 4-mile lateral in Haynesville producing 80M scf/day. Kate Thomson (CFO, BP) explained the pension fund buy-in as a de-risking measure, noting it's a decision for the Pension Trustee Board, which will continue to evaluate further de-risking.

Lucas Herrmann of BNP Paribas asked about the fiscal implications of recent US legislation on corporate tax and the outlook for refinery availability, given the recent period of heavy turnarounds.

Answer

EVP Gordon Birrell stated that he expects a lower level of turnaround activity in 2026-2027 compared to the 2024-2025 period and aims to maintain the recently achieved high availability. CEO Murray Auchincloss described the US tax legislation as 'very positive,' as it sustained the 21% corporate tax rate and included immediate expensing, which helps business planning and investment.

Lucas Herrmann of BNP Paribas inquired about the fiscal implications for BP from recent US tax legislation and asked for an outlook on refining availability, considering the recent heavy turnaround schedule.

Answer

EVP - Production & Operations Gordon Birrell projected that turnaround days would be lower in 2026-27 compared to 2024-25, with a goal of maintaining the current high availability levels. CEO Murray Auchincloss described the US tax bill as 'very favorable,' as it maintained the 21% corporate tax rate and immediate expensing, which benefits BP's significant US operations.

Lucas Herrmann of BNP Paribas asked for confirmation on the expected LNG volume from the Venture Global offtake this year. He also posed a strategic question, suggesting that to build investor confidence, BP should perhaps focus less on speculative value trading to reduce quarterly earnings volatility and instead prioritize a more stable, flow-based margin.

Answer

Executive Murray Auchincloss confirmed that the Venture offtake started flowing in mid-April from BP's 2 MTPA capacity. In response to the trading question, he argued that telling the trading organization to stabilize income would remove its commercial edge. He stressed that trading performance should be viewed on an annual or multi-year cycle, where BP has a strong track record of delivering its target 4% return, rather than on a volatile quarter-by-quarter basis.

Lucas Herrmann from BNP Paribas Exane asked for the expected incremental LNG volumes in tonnes for the year from the Beach and Tortue projects.

Answer

CEO Murray Auchincloss stated that the Tortue and Beach projects are expected to add a combined 3 million tonnes per annum (mtpa), assuming full-year flow. He declined to comment on the Venture project due to ongoing arbitration.

Lucas Herrmann asked if Shell's resource resolution strategy primarily focuses on deepwater, given its strength and attractive margins. He also sought comments on expected incremental LNG volumes from various projects like Calcasieu, Pavilion, Plaquemines, and Canada, and an update on Nigeria Train 7's timing.

Answer

CEO Wael Sawan stated that Shell is agnostic about the specific resource type, focusing on creating value per share by deploying capital accretively, leveraging strengths in deepwater, conventional oil and gas, and shales. CFO Sinead Gorman confirmed that LNG Canada is ramping up to full capacity, and third-party volumes are coming online, contributing to Shell's 11% LNG sales growth in the last year, exceeding the 4-5% annual target. She noted that Shell's portfolio is currently tighter on additional length, limiting trading opportunities, but volumes will continue to grow.

Lucas Herrmann asked if Shell's strategy for resolving resource issues is primarily focused on deepwater, given it's a core strength. He also inquired about the expected incremental LNG volumes and growth opportunities for the current year from various projects, and sought an update on Nigeria Train 7 timing.

Answer

CEO Wael Sawan stated that Shell is agnostic regarding the specific resource base, focusing on creating value per share by leveraging strengths across deepwater, conventional oil and gas, and shales. CFO Sinead Gorman noted that LNG Canada is ramping up, and third-party volumes are coming online, contributing to an 11% growth in LNG sales in 2025 against a 4-5% annual target. She mentioned that Shell's portfolio is currently balanced, with less additional length for trading opportunities. (No specific update on Nigeria Train 7 timing was provided in this response).

Lucas Herrmann asked for an update on the full-year outlook for divestments, including the status of the Colonial pipeline sale. He also inquired about the deepwater Nigerian project OPL 245 (Zaba Zaba) and whether it might be moving forward.

Answer

CEO Wael Sawan noted that OPL 245 is operated by ENI and Shell would defer to them, but confirmed Shell is actively looking to expand in deepwater Nigeria with projects like Bonga Southwest. CFO Sinead Gorman stated that divestments are more about strategic portfolio alignment than a funding necessity this year. She expects the Colonial sale to close in Q3 or Q4.

Lucas Herrmann asked for an update on expected full-year divestment proceeds and the status of the OPL 245 (Zaba Zaba) deepwater project in Nigeria.

Answer

CFO Sinead Gorman noted that divestments this year are focused on strategic portfolio alignment rather than a need for cash, with the Colonial pipeline deal expected to close in H2. CEO Wael Sawan stated the OPL 245 project is operated by ENI, but Shell continues to evaluate other deepwater opportunities in Nigeria, such as Bonga Southwest.

Lucas Herrmann asked about the status of strategic reviews for chemicals assets, the reason for low utilization guidance, and why the detailed net income breakdown for Marketing sub-segments was removed from disclosures.

