TotalEnergies SE UK Regulatory Announcement: Half-year Report

admin September 16, 2021

15 15 minutes read

PARIS–(BUSINESS WIRE)–

TOTAL ENERGIES

Financial report

1^st half 2021

Certification of the person responsible for the half-year financial report

This translation is a non binding translation into English of the Chairman and Chief Executive Officer’s certification issued in French, and is provided solely for the convenience of English-speaking readers.

“I certify, to the best of my knowledge, that the condensed Consolidated Financial Statements of TotalEnergies SE (the Corporation) for the first half of 2021 have been prepared in accordance with the applicable set of accounting standards and give a fair view of the assets, liabilities, financial position and profit or loss of the Corporation and all the entities included in the consolidation, and that the half-year financial report on pages  to  herein includes a fair review of the important events that have occurred during the first six months of the financial year and their impact on the financial statements, major related parties transactions and the principal risks and uncertainties for the remaining six months of the financial year.

The statutory auditors’ report on the limited review of the above-mentioned condensed Consolidated Financial Statements is included on page  of this half-year financial report.”

Courbevoie, July 29, 2021

Patrick Pouyanné

Chairman and Chief Executive Officer

Glossary

The terms “TotalEnergies” and “TotalEnergies company” as used in this document refer to TotalEnergies SE collectively with all of its direct and indirect consolidated companies located in or outside of France. The term “Corporation” as used in this document exclusively refers to TotalEnergies SE, which is the parent company of TotalEnergies company.

Abbreviations
€ :	euro
$ or dollar :	US dollar
ADR :	American depositary receipt (evidencing an ADS)
ADS :	American depositary share (representing a share of a company)
AMF :	Autorité des marchés financiers (French Financial Markets Authority)
API :	American Petroleum Institute
CO₂ :	carbon dioxide
DACF :	debt adjusted cash flow is defined as operating cash flow before working capital changes without financial charges
EV :	electric vehicle
FLNG :	floating liquefied natural gas
FPSO :	floating production, storage and offloading
FSRU :	floating storage and regasification unit
GHG :	greenhouse gas
HSE :	health, safety and the environment
IFRS :	International Financial Reporting Standards
IPIECA :	International Petroleum Industry Environmental Conservation Association
LNG :	liquefied natural gas
LPG :	liquefied petroleum gas
NGL :	natural gas liquids
NGV :	natural gas vehicle
OML :	oil mining lease
PPA :	Power Purchase Agreement
ROACE :	return on average capital employed
ROE :	return on equity
SEC :	United States Securities and Exchange Commission
VCM :	variable cost margin – Refining Europe This indicator represents the average margin on variable costs realized by TotalEnergies’ European refining business. It is equal to the difference between the sales of refined products realized by TotalEnergies’ European refining and the crude purchases as well as associated variable costs, divided by refinery throughput in tons.

Units of measurement

b = barrel⁽¹⁾

b = billion

Bcm = billion of cubic meters

boe = barrel of oil equivalent

btu = British thermal unit

cf = cubic feet

CO₂e = CO₂ equivalent

/d = per day

GtCO₂ = billion of CO₂ tons

GW = gigawatt

GWh = gigawatt hour

k = thousand

km = kilometer

m = meter

m³ = cubic meter⁽¹⁾

M = million

MW = megawatt

PJ = petajoule

t = (Metric) ton

toe = ton of oil equivalent

TWh = terawatt hour

W = watt

Wac = AC watt

Wp = watt-peak or watt of peak power

/y = per year

Conversion table

1 acre ≈ 0.405 hectares

1 b = 42 gallons US ≈ 159 liters

1 b/d of crude oil ≈ 50 t/y of crude oil

1 km ≈ 0.62 miles

1 m³ ≈ 35.3 cf

1 Mt de LNG ≈ 48 Bcf of gas

1 Mt/y of LNG ≈ 131 Mcf/d of gas

1 t of oil ≈ 7.5 b of oil (assuming a specific gravity of 37° API)

1 boe = 1 b of crude oil ≈ 5,399 cf of gas in 2020⁽²⁾ (5,395 cf in 2019 and 5,387 cf in 2018)

(1) Liquid and gas volumes are reported at international standard metric conditions (15°C and 1 atm).

