REG-TotalEnergies SE Half-year Report
28/07/2023 15:30
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Half-year Report
TOTALENERGIES
Financial report
First half 2023
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 2023 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 5 to 24 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 26 of this
half-year financial report.”
Courbevoie, July 27, 2023
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
ATEX: explosive atmosphere
CCS: carbon capture and storage
CCUS: carbon capture utilization and storage (refer to the definition of carbon
capture
and storage below)
CNG: compressed natural gas
CO2: carbon dioxide
CO2e: equivalent CO2
CSR: corporate and social responsibility
DACF: debt adjusted cash flow (refer to the definition of operating cash flow before
working capital changes without financial charges below)
ESG: Environment, Social and Governance
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
IEA (SDS): International Energy Agency (Sustainable Development Scenario)
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 (refer to the definition below)
ROACE: return on average capital employed
ROE: return on equity
SDG: Sustainable development goal
SEC: United States Securities and Exchange Commission
TCFD: task force on climate-related financial disclosures
VCM: variable cost margin – Refining Europe
WHRS: Worldwide Human Resources Survey
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
/d = per day
Gt CO2 = billion of CO2 tons
GW = gigawatt
GWac = AC gigawatt
GWh = gigawatt hour
k = thousand
km = kilometer
m = meter
m³ = cubic meter((1))
M = million
Mtpa = million ton per annum
MW = megawatt
PJ = petajoule
t = (Metric) ton
toe= ton of oil equivalent
TWh = terawatt hour
W = watt
Wac = AC (alternating current) watt
Wp = watt-peak or watt of peak power
/y = per year
CONVERSION TABLE
1 acre ≈ 0.405 hectares
1 b = 42 US gallons ≈ 159 liters
1 b/d of crude oil ≈ 50 t/y of crude oil
1 Bcm/y ≈ 0.1 Bcf/d
1 km ≈ 0.62 miles
1 m³ ≈ 35.3 cf
1 Mt of 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 ≈ 5,387 cf of gas in 2022(2) (5,378 cf in 2021 and 5,399 cf in 2020)
1. Half year financial report
1.1 Highlights since the beginning of 2023(3)
Social and environmental responsibility
* Publication of the Sustainability & Climate – 2023 Progress Report
presenting the progress made on TotalEnergies’ transformation strategy and
the update of its climate ambition
* TotalEnergies ranked Number 2 in employee share ownership in Europe according
to the report of the European Federation of Employee Share Ownership
* TotalEnergies guarantees customers that its fuel price will not exceed 1.99
€/l in its stations in France
Multi-energy strategy
* Launch of GGIP in Iraq: major multi-energy project (access to low-cost,
low-emission oil from the Ratawi field, gas gathering and treatment for
electricity generation, 1 GW solar farm and sea water treatment) in favor of
the sustainable development of natural resources in Basrah area
* Partnership with SONATRACH to increase the production of the Tin Fouyé
Tabankort fields, extend to 2024 2 Mt/y of LNG deliveries in France, and
develop renewable energy projects in Algeria
Upstream
* Acquisition of CEPSA's upstream assets in the United Arab Emirates,
representing a share of 50 kboe/d
* Launch of the Lapa South-West project in Brazil
* Production start-up of Absheron gas and condensate field, in Azerbaijan
* Oil and gas discovery on the Ntokon well, located on OML 102 in Nigeria
* Renewal for 20 years of the OML130 license, in Nigeria
* Exercise by ConocoPhillips of its preemption right on Surmont, following the
announcement of the sale to Suncor of the entirety of the shares of
TotalEnergies EP Canada Ltd
* Signature of Production Sharing Contracts on Blocks 6 and 8, in Suriname
* Signature of the Production Sharing Contract for the Agua Marinha block, in
Brazil
Downstream
* Sale to Alimentation Couche-Tard of retail networks in Germany and the
Netherlands and 40%/60% partnership in Belgium and Luxembourg
* Agreement with waste recycling company Paprec to develop chemical plastic
recycling projects in France
* Creation of a joint venture with Air Liquide to develop a network of more than
100 hydrogen stations for trucks in Europe
* Award of $11 billion EPC contracts for the Amiral project, in Saudi Arabia
* Realignment with INEOS of stakes in petrochemical assets in Eastern France
Integrated LNG
* Production start-up on Block 10 and signed a long-term LNG contract for 0.8
Mt/year in Oman
* Launch of Papua LNG Integrated Engineering Studies in Papua New Guinea
* Delivery of the first LNG cargo to the Dhamra LNG terminal in India
* Commissioning of the floating LNG regasification terminal in Lubmin, Germany
* Authorization by the French and European authorities for the installation of
the floating LNG regasification terminal in Le Havre in France
* Launch of the RGLNG project, in Texas: acquisition of a 16.67% stake in the JV
in charge of developing the 17.5 Mt/y project, acquisition of a 17.5% stake in
NextDecade, and signature of a 5.4 Mt/y offtake agreement for 20 years
* Signing of LNG sale contracts to IOCL in India for 10 years and to ADNOC Gas
for 3 years
Integrated Power
* Closing of the acquisition of a 34% interest in Casa dos Ventos, leading
renewable developer in Brazil