Answer

CEO Wael Sawan confirmed inbound interest for chemicals assets since CMD, with a process underway to find the right partnership structure, not a fire sale. He noted utilization guidance reflects a choice to switch off cash-negative units. Executive Sinead Gorman explained the marketing disclosure was intentionally simplified to reduce complexity and cost, as allocating items like tax to sub-segments was impractical, while still providing quarterly EBITDA and annual capital employed.

Lucas Herrmann of BNP Paribas asked for a more specific timeline on the completion of the Pavilion acquisition and sought management's perspective on why Shell's shares continue to trade at a low multiple despite strong performance.

Answer

Executive Sinead Gorman anticipates regulatory approvals for the Pavilion deal by the end of Q1, with a notable financial impact expected in 2026. Executive Wael Sawan expressed confidence that consistent delivery and building a strong track record will eventually lead to a valuation re-rating, adding that the current share price presents a compelling opportunity for buybacks.

Lucas Herrmann of BNP Paribas questioned the sizable loss in the Renewables and Energy Solutions (RES) business, seeking guidance on future profitability and clarity on its capital employed. He also asked about Shell's strategy for unlocking value from its Marketing assets, referencing a peer's recent divestment.

Answer

CFO Sinead Gorman explained the RES segment's quarterly loss was due to low market volatility, which limited trading and optimization opportunities, and that a near-zero result is expected on average without volatility. CEO Wael Sawan stated that the current focus for the Marketing business is on improving performance to its full potential by focusing on value, premium products, and cost reduction, before considering structural options to unlock value at a future date.

Lucas Herrmann inquired about the two large downstream and chemicals facilities coming online next year in partnership with QatarEnergy, asking about the expected cash flow increment at current levels and the potential for CapEx to fall and distributions to Chevron to increase from CP Chem.

Answer

Chairman and CEO Mike Wirth stated that the two world-scale facilities with QatarEnergy will have advantaged feedstock positions, operate low on the cost curve, and have expected IRRs of approximately 20%. He clarified that Chevron's exposure is through a joint venture in CP Chem and a further venture with QatarEnergy, meaning cash flow generation will be influenced by CP Chem's dividend policy and Chevron's partial ownership. He indicated that more details would be provided at Investor Day.

Lucas Herrmann asked about the financial impact of the two large downstream and chemicals facilities coming online next year in partnership with QatarEnergy, specifically inquiring about the expected increment to cash flow, potential CapEx reduction across CP Chem, and increased distributions.

Answer

Chairman and CEO Mike Wirth highlighted that these world-scale facilities will have advantaged feedstock positions, be low on the cost curve, and are expected to deliver 20% IRR. He emphasized the strong relationship with QatarEnergy. Wirth clarified that Chevron's exposure is through a joint venture in CP Chem and a further venture with QatarEnergy, meaning cash flow generation and distributions will depend on CP Chem's dividend policy and Chevron's specific portion of each facility. More details will be provided at Investor Day.

Lucas Herrmann of BNP Paribas asked about Chevron's LNG strategy, specifically how it plans to manage its increased offtake capacity of 7 million tonnes per annum, questioning the balance between securing long-term contracts versus retaining flexibility for short-term market plays.

Answer

Chairman & CEO Michael Wirth noted that some offtake agreements have already been executed. Vice Chairman Mark Nelson added that the strategy is to build a globally connected LNG portfolio. The increased U.S. Gulf Coast offtake, combined with equity gas from Australia, allows Chevron to serve the global system and direct product to markets with the best margins, providing exposure to multiple margin sets.

Lucas Herrmann asked for clarification on the outlook for cash flow from equity affiliates, noting a perceived change in guidance for the year.

Answer

CFO Eimear Bonner explained that the updated earnings guidance reflects higher DD&A from the early TCO startup and a revised margin outlook for CPChem. CEO Mike Wirth clarified that the full-year guidance for affiliate *dividends* remains unchanged; the difference is between earnings and dividends.

Lucas Herrmann asked for clarification on the Wheatstone asset swap, questioning if 'monetize' refers to the resource or the facility, and asked if returns for the new power business are evaluated on a volatility-adjusted basis.

Answer

CEO Mike Wirth clarified that 'monetize' means developing the gas resource through the LNG plants over time, not selling a stake in the facility. For the power business, he explained returns would be viewed similarly to other volatile parts of their business, using tools like Power Purchase Agreements (PPAs) to manage risk.

Lucas Herrmann from BNP Paribas inquired about the forward-looking capital expenditure trajectory, noting that with major projects completing and a focus on free cash flow, there seems to be an opportunity for CapEx to decline materially.

Answer

CEO Mike Wirth acknowledged that affiliate CapEx will decrease next year as the TCO project concludes. He highlighted that overall CapEx is already less than half of what it was a decade ago and has become much more ratable. While premature to give a specific 2025 number, he reiterated the commitment to the existing $14-16 billion guidance range and capital discipline. CFO Eimear Bonner confirmed this focus.