(2) Natural gas is converted to barrels of oil equivalent using a ratio of cubic feet of natural gas per one barrel. This ratio is based on the actual average equivalent energy content of TotalEnergies’ natural gas reserves during the applicable periods and is subject to change. The tabular conversion rate is applicable to TotalEnergies natural gas reserves on a Company-wide basis.

01 HALF YEAR FINANCIAL REPORT

1.1 Highlights since the beginning of 2021⁽¹⁾Sustainability

Total transforms and becomes TotalEnergies, with a new visual identity
TotalEnergies’ Board of Directors takes the initiative to submit a resolution on the Company’s ambition for sustainable development and energy transition toward carbon neutrality
Consistent with its climate policy, TotalEnergies withdraws from the American Petroleum Institute
Inauguration of L’Industreet, a campus for training young people in the industry profession, TotalEnergies’ flagship action for social responsibility in France
3^rd place globally and 1^st place for the sector Oil and Gas in the BloombergNEF ranking on the alignment of corporate strategies with the United Nations’ Sustainable Development Goals
TotalEnergies and Chevron decide to suspend distribution of dividends from gas transport company in Myanmar
Partnership with Novatek to reduce emissions from LNG production, develop large-scale carbon capture and storage, and study carbon-free hydrogen and ammonia projects
Partnership with GHGSat for satellite-based monitoring of methane emissions at sea

Renewables and Electricity

Acquired in India 20% of Adani Green Energy Limited (AGEL), the largest solar developer in the world
Secured with Macquarie rights to seabed lease to jointly develop 1.5 GW offshore wind project in the UK
Acquired 4 GW portfolio of solar and energy storage projects in the US
Farmed down 50% of two renewables portfolios in France representing close to 340 MW
Acquired 23% stake in 640 MW offshore wind project under construction in Taiwan
Acquisition by Adani Green Energy Ltd., in which TotalEnergies has a 20% stake, of a portfolio of 5 GW of renewable electricity generation capacity in operation and under construction in India that will contribute 1 GW to TotalEnergies’ target of 35 GW in 2025
Signed major green power sale agreement to Orange to develop 80 MW of solar farms in France
Signed contract with Merck & Co. for the sale of 90 GWh/y renewable electricity in Spain for 10 years
Sales contract for 50GWh/y over 15 years with Air Liquide in Belgium
Partnered with Microsoft to support digital innovation and carbon neutrality goals
Partnership with Amazon to supply (474 MW) renewable electricity to its data centers in Europe and the United States, and to accelerate TotalEnergies digital transformation

LNG

Declaration of force majeure on Mozambique LNG project considering the security situation in the northern Cabo Delgado
Remobilization of the Papua LNG project with a view to final investment decision in 2023
Agreement with Novatek to acquire 10% of Arctic Transshipment LLC, which will operate two LNG transshipment terminals under construction in Russia
Tolling agreement with GIP, for more than $750 million, for Gladstone LNG infrastructure in Australia
Withdrew from the Driftwood LNG project and sold TotalEnergies’ stake in Tellurian Inc.
Signed agreements with Shenergy Group for the supply of up to 1.4 Mt/y of LNG in China
Signed contract with ArcelorMittal Nippon Steel for a 5-year supply of up to 0.5 Mt/y of LNG in India
Obtained supplier license for marine bunker LNG in Singapore
Technical collaboration agreements with Siemens Energy and Technip Energies to develop low-carbon LNG technologies

Upstream

Signed definitive agreements enabling the launch of Tilenga and Kingfisher upstream oil projects and construction of East African Crude Oil Pipeline in Uganda and Tanzania
Published societal and environmental studies relating to the Tilenga and EACOP projects in Uganda and Tanzania
Started production of Zinia Phase 2, short-cycle development project on Block 17 in Angola
Significant new discovery on the Sapakara South well in Suriname
Awarded two new conventional offshore exploration permits in Suriname with partner Qatar Petroleum
Entry on Block 29 exploration permit in Angola as operator
Agreed to divest TotalEnergies 18% interest in the Sarsang block, in Iraqi Kurdistan
Divested TotalEnergies’ interest in Petrocedeño to PDVSA in Venezuela which led to the recognition of an exceptional capital loss of $1.38 billion during the second quarter 2021