* Acquisition from Corio Generation a 50% interest (minus 10 shares) in the 600
MW Formosa 3 offshore wind project in Taiwan
* Signature of renewable power purchase agreements with Sasol and Air Liquide in
South Africa
* Acquisition at 100% of Total Eren, a leading renewable electricity producer
* Award of two maritime leases to develop two offshore wind farms for a total
capacity of 3 GW in Germany
* Favorable environmental impact assessment for 3 GW of solar projects in Spain
* 25-year Power Purchase Agreement for 1 GW onshore wind farm with battery
storage in Kazakhstan
* Launch at Antwerp, in Belgium, of a 75 MWh battery energy storage project
* Strategic Collaboration Agreement with Petronas, to develop renewable energy
projects in the Asia Pacific region. Agreement to develop the 100 MW Pleasant
Hills solar project in Australia
Decarbonization & new molecules
* Acquisition of PGB, Poland's leading biogas producer
* Entry on two permits for the storage of CO2 in the North Sea, Denmark
* Partnership with TES to develop a large-scale production unit for e-natural
gas in the United States
* Agreement with VNG to initiate the future supply of green hydrogen to the
Leuna refinery, in Germany
* SAF: doubling SAF production capacity to 285 kt per year at Grandpuits, in
France
* Biomethane:
* Acquisition of 20% stake in the Finnish start-up Ductor
* Signature with Saint-Gobain France of a 100 GWh sale agreement over 3 years
* Construction in Grandpuits, in France, of a production unit with annual
capacity of 80 GWh
1.2 Key figures from TotalEnergies’ consolidated financial statements(4)
(in millions of dollars, except effective tax rate, earnings per share and 1H23 1H22 1H23 vs 1H22
number of shares)
Adjusted EBITDA(5) 25,272 36,161 -30%
Adjusted net operating income from business segments 12,575 19,958 -37%
Exploration & Production 5,002 9,734 -49%
Integrated LNG 3,402 5,348 -36%
Integrated Power 820 258 x3.2
Refining & Chemicals 2,622 3,880 -32%
Marketing & Services 729 738 -1%
Contribution of equity affiliates to adjusted net income 1,741 3,805 -54%
Effective tax rate(6) 39.7% 39.0%
Adjusted net income (TotalEnergies share) 11,497 18,773 -39%
Adjusted fully-diluted earnings per share (dollars)(7) 4.61 7.14 -35%
Adjusted fully-diluted earnings per share (euros)* 4.27 6.53 -35%
Fully-diluted weighted-average shares (millions) 2,460 2,602 -5%
Net income (TotalEnergies share) 9,645 10,636 -9%
Organic investments(8) 7,704 4,800 +60%
Net acquisitions(9) 3,307 2,998 +10%
Net investments(10) 11,011 7,798 +41%
Operating cash flow before working capital changes(11) 18,106 24,859 -27%
Operating cash flow before working capital changes w/o financial charges 18,371 25,626 -28%
(DACF)(12)
Cash flow from operations 15,033 23,901 -37%
*Average €-$ exchange rate: 1.0807 in the first half 2023 and 1.0934 in the
first half 2022.
1.3 Key figures of environment, greenhouse gas emissions and production
1.3.1 Environment – liquids and gas price realizations, refining margins
1H23 1H22 1H23 vs 1H22
Brent ($/b) 79.7 107.9 -26%
Henry Hub ($/Mbtu) 2.5 6.1 -58%
NBP ($/Mbtu) 13.3 27.2 -51%
JKM ($/Mbtu) 13.7 29.1 -53%
Average price of liquids ($/b) Consolidated subsidiaries 72.7 96.3 -25%
Average price of gas ($/Mbtu) Consolidated subsidiaries 7.48 11.65 -36%
Average price of LNG ($/Mbtu) Consolidated subsidiaries and equity affiliates 11.59 13.77 -16%
Variable cost margin - Refining Europe, VCM ($/t) 65.0 101.0 -36%
1.3.2 Greenhouse gas emissions(13)
Scope 1+2 emissions (MtCO2e) 1H23 1H22
Scope 1+2 from operated facilities (14) 18.2 19.3
of which Oil & Gas 15.5 16.0
of which CCGT 2.6 3.3
Scope 1+2 - equity share 25.3 27.4
Estimated 1H23 emissions.
Methane emissions (ktCH4) 1H23 1H22
Methane emissions from operated facilities 18 20
Methane emissions - equity share 21 24
Estimated 1H23 emissions.
Scope 3 emissions (MtCO2e) 1H23 1H22
Scope 3 from Oil, Biofuels and Gas Worldwide (15) est. 180 389.0
The lower Scope 1+2 emissions from the operated facilities is the result of
the decrease in the use of gas-fired power plants in a context of lower demand
in Europe and the continuous decline in flaring on Exploration &
Production facilities.
1.3.3 Production*
Hydrocarbon production 1H23 1H22 1H23 vs 1H22
Hydrocarbon production (kboe/d) 2,498 2,791 -10.5%
Oil (including bitumen) (kb/d) 1,407 1,287 +9%
Gas (including condensates and associated NGL) (kboe/d) 1,091 1,504 -27%
Hydrocarbon production (kboe/d) 2,498 2,791 -10.5%
Liquids (kb/d) 1,567 1,505 +4%
Gas (Mcf/d) 5,017 6,997 -28%
Hydrocarbon production excluding Novatek (kboe/d) 2,498 2,460 +2%
*Company production = E&P production + Integrated LNG production.
Hydrocarbon production was 2,498 thousand barrels of oil equivalent per day
(kboe/d) in the first half of 2023, up 2% year-on-year (excluding Novatek),
comprised of:
* +4% due to projects start-ups and ramp-ups, including Mero 1 in Brazil, Ikike
in Nigeria, Johan Sverdrup Phase 2 in Norway and Block 10 in Oman,
* +1% price effect,
* +1% due to the improvement of security conditions in Nigeria and Libya,
* -1% portfolio effect, notably related to the end of the Bongkot operating
licenses in Thailand, the exit from Termokarstovoye in Russia and the
effective withdrawal from Myanmar, partially offset by the entry into the
producing fields of Sepia and Atapu in Brazil and SARB and Umm Lulu in the
United Arab Emirates,
* -3% due to natural decline of the fields.
1.4 Analysis of business segments
1.4.1 Exploration-Production
1.4.1.1 PRODUCTION
Hydrocarbon production 1H23 1H22 1H23 vs 1H22
EP (kboe/d) 2,047 2,314 -12%
Liquids (kb/d) 1,506 1,449 +4%
Gas (Mcf/d) 2,895 4,706 -38%
EP excluding Novatek (kboe/d) 2,047 2,040 –
1.4.1.2 RESULTS
(in millions of dollars, except effective tax rate) 1H23 1H22 1H23 vs 1H22
Adjusted net operating income* 5,002 9,734 -49%
including adjusted income from equity affiliates 284 642 -56%
Effective tax rate** 53.9% 47.1% –
Organic investments 4,558 3,299 +38%
Net acquisitions 2,114 2,541 -17%
Net investments 6,672 5,840 +14%
Operating cash flow before working capital changes*** 9,271 14,686 -37%
Cash flow from operations*** 8,583 14,536 -41%
*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.
In the first half of 2023, adjusted net operating income and cash flow were
$5,002 million and $9,271 million, down 47% and 35%, respectively,
year-on-year (excluding Novatek), due to lower oil and gas prices and higher
taxes, notably in the UK.
1.4.2 Integrated LNG
1.4.2.1 PRODUCTION AND SALES OF LIQUEFIED NATURAL GAS (LNG)
Hydrocarbon production for LNG 1H23 1H22 1H23 vs 1H22
Integrated LNG (kboe/d) 451 477 -6%
Liquids (kb/d) 61 56 +7%
Gas (Mcf/d) 2,122 2,291 -7%
Integrated LNG excluding Novatek (kboe/d) 451 419 +8%
Liquefied Natural Gas in Mt 1H23 1H22 1H23 vs 1H22
Overall LNG sales 22.0 24.9 -12%
incl. Sales from equity production* 7.6 8.6 -12%
incl. Sales by TotalEnergies from equity production and third party purchases 19.9 22.2 -10%
*The Company's equity production may be sold by Total Energies or by the joint
ventures.
Hydrocarbon production for LNG was up 8% year-on-year in the first half 2023
(excluding Novatek), due to the increased supply of NLNG following improved
security conditions in Nigeria and the restart of Snøhvit in Norway during
the second quarter 2022.
LNG sales were down 12% year-on-year in the first half 2023, due to lower
demand in Europe.
1.4.2.2 RESULTS
(in millions of dollars) 1H23 1H22 1H23 vs 1H22
Adjusted net operating income* 3,402 5,348 -36%
including adjusted income from equity affiliates 1,218 2,596 -53%
Organic investments 779 110 x7.1
Net acquisitions 964 (56) ns
Net investments 1,743 54 x32.3
Operating cash flow before working capital changes** 3,882 4,604 -16%
Cash flow from operations*** 4,868 6,021 -19%
*Detail of adjustment items shown in the business segment information annex to
financial statements.
**Excluding financial charges, except those related to lease contracts,
excluding the impact of contracts recognized at fair value.
*** Excluding financial charges, except those related to leases.
Integrated LNG adjusted net operating income was $3,402 million in the first
half 2023, down 26% year-on-year (excluding Novatek), due to lower prices and
LNG sales, as well as exceptional trading results in the first quarter 2022.
Operating cash flow before working capital changes for Integrated LNG was
$3,882 million in the first half 2023, down 16% year-on-year (excluding
Novatek), due to lower LNG prices, partially offset by higher margins secured
in 2022 on LNG cargoes to be delivered in 2023.
1.4.3 Integrated Power
1.4.3.1 CAPACITIES, PRODUCTIONS, CLIENTS AND SALES
Integrated Power 1H23 1H22 1H23 vs 1H22
PORTFOLIO OF RENEWABLE POWER GENERATION GROSS CAPACITY (GW)((1)(2)) 74.7 50.7 47%
o/w installed capacity 19.0 11.6 63%
o/w capacity in construction 5.7 5.2 11%
o/w capacity in development 50.0 33.9 47%
PORTFOLIO OF RENEWABLE POWER GENERATION NET CAPACITY (GW)((2)) 46.9 38.4 22%
o/w installed capacity 8.9 5.8 53%
o/w capacity in construction 3.9 3.7 7%
o/w capacity in development 34.1 28.9 18%
GAS-FIRED POWER GENERATION GROSS INSTALLED CAPACITY (GW)((2)) 5.8 5.8 –
GAS-FIRED POWER GENERATION NET INSTALLED CAPACITY (GW)((2)) 4.3 4.3 –
NET POWER PRODUCTION (TWH)((3)) 16.6 15.2 9%
incl. Power production from renewables 8.1 4.7 70%
Clients power – BtB and BtC (Million)((2)) 6.0 6.2 -3%
Clients gas – BtB and BtC (Million)((2)) 2.8 2.7 1%
Sales power – BtB and BtC (TWh) 27.0 28.6 -6%
Sales gas – BtB and BtC (TWh) 56.4 54.1 4%
(1)Includes 20% of Adani Green Energy Ltd’s gross capacity effective first
quarter 2021, 50% of Clearway Energy Group’s gross capacity effective third
quarter 2022 and 49% of Casa dos Ventos’ gross capacity effective first
quarter 2023.
(2)End of period data.
(3)Solar, wind, hydroelectric and combined-cycle gas turbine (CCGT) plants.
Net electricity production was 16.6 TWh in the first half 2023, an increase of
9% year-on-year, as growing electricity generation from renewables is
partially offset by lower generation from flexible capacity in a context of
lower demand.
Gross installed renewable power generation capacity was 19 GW at the end of
the first half 2023, up by more than 7 GW year-on-year, including close to 4.5
GW from the acquisition of a 50% stake in Clearway Energy Group and the
start-up of solar and wind projects in the US, 0.8 GW from the start-up of the
Seagreen offshore wind project in the UK, 0.6 GW from the acquisition of an
interest in the Casa dos Ventos portfolio of renewable projects in Brazil, and
0.4 GW from the start-up of the Al Kharsaah photovoltaic project in Qatar.
1.4.3.2 RESULTS
(in millions of dollars) 1H23 1H22 1H23 vs 1H22
Adjusted net operating income* 820 258 x3.2
including adjusted income from equity affiliates 79 53 +49%
Organic investments 1,330 489 x2.7
Net acquisitions 477 639 -25%
Net investments 1,807 1,128 +60%
Operating cash flow before working capital changes** 931 341 x2.7
Cash flow from operations*** 999 (1,736) ns
*Detail of adjustment items shown in the business segment information annex to
financial statements.