Downstream

Started production of sustainable aviation biofuels in France and made, in partnership with Air France-KLM, Groupe ADP and Airbus, the first long-haul flight with sustainable air fuel (SAF) in France
Obtained concession for the expansion of the public charging network for electric vehicles of the City of Amsterdam, with 2,200 new charging points
Global partnership in the field of lubricants and electric mobility with Peugeot, Citroën, DS Automobiles, Opel and Vauxhall
Partnership agreement with Uber to accelerate transition of VTC drivers to electric mobility in France
Acquired 20% stake in Hysetco, a French company owning the world’s first fleet of hydrogen taxis, operated under the Hype brand, as well as hydrogen charging stations

Carbon sinks

Investment to plant 40,000-hectare forest in Republic of Congo that will create a carbon sink to sequester more than 10 million tons of CO₂ over 20 years
Creation of the joint-venture development of the Northern Lights CO₂ sequestration project in the northern North Sea

(1) Certain transactions referred to in the highlights are subject to approval by authorities or to conditions as per the agreements.

1.2 Key figures from TotalEnergies’ consolidated financial statements⁽¹⁾

In millions of dollars, except effective tax rate, earnings per share and number of shares	1S21	1S20	1S21 vs 1S20
Adjusted EBITDA⁽²⁾	16,837	10,583	+59%
Adjusted net operating income from business segments	7,519	3,121	x2.4
Exploration & Production	4,188	494	x8.5
Integrated Gas, Renewables & Power	1,876	1,239	+51%
Refining & Chemicals	754	957	-21%
Marketing & Services	701	431	+63%
Contribution of equity affiliates to adjusted net income	1,260	669	+88%
Effective tax rate⁽³⁾	34.4%	24.3%	–
Adjusted net income (TotalEnergies share)	6,466	1,907	x3.4
Adjusted fully-diluted earnings per share (dollars)⁽⁴⁾	2.38	0.68	x3.5
Adjusted fully-diluted earnings per share (euros)*	1.97	0.62	x3.2
Fully-diluted weighted-average shares (millions)	2,644	2,598	+2%
Net income (TotalEnergies share)	5,550	(8,335)	ns
Organic investments⁽⁵⁾	5,181	4,724	+10%
Net acquisitions⁽⁶⁾	1,986	1,823	+9%
Net investments⁽⁷⁾	7,167	6,547	+9%
Operating cash flow before working capital changes**⁽⁸⁾	11,718	7,409	+58%
Operating cash flow before working capital changes w/o financial charges (DACF)⁽⁹⁾	12,511	8,420	+49%
Cash flow from operations	13,149	4,778	x2.8

* Average €-$ exchange rate: 1.2053 in the first half 2021.

** 1H20 data restated.

(1) Adjusted results are defined as income using replacement cost, adjusted for special items, excluding the impact of changes for fair value; adjustment items are on page ■.

(2) Adjusted EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) corresponds to the adjusted earnings before depreciation, depletion and impairment of tangible and intangible assets and mineral interests, income tax expense and cost of net debt, i.e. all operating income and contribution of equity affiliates to net income.

(3) Effective tax rate = (tax on adjusted net operating income) / (adjusted net operating income – income from equity affiliates – dividends received from investments – impairment of goodwill + tax on adjusted net operating income).

(4) In accordance with IFRS rules, adjusted fully-diluted earnings per share is calculated from the adjusted net income less the interest on the perpetual subordinated bond.

(5) Organic investments = net investments excluding acquisitions, asset sales and other operations with non-controlling interests.

(6) Net acquisitions = acquisitions – assets sales – other transactions with non-controlling interests (see page ■).

(7) Net investments = organic investments + net acquisitions (see page ■).

(8) Operating cash flow before working capital changes, is defined as cash flow from operating activities before changes in working capital at replacement cost, excluding the mark-to-market effect of iGRP’s contracts and including capital gain from renewable projects sale (effective first quarter 2020).