**Excluding financial charges, 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.
***Excluding financial charges, except those related to leases. Excluding
margin calls, reported in the Integrated LNG segment since the implementation
in 2022 of its centralized management.
Adjusted net operating income for the Integrated Power sector was $820 million
in the first half 2023, tripling over one year, due to the performance of its
integrated electricity portfolio.
Operating cash flow before working capital changes was 2.7 times higher over
one year to $931 million in the first half 2023, for the same reasons.
1.4.4 Downstream (Refining & Chemicals and Marketing & Services)
1.4.4.1 RESULTS
(in millions of dollars) 1H23 1H22 1H23 vs 1H22
Adjusted net operating income* 3,351 4,618 -27%
Organic investments 976 878 +11%
Net acquisitions (248) (125) ns
Net investments 728 753 -3%
Operating cash flow before working capital changes** 4,274 5,444 -21%
Cash flow from operations** 1,064 6,111 -83%
*Detail of adjustment items shown in the business segment information annex to
financial statements.
**Excluding financial charges, except those related to leases.
1.4.4.2 REFINING & CHEMICALS
1.4.4.2.1 REFINERY AND PETROCHEMICALS THROUGHPUT AND UTILIZATION RATES
Refinery throughput and utilization rate* 1H23 1H22 1H23 vs 1H22
Total refinery throughput (kb/d) 1,437 1,448 -1%
France 360 324 +11%
Rest of Europe 598 627 -5%
Rest of world 479 497 -4%
Utilization rate based on crude only** 80% 81% –
*Includes refineries in Africa reported in the Marketing & Services
segment.
**Based on distillation capacity at the beginning of the year.
Petrochemicals production and utilization rate 1H23 1H22 1H23 vs 1H22
Monomers* (kt) 2,452 2,611 -6%
Polymers (kt) 2,074 2,461 -16%
Vapocracker utilization rate** 71% 78%
*Olefins.
**Based on olefins production from steamcrackers and their treatment capacity
at the start of the year.
Refinery throughput was down 1% year-on-year in the first half 2023, notably
due to planned maintenance and unplanned shutdowns at the Antwerp refinery in
Belgium, and logistical limitations linked to high inventory levels at the
Normandy refinery in France, partially offset by the restart of the Donges
refinery in France in the second quarter 2022.
Polymer production was down 16% in the first half 2023 year-on-year, due to
the slowdown in global demand.
1.4.4.2.2 RESULTS
(in millions of dollars) 1H23 1H22 1H23 vs 1H22
Adjusted net operating income* 2,622 3,880 -32%
Organic investments 652 510 +28%
Net acquisitions (10) (34) ns
Net investments 642 476 +35%
Operating cash flow before working capital changes** 3,062 4,396 -30%
Cash flow from operations** 1,072 4,633 -77%
*Detail of adjustment items shown in the business segment information annex to
financial statements.
**Excluding financial charges, except those related to leases.
Refining & Chemicals adjusted net operating income was $2,622 million in
the first half 2023, down 32% year-on-year, reflecting lower refining margins
in Europe impacted at the start of the period by Chinese exports and the
quicker than anticipated reorganization of Russian flows following the
European embargo, although supported at the end of the semester by higher
gasoline exports to the US and lower diesel imports in Europe from China.
Operating cash flow before working capital changes was $3,062 million in the
first half 2023, down 30% respectively year-on-year as the first half 2022
benefited from exceptional conditions.
1.4.4.3 MARKETING & SERVICES
1.4.4.3.1 PETROLEUM PRODUCT SALES
Sales (in kb/d)* 1H23 1H22 1H23 vs 1H22
Total Marketing & Services sales 1,379 1,464 -6%
Europe 778 804 -3%
Rest of world 600 661 -9%
*Excludes trading and bulk refining sales.
Sales of petroleum products were down year-on-year by 6% in the first half
2023, as lower demand from commercial and industrial customers in Europe and
the perimeter effect linked to the disposal of 50% of the fuel distribution
business in Egypt were partially offset by the recovery in the aviation
business.
1.4.4.3.2 RESULTS
(in millions of dollars) 1H23 1H22 1H23 vs 1H22
Adjusted net operating income* 729 738 -1%
Organic investments 324 368 -12%
Net acquisitions (238) (91) ns
Net investments 86 277 -69%
Operating cash flow before working capital changes** 1,212 1,048 +16%
Cash flow from operations** (8) 1,478 ns
*Detail of adjustment items shown in the business segment information annex to
financial statements.
**Excluding financial charges, except those related to leases.
Marketing & Services adjusted net operating income was $729 million in the
first half 2023, slightly down year-on-year, in line with lower sales.
Operating cash flow before working capital changes rose by 16% to $1,212
million in the first half 2023, as 2022 was negatively impacted by the tax
effect of higher prices on the valuation of petroleum product inventories.
1.5 TotalEnergies results
1.5.1 Adjusted net operating income from business segments
Adjusted net operating income for the sectors was $12,575 million in the first
half 2023, compared to $19,958 million a year earlier, due to lower oil and
gas prices and refining margins.
1.5.2 Adjusted net income (TotalEnergies share)
Adjusted net income (TotalEnergies share) was $11,497 million in the first
half 2023 compared to $18,773 million a year earlier, mainly due to lower oil
and gas prices and refining margins.
Adjusted net income excludes the after-tax inventory effect, special items and
impact of changes in fair value(16).
Total net income adjustments(17) were ($1,852) million in the first half 2023,
consisting mainly of:
* ($0.8) billion inventory effect,
* ($0.5) billion related to impairments, notably on upstream assets in Kenya and
the Yunlin offshore wind project in Taiwan,
* ($0.5) billion effects of changes in fair value, and
* ($0.2) billion related to the impacts of the European solidarity contribution
and the inframarginal income contribution in France.
The effective tax rate for TotalEnergies was 39.7% in the first half 2023,
compared to 39.0% in the first half 2022, mainly as a result of the higher tax
rate for Exploration & Production related notably to the Energy Profits
Levy in the UK.
1.5.3 Adjusted earnings per share
Adjusted fully-diluted earnings per share was $4.61 in the first half 2023,
calculated based on 2,460 million weighted-average diluted shares, compared to
$7.14 a year earlier.
As of June 30, 2023, the number of fully-diluted shares was 2,443 million.
As part of its shareholder return policy, TotalEnergies repurchased 65.0
million shares for cancellation in the first half 2023 for $4 billion.
1.5.4 Acquisitions – asset sales
Acquisitions were $3,738 million in the first half 2023, mainly related to the
acquisition of a 20% interest in the SARB and Umm Lulu concession in the
United Arab Emirates, the acquisition of a 6.25% stake in the NFE and a 9.375%
stake in the NFS LNG projects in Qatar, a 34% stake in a joint venture with
Casa dos Ventos in Brazil, the renewal of the license OML 130 in Nigeria, and
the acquisition of a 5.06% stake in NextDecade in line with the launch of
RGLNG project in the US.
Divestments were $431 million in the first half 2023, notably related to the
sales of shares in Maxeon and of 50% of the Marketing & Services
subsidiary in Egypt.
1.5.5 Net cash flow
TotalEnergies’ net cash flow(18 )was $7,095 million in the first half 2023,
compared to $17,061 million a year earlier, reflecting the $6,753 million
decrease in cash flow and the $3,213 million increase in net investments to
$11,011 million in the first half 2023.
In the first half 2023, cash flow from operations was $15,033 million compared
to $18,106 million of operating cash flow before working capital changes,
reflecting a $3.0 billion increase in working capital requirements, mainly due
to the effects of lower prices on tax payables and the seasonality of payment
of the gas and power marketing business.
1.5.6 Profitability
The return on equity was 25.2% for the twelve months ended June 30, 2023.
(in millions of dollars) July 1, 2022 April 1, 2022 July 1, 2021
June 30, 2023
March 31, 2023
June 30, 2022
Adjusted net income 29,351 34,219 30,716
Average adjusted shareholders' equity 116,329 115,233 113,333
RETURN ON EQUITY (ROE) 25.2% 29.7% 27.1%
The return on average capital employed(19) was 22.4% for the twelve months
ended June 30, 2023.
(in millions of dollars) July 1, 2022 April 1, 2022 July 1, 2021
June 30, 2023
March 31, 2023
June 30, 2022
Adjusted net operating income 30,776 35,712 32,177
Average capital employed 137,204 140,842 139,377
ROACE 22.4% 25.4% 23.1%
1.6 TotalEnergies SE accounts
Net income for TotalEnergies SE, the parent company, was €7,040 million in
the first half 2023 compared to €3,702 in the first half 2022.
1.7 2023 Sensitivities*
Change Estimated impact on adjusted net operating income Estimated impact on cash flow from operations
Dollar +/- 0.1 $ per € -/+ 0.1 B$ ~0 B$
Average liquids price** +/-10 $/b +/- 2.5 B$ +/- 3.0 B$
European gas price - NBP / TTF +/-2 $/Mbtu +/- 0.4 B$ +/- 0.4 B$
Variable cost margin, European refining (VCM) +/-10 $/t +/- 0.4 B$ +/- 0.5 B$
*Sensitivities are revised once per year upon publication of the previous
year’s fourth quarter results. Sensitivities are estimates based on
assumptions about TotalEnergies’ portfolio in 2023. Actual results could
vary significantly from estimates based on the application of these
sensitivities. The impact of the $-€ sensitivity on adjusted net operating
income is essentially attributable to Refining & Chemicals.
**In a 80 $/b Brent environment.
1.8 Outlook
Oil prices have remained buoyant at around $75/b for several months now,
supported by OPEC+ actions. Demand for petroleum products should be supported
as the summer driving season is ongoing and the global recovery for air travel
continues.
European natural gas prices are currently around $10/Mbtu due to high
inventories in Europe. Demand recovery in Asia and tension on supply
capacities in Europe support forward prices above $15/Mbtu for the winter of
2023/2024.
Given the evolution of oil and gas prices in recent months and the lag effect
on price formulas, TotalEnergies anticipates that its average LNG selling
price should be between $9 and $10/Mbtu in the third quarter 2023.
For the third quarter 2023, TotalEnergies anticipates hydrocarbon production
of around 2.5 Mboe/d, notably supported by the start-up of Absheron field in
Azerbaijan. The utilization rate in refineries should remain above 80%.
The Company confirms 2023 guidance of net investments between $16 and $18
billion, including $5 billion in low-carbon energies
1.9 Other information
1.9.1 Operating information by segment
Combined liquids and gas production by region (kboe/d) 1H23 1H22 1H23 vs 1H22
Europe 559 933 -40%
Africa 488 479 +2%
Middle East and North Africa 743 675 +10%
Americas 442 403 +10%
Asia-Pacific 266 301 -12%
Total production 2,498 2,791 -10%
includes equity affiliates 341 702 -51%
1.9.1.1 COMPANY’S PRODUCTION (EXPLORATION & PRODUCTION + INTEGRATED LNG)
Liquids production by region (kb/d) 1H23 1H22 1H23 vs 1H22
Europe 231 283 -18%
Africa 365 362 +1%
Middle East and North Africa 596 542 +10%
Americas 266 216 +23%
Asia-Pacific 109 102 +6%
Total production 1,567 1,505 +4%
includes equity affiliates 152 206 -26%
Gas production by region (Mcf/d) 1H23 1H22 1H23 vs 1H22
Europe 1,774 3,498 -49%
Africa 612 594 +3%
Middle East and North Africa 803 734 +9%
Americas 985 1,052 -6%
Asia-Pacific 843 1,119 -25%
Total production 5,017 6,997 -28%
includes equity affiliates 1,029 2,673 -62%
1.9.1.2 DOWNSTREAM (REFINING & CHEMICALS AND MARKETING & SERVICES)
Petroleum product sales by region (kb/d) 1H23 1H22 1H23 vs 1H22
Europe 1,655 1,724 -4%
Africa 633 747 -15%
Americas 883 849 +4%
Rest of world 644 618 +4%
Total consolidated sales 3,815 3,939 -3%
Includes bulk sales 405 409 -1%
Includes trading 2,031 2,065 -2%
Petrochemicals production* (kt) 1H23 1H22 1H23 vs 1H22
Europe 2,073 2,282 -9%
Americas 1,226 1,240 -1%
Middle East and Asia 1,228 1,549 -21%
*Olefins, polymers.