The inventory valuation effect is explained on page ■. The reconciliation table for different cash flow figures is on page ■.

(9) DACF = debt adjusted cash flow, is defined as operating cash flow before working capital changes and financial charges.

1.3 Key figures of environment, greenhouse gas emissions and production

1.3.1 Environment – liquids and gas price realizations, refining margins

	1S21	1S20	1S21 vs 1S20
Brent ($/b)	65.0	40.1	+62%
Henry Hub ($/Mbtu)	2.9	1.8	+57%
NBP ($/Mbtu)	7.7	2.4	x3.2
JKM ($/Mbtu)	10.0	2.9	x3.5
Average price of liquids ($/b) Consolidated subsidiaries	59.7	33.8	+77%
Average price of gas ($/Mbtu) Consolidated subsidiaries	4.23	2.99	+41%
Average price of LNG ($/Mbtu) Consolidated subsidiaries and equity affiliates	6.33	5.42	+17%
Variable cost margin – Refining Europe, VCM ($/t)	7.6	21.0	-64%

1.3.2 Greenhouse gas emissions⁽¹⁾

GHG emissions (MtCO₂e)	1S21
Scope 1+2 from operated oil & gas facilities⁽²⁾	15
Scope 3⁽³⁾	159
Scope 1+2+3 in Europe⁽⁴⁾	95

1.3.3 Production*

Hydrocarbon production	1S21	1S20	1S21 vs 1S20
Hydrocarbon production (kboe/d)	2,805	2,966	-5%
Oil (including bitumen) (kb/d)	1,265	1,381	-8%
Gas (including condensates and associated NGL) (kboe/d)	1,540	1,584	-3%

Hydrocarbon production (kboe/d)	2,805	2,966	-5%
Liquids (kb/d)	1,486	1,626	-9%
Gas (Mcf/d)	7,208	7,302	-1%

* Company production = E&P production + iGRP production

Hydrocarbon production was 2,805 kboe/d in the first half 2021, a decrease of 5%, comprised of:

+2% due to the start-up and ramp-up of projects, including North Russkoye in Russia, Culzean in the United Kingdom, Johan Sverdrup in Norway and Iara in Brazil,
-1% portfolio effect, notably asset sales in the United Kingdom and Block CA1 in Brunei,
-2% due to planned maintenance and unplanned outages, notably in the United Kingdom, Australia, Norway and Nigeria,
-1% due to the price effect,
-3% due to the natural decline of the fields.

(1) The six greenhouse gases in the Kyoto protocol, namely CO₂, CH₄, N₂O, HFCs, PFCs and SF₆, with their respective GWP (Global Warming Potential) as described in the 2007 IPCC report. HFCs, PFCs and SF₆ are virtually absent from the Company’s emissions or are considered as non-material, and are therefore not counted.

(2) Scope 1+2 GHG emissions of operated oil & gas facilities are defined as the sum of direct emissions of greenhouse gases from sites or activities that are included in the scope of reporting

(as defined in the Company’s 2020 Universal Registration Document) and indirect emissions attributable to brought-in energy (electricity, heat, steam), excluding purchased industrial gases (H₂). They do not include facilities for power generation from renewable sources or natural gas, such as combined cycle natural gas power plants (CCGT) and sites with GHG emissions and activities of less than 30 kt CO₂e/year.

(3) Scope 3 GHG emissions are defined as the indirect emissions of greenhouse gases related to the use by customers of energy products sold for end-use, i.e. combustion of the products to obtain energy. A stoichiometric emission (oxidation of molecules to carbon dioxide) factor is applied to these sales to obtain an emission volume. The Company usually follows the oil & gas industry reporting guidelines published by IPIECA, which comply with the GHG Protocol methodologies. Only item 11 of Scope 3 (use of sold products), which is the most significant, is reported.

(4) Scope 1+2+3 GHG emissions in Europe are defined as the sum of Scope 1+2 GHG emissions of facilities operated by the Company and indirect GHG emissions related to the use by customers of energy products sold for end-use (Scope 3) in the EU, Norway, United Kingdom and Switzerland.