1.9.1.3 RENEWABLES
Installed power generation gross capacity (GW)((1)(2)) 1H23 1H22
Solar Onshore Wind Offshore Wind Other Total Solar Onshore Wind Offshore Wind Other Total
France 0.8 0.6 0.0 0.1 1.6 0.7 0.5 0.0 0.1 1.3
Rest of Europe 0.2 1.1 0.8 0.0 2.1 0.2 1.1 0.0 0.0 1.3
Africa 0.1 0.0 0.0 0.0 0.2 0.1 0.0 0.0 0.0 0.1
Middle East 1.2 0.0 0.0 0.0 1.2 0.7 0.0 0.0 0.0 0.7
North America 3.5 2.1 0.0 0.1 5.6 1.1 0.0 0.0 0.0 1.1
South America 0.4 1.0 0.0 0.0 1.4 0.4 0.3 0.0 0.0 0.7
India 5.1 0.4 0.0 0.0 5.5 4.9 0.2 0.0 0.0 5.1
Asia-Pacific 1.4 0.0 0.1 0.0 1.5 1.2 0.0 0.1 0.0 1.2
TOTAL 12.5 5.2 1.0 0.3 19.0 9.2 2.1 0.1 0.2 11.6
(1) Includes 20% of the gross capacities of Adani Green Energy Limited, 50% of
Clearway Energy Group and, from 1Q23, 49% of Casa dos Ventos.
(2) End-of-period data.
Power generation gross capacity from renewables in construction (GW)((1)(2)) 1H23 1H22
Solar Onshore Wind Offshore Wind Other Total Solar Onshore Wind Offshore Wind Other Total
France 0.2 0.1 0.0 0.0 0.3 0.2 0.2 0.0 0.1 0.4
Rest of Europe 0.1 0.0 0.3 0.0 0.5 0.0 0.0 1.1 0.0 1.1
Africa 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Middle East 0.1 0.0 0.0 0.0 0.1 0.4 0.0 0.0 0.0 0.4
North America 2.8 0.1 0.0 0.5 3.4 1.3 0.0 0.0 0.0 1.3
South America 0.1 0.2 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0
India 0.4 0.1 0.0 0.0 0.5 0.9 0.3 0.0 0.0 1.2
Asia-Pacific 0.0 0.0 0.5 0.0 0.6 0.1 0.0 0.6 0.0 0.7
TOTAL 3.8 0.5 0.9 0.6 5.7 2.8 0.5 1.7 0.1 5.2
(1) Includes 20% of the gross capacities of Adani Green Energy Limited, 50% of
Clearway Energy Group and, from 1Q23, 49% of Casa dos Ventos.
(2) End-of-period data.
Power generation gross capacity from renewables in development (GW)((1)(2)) 1H23 1H22
Solar Onshore Wind Offshore Wind Other Total Solar Onshore Wind Offshore Wind Other Total
France 1.0 0.6 0.0 0.0 1.6 2.3 0.5 0.0 0.0 2.8
Rest of Europe 5.4 0.4 4.4 0.1 10.3 4.8 0.3 4.4 0.1 9.5
Africa 0.6 0.3 0.0 0.1 1.0 0.6 0.1 0.0 0.1 0.8
Middle East 0.4 0.0 0.0 0.0 0.4 1.8 0.0 0.0 0.0 1.8
North America 9.0 3.2 4.1 5.1 21.3 6.2 0.1 4.0 0.8 11.0
South America 1.6 1.6 0.0 0.4 3.6 0.6 0.0 0.0 0.2 0.8
India 4.2 0.1 0.0 0.0 4.3 3.9 0.1 0.0 0.0 4.0
Asia-Pacific 3.2 0.4 2.9 0.9 7.5 1.7 0.2 1.2 0.1 3.2
TOTAL 25.5 6.6 11.4 6.5 50.0 21.7 1.3 9.6 1.3 33.9
(1) Includes 20% of the gross capacities of Adani Green Energy Limited, 50% of
Clearway Energy Group and, from 1Q23, 49% of Casa dos Ventos.
(2) End-of-period data.
1.9.2 Adjustment items to net income (TotalEnergies share)
(in millions of dollars) 1H23 1H22
Special items affecting net income (TotalEnergies share) (536) (9,539)
Gain (loss) on asset sales 203 –
Restructuring charges (5) (11)
Impairments (529) (8,780)
Other (205) (748)
After-tax inventory effect : FIFO vs. replacement cost (771) 2,033
Effect of changes in fair value (545) (631)
TOTAL ADJUSTMENTS AFFECTING NET INCOME (1,852) (8,137)
1.9.3 Reconciliation of adjusted EBITDA with consolidated financial statements
1.9.3.1 RECONCILIATION OF NET INCOME (TotalEnergies SHARE) TO ADJUSTED EBITDA
(in millions of dollars) 1H23 1H22 1H23 vs 1H22
NET INCOME – TotalEnergies SHARE 9,645 10,636 -9%
Less: adjustment items to net income (TotalEnergies share) 1,852 8,137 -77%
ADJUSTED NET INCOME – TotalEnergies SHARE 11,497 18,773 -39%
Adjusted items
Add: non-controlling interests 135 165 -18%
Add: income taxes 6,805 9,998 -32%
Add: depreciation, depletion and impairment of tangible assets and mineral 5,985 6,186 -3%
interests
Add: amortization and impairment of intangible assets 191 194 -2%
Add: financial interest on debt 1,434 1,034 +39%
Less: financial income and expense from cash & cash equivalents (775) (189) ns
ADJUSTED EBITDA 25,272 36,161 -30%
1.9.3.2 RECONCILIATION OF REVENUES FROM SALES TO ADJUSTED EBITDA AND NET
INCOME (TotalEnergies SHARE)
(in millions of dollars) 1H23 1H22 1H23 vs 1H22
Adjusted items
Revenues from sales 109,767 134,398 -18%
Purchases, net of inventory variation (70,858) (86,785) ns
Other operating expenses (15,506) (15,029) ns
Exploration costs (156) (253) ns
Other income 193 550 -65%
Other expense, excluding amortization and impairment of intangible assets (202) (604) ns
Other financial income 649 350 85%
Other financial expense (356) (271) ns
Net income (loss) from equity affiliates 1,741 3,805 -54%
ADJUSTED EBITDA 25,272 36,161 -30%
Adjusted items
Less: depreciation, depletion and impairment of tangible assets and mineral (5,985) (6,186) ns
interests
Less: amortization of intangible assets (191) (194) ns
Less: financial interest on debt (1,434) (1,034) ns
Add: financial income and expense from cash & cash equivalents 775 189 x4.1
Less: income taxes (6,805) (9,998) ns
Less: non-controlling interests (135) (165) ns
Add: adjustment – TotalEnergies share (1,852) (8,137) ns
NET INCOME – TotalEnergies SHARE 9,645 10,636 -9%
1.9.4 Investments – Divestments
(in millions of dollars) 1H23 1H22 1H23 vs 1H22
Organic investments (a) 7,704 4,800 +60%
Capitalized exploration 533 212 x2.5
Increase in non-current loans 740 511 +45%
Repayment of non-current loans, excluding organic loan repayment from equity (313) (609) ns
affiliates
Change in debt from renewable projects (TotalEnergies share) – (190) -100%
Acquisitions (b) 3,738 3,864 -3%
Asset sales (c) 431 866 -50%
Change in debt from renewable projects (partner share) (38) 174 ns
Net acquisitions 3,307 2,998 +10%
NET INVESTMENTS (a + b - c) 11,011 7,798 +41%
Other transactions with non-controlling interests (d) – – ns
Organic loan repayment from equity affiliates (e) (12) (725) ns
Change in debt from renewable projects financing* (f) (38) 364 ns
Capex linked to capitalized leasing contracts (g) 124 73 +70%
Expenditures related to carbon credits (h) 2 4 -50%
CASH FLOW USED IN INVESTING ACTIVITIES (a + b - c + d + e + f - g - h) 10,835 7,360 +47%
*Change in debt from renewable projects (TotalEnergies share and partner
share).
1.9.5 Cash-flow
(in millions of dollars) 1H23 1H22 1H23 vs 1H22
CASH FLOW FROM OPERATIONS 15,033 23,901 -37%
Less: (Increase) decrease in working capital** (2,269) (2,614) ns
Less: Inventory effect (754) 2,406 ns
Less: Capital gain from renewable projects sale (38) (25) ns
Less: Organic loan repayment from equity affiliates (12) (725) ns
OPERATING CASH FLOW BEFORE WORKING CAPITAL CHANGES (a)* 18,106 24,859 -27%
Financial charges (265) (767) ns
OPERATING CASH FLOW BEFORE WORKING CAPITAL CHANGES W/O FINANCIALS CHARGES 18,371 25,626 -28%
(DACF)
Organic investments (b) 7,704 4,800 +60%
FREE CASH FLOW AFTER ORGANIC INVESTMENTS, W/O NET ASSET SALES (a - b) 10,402 20,059 -48%
Net investments (c) 11,011 7,798 +41%
NET CASH FLOW (a - c) 7,095 17,061 -58%
*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 Integrated LNG and Integrated
Power sectors’ contracts and including capital gain from renewable projects
sale.
Historical data have been restated to cancel the impact of fair valuation of
Integrated LNG and Integrated Power sectors’ contracts.
**Changes in working capital are presented excluding the mark-to-market effect
of Integrated LNG and Integrated Power sectors’ contracts.
1.9.6 Gearing ratio
(in millions of dollars) 30/06/2023 31/03/2023 30/06/2022
Current borrowings((1)) 13,980 16,280 14,589
Other current financial liabilities 443 597 401
Current financial assets ((1)(2)) (6,397) (7,223) (7,697)
Net financial assets classified as held for sale((1)) (41) (38) (14)
Non-current financial debt((1)) 33,387 34,820 39,233
Non-current financial assets((1)) (1,264) (1,101) (692)
Cash and cash equivalents (25,572) (27,985) (32,848)
NET DEBT (a) 14,536 15,350 12,972
Shareholders’ equity - TotalEnergies share 113,682 115,581 116,688
Non-controlling interests 2,770 2,863 3,309
SHAREHOLDERS' EQUITY (b) 116,452 118,444 119,997
NET-DEBT-TO-CAPITAL RATIO = a / (a+b) 11.1% 11.5% 9.8%
Leases (c) 8,090 8,131 7,963
Net-debt-to-capital ratio including leases (a+c) / (a+b+c) 16.3% 16.5% 14.9%
(1) Excludes leases receivables and leases debts.
(2) Including initial margins held as part of the Company's activities on
organized markets.