1.4 Analysis of business segments

1.4.1 Integrated Gas, Renewables & Power (iGRP)

1.4.1.1 Production and sales of Liquefied natural gas (LNG) and electricity

Hydrocarbon production for LNG	1S21	1S20	1S21 vs 1S20
iGRP (kboe/d)	510	536	-5%
Liquids (kb/d)	58	69	-17%
Gas (Mcf/d)	2,470	2,541	-3%

Liquefied Natural Gas in Mt	1S21	1S20	1S21 vs 1S20
Overall LNG sales	20.4	20.2	+1%
incl. Sales from equity production*	8.5	9.0	-5%
incl. Sales by TotalEnergies from equity production and third party purchases	16.7	16.5	+1%

* The Company’s equity production may be sold by TotalEnergies or by the joint ventures.

Hydrocarbon production for LNG decreased year-on-year by 5% in the first half 2021, notably due to the shutdown of the Snøhvit LNG plant following a fire at the end of September 2020 and the planned maintenance shutdown in the second quarter 2021 on Ichthys LNG’s liquefaction trains in Australia.

Total LNG sales were stable year-on-year in the first half 2021.

Renewables & Electricity	1S21	1S20	1S21 vs 1S20
Portfolio of renewable power generation gross capacity (GW)⁽¹⁾⁽²⁾	41.7	20.4	x2
o/w installed capacity	8.3	5.1	+63%
o/w capacity in construction	5.4	2.9	+89%
o/w capacity in development	28.0	12.4	x2.3
Gross renewables capacity with PPA (GW)⁽¹⁾⁽²⁾	22.6	11.2	x2
Portfolio of renewable power generation net capacity (GW)⁽¹⁾⁽²⁾	30.7	13.6	x2.3
o/w installed capacity	4.0	2.3	+76%
o/w capacity in construction	3.1	1.1	x3
o/w capacity in development	23.6	10.3	x2.3
Net power production (TWh)⁽³⁾	9.8	5.9	+67%
incl. Power production from renewables	3.2	1.8	+79%
Clients power – BtB and BtC (Million)⁽²⁾	5.8	4.2	+38%
Clients gas – BtB and BtC (Million)⁽²⁾	2.7	1.7	+58%
Sales power – BtB and BtC (TWh)	28.8	23.6	+22%
Sales gas – BtB and BtC (TWh)	56.8	50.9	+12%

Proportional adjusted EBITDA Renewables and Electricity (M$)⁽⁴⁾	635	340	+87%
incl. from renewables business	210	184	+14%

Gross installed capacity of renewable electricity generation grew to 8.3 GW at the end of first semester 2021.

Net electricity production was 9.8 TWh in the first half 2021, an increase of 67% year-on-year, notably due to strong growth in renewable electricity generation and the acquisition of four CCGT plants in France and Spain in the fourth quarter of 2020.

Electricity and gas sales increased by 22% and 12% respectively in the first half 2021 compared to last year thanks to the growing number of customers, with TotalEnergies notably surpassing the 5 million customer mark (B2C and B2B) in France.

TotalEnergies’ share of the EBITDA of the Renewables and Electricity activities was $635 million in the first half 2021, an increase of 87% over one year, driven by growing electricity production, particularly renewable electricity, and the number of gas and electricity customers.

(1) Includes 20% of Adani Green Energy Ltd gross capacity effective first quarter 2021.

(2) End of period data.

(3) Solar, wind, biogas, hydroelectric and combined-cycle gas turbine (CCGT) plants.

(4) TotalEnergies share (% interest) of EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) in Renewables and Electricity affiliates, regardless of consolidation method.

1.4.1.2 Results

*In millions of dollars*	1S21	1S20	1S21 vs 1S20
Adjusted net operating income*	1,876	1,239	+51%
including income from equity affiliates	620	179	x3.5
Organic investments	1,512	1,264	+20%
Net acquisitions	2,059	1,570	+31%
Net investments	3,571	2,834	+26%
Operating cash flow before working capital changes**	1,963	1,652	+19%
Cash flow from operations***	1,347	900	+50%

* Detail of adjustment items shown in the business segment information annex to financial statements.