1.9.7 Return on average capital employed(20)
1.9.7.1 TWELVE MONTHS ENDED JUNE 30, 2023
(in millions of dollars) Exploration & Production Integrated Integrated Refining & Chemicals Marketing & Services Company
LNG
Power
Adjusted net operating income 12,747 9,223 1,537 6,044 1,541 30,776
Capital employed at 06/30/2022* 70,248 41,606 12,568 7,958 7,475 137,035
Capital employed at 06/30/2023* 68,530 34,598 17,804 9,698 8,796 137,372
ROACE 18.4% 24.2% 10.1% 68.5% 18.9% 22.4%
1.9.7.2 TWELVE MONTHS ENDED MARCH 31, 2023
(in millions of dollars) Exploration & Production Integrated Integrated Refining & Chemicals Marketing & Services Company
LNG
Power
Adjusted net operating income 15,117 10,108 1,427 7,800 1,558 35,712
Capital employed at 03/31/2022* 71,518 44,803 9,937 8,847 7,751 141,853
Capital employed at 03/31/2023* 67,658 34,183 18,982 10,115 8,811 139,830
ROACE 21.7% 25.6% 9.9% 82.3% 18.8% 25.4%
*At replacement cost (excluding after-tax inventory effect).
1.10 Principal risks and uncertainties for the remaining six months of 2023
The Company and its businesses are subject to various risks relating to
changing political, economic, monetary, legal, environmental, social,
industrial, competitive, operating and financial conditions. A description of
such risk factors is provided in TotalEnergies’ 2022 Universal Registration
Document filed with the Autorité des marchés financiers (French Financial
Markets Authority) on March 24, 2023. These conditions are subject to change
not only in the six months remaining in the current financial year, but also
in the years to come.
Additionally, a description of certain risks is included in the Notes to the
condensed Consolidated Financial Statements for the first half of 2023 (page
52 of this half-year financial report).
1.11 Major related parties’ transactions
Information concerning the major related parties’ transactions for the first
six months of 2022 is provided in Note 6 to the condensed Consolidated
Financial Statements for the first half of 2023 (page 52 of this half-year
financial report).
Disclaimer
The terms “TotalEnergies”, “TotalEnergies company” and “Company”
in this document are used to designate TotalEnergies SE and the consolidated
entities directly or indirectly controlled by TotalEnergies SE. Likewise, the
words “we”, “us” and “our” may also be used to refer to these
entities or their employees. The entities in which TotalEnergies SE directly
or indirectly owns a shareholding are separate and independent legal entities.
This document may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, notably with respect to the
financial condition, results of operations, business activities and industrial
strategy of TotalEnergies. This document may also contain statements regarding
the perspectives, objectives, areas of improvement and goals of TotalEnergies,
including with respect to climate change and carbon neutrality (net zero
emissions). An ambition expresses an outcome desired by TotalEnergies, it
being specified that the means to be deployed do not depend solely on
TotalEnergies. These forward-looking statements may generally be identified by
the use of the future or conditional tense or forward-looking words such as
“envisions”, “intends”, “anticipates”, “believes”,
“considers”, “plans”, “expects”, “thinks”, “targets”,
“aims” or similar terminology. Such forward-looking statements included in
this document are based on economic data, estimates and assumptions prepared
in a given economic, competitive and regulatory environment and considered to
be reasonable by TotalEnergies as of the date of this document.
These forward-looking statements are not historical data and should not be
interpreted as assurances that the perspectives, objectives or goals announced
will be achieved. They may prove to be inaccurate in the future, and may
evolve or be modified with a significant difference between the actual results
and those initially estimated, due to the uncertainties notably related to the
economic, financial, competitive and regulatory environment, or due to the
occurrence of risk factors, such as, notably, the price fluctuations in crude
oil and natural gas, the evolution of the demand and price of petroleum
products, the changes in production results and reserves estimates, the
ability to achieve cost reductions and operating efficiencies without unduly
disrupting business operations, changes in laws and regulations including
those related to the environment and climate, currency fluctuations, as well
as economic and political developments, changes in market conditions, loss of
market share and changes in consumer preferences, or pandemics such as the
COVID-19 pandemic. Additionally, certain financial information is based on
estimates particularly in the assessment of the recoverable value of assets
and potential impairments of assets relating thereto.
Neither TotalEnergies SE nor any of its subsidiaries assumes any obligation to
update publicly any forward-looking information or statement, objectives or
trends contained in this document whether as a result of new information,
future events or otherwise. The information on risk factors that could have a
significant adverse effect on TotalEnergies’ business, financial condition,
including its operating income and cash flow, reputation, outlook or the value
of financial instruments issued by TotalEnergies is provided in the most
recent version of the Universal Registration Document which is filed by
TotalEnergies SE with the French Autorité des Marchés Financiers and the
annual report on Form 20-F filed with the United States Securities and
Exchange Commission (“SEC”).
Financial information by business segment is reported in accordance with the
internal reporting system and shows internal segment information that is used
to manage and measure the performance of TotalEnergies. In addition to IFRS
measures, certain alternative performance indicators are presented, such as
performance indicators excluding the adjustment items described below
(adjusted operating income, adjusted net operating income, adjusted net
income), return on equity (ROE), return on average capital employed (ROACE),
gearing ratio, operating cash flow before working capital changes, the
shareholder rate of return. These indicators are meant to facilitate the
analysis of the financial performance of TotalEnergies and the comparison of
income between periods. They allow investors to track the measures used
internally to manage and measure the performance of TotalEnergies.
These adjustment items include:
(i)Special items
Due to their unusual nature or particular significance, certain transactions
qualified as “special items” are excluded from the business segment
figures. In general, special items relate to transactions that are
significant, infrequent or unusual. However, in certain instances,
transactions such as restructuring costs or asset disposals, which are not
considered to be representative of the normal course of business, may be
qualified as special items although they may have occurred within prior years
or are likely to occur again within the coming years.
(ii)Inventory valuation effect
The adjusted results of the Refining & Chemicals and Marketing &
Services segments are presented according to the replacement cost method. This