** Excluding financial expenses, except those related to lease contracts, excluding the impact of contracts recognized at fair value for the sector and including capital gains on the sale of renewable projects. 1H20 data restated (see note 8 on page ■).

*** Excluding financial charges, except those related to leases.

Adjusted net operating income for the iGRP sector was 1,876 million in the first half 2021, an increase of 51% year-on-year, thanks to higher LNG prices, growing contribution from Renewables and Electricity as well as good performance by the trading activities in the first quarter 2021.

Operating cash flow before working capital changes increased 19% year-on-year to $1,963 million in the first half 2021, in line with the rise in LNG prices and the growing contribution of Renewables and Electricity.

1.4.2 Exploration-Production

1.4.2.1 Production

Hydrocarbon production	1S21	1S20	1S21 vs 1S20
EP (kboe/d)	2,295	2,430	-6%
Liquids (kb/d)	1,428	1,557	-8%
Gas (Mcf/d)	4,738	4,761	–

1.4.2.2 Results

*In millions of dollars, except effective tax rate*	1S21	1S20	1S21 vs 1S20
Adjusted net operating income*	4,188	494	x8.5
including income from equity affiliates	549	438	+25%
Effective tax rate**	39.5%	69.6%	–
Organic investments	2,838	2,684	+6%
Net acquisitions	29	305	-90%
Net investments	2,867	2,989	-4%
Operating cash flow before working capital changes***	8,086	4,386	+84%
Cash flow from operations***	8,571	4,833	+77%

* Details on adjustment items are shown in the business segment information annex to financial statements.

** Tax on adjusted net operating income/(adjusted net operating income – income from equity affiliates – dividends received from investments – impairment of goodwill + tax on adjusted net operating income).

*** Excluding financial charges, except those related to leases.

Adjusted net operating income for Exploration & Production was $4,188 million in the first half 2021, more than eight times higher in the first half 2020, thanks to the sharp rebound in oil and gas prices.

Operating cash flow before working capital changes increased by 84% to $8,086 million in the first half 2021, in line with higher oil and gas prices.

1.4.3 Downstream (Refining & Chemicals and Marketing & Services)

1.4.3.1 Results

*In millions of dollars*	1S21	1S20	1S21 vs 1S20
Adjusted net operating income*	1,455	1,388	+5%
Organic investments	803	734	+9%
Net acquisitions	(104)	(50)	ns
Net investments	699	684	+2%
Operating cash flow before working capital changes**	2,332	2,552	-9%
Cash flow from operations**	4,330	317	x13.7

* Detail of adjustment items shown in the business segment information annex to financial statements.

** Excluding financial charges, except those related to leases.

1.4.3.2 Refining & Chemicals

1.4.3.2.1 Refinery and petrochemicals throughput and utilization rates

Refinery throughput and utilization rate*	1S21	1S20	1S21 vs 1S20
Total refinery throughput (kb/d)	1,109	1,347	-18%
France	131	230	-43%
Rest of Europe	578	676	-14%
Rest of world	400	441	-9%
Utlization rate based on crude only**	58%	64%

* Includes refineries in Africa reported in the Marketing & Services segment.

** Based on distillation capacity at the beginning of the year, excluding Grandpuits (definitively shut down first quarter 2021) from 2021 and Lindsey refinery (divested) from second quarter 2021.

Petrochemicals production and utilization rate	1S21	1S20	1S21 vs 1S20
Monomers* (kt)	2,829	2,778	+2%
Polymers (kt)	2,377	2,395	-1%
Vapocracker utilization rate**	88%	83%

* Olefins.

** Based on olefins production from steamcrackers and their treatment capacity at the start of the year.

Refinery throughput decreased 18% in the first half 2021 compared to the previous year, mainly due to the prolonged voluntary economic shutdown of the Donges refinery given the low European margins, the planned major shutdown of the Leuna refinery in Germany, the shutdown of the Grandpuits refinery in the first quarter 2021 for its conversion to a zero-oil platform, and the sale of the Lindsey refinery in the United Kingdom.

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admin September 16, 2021

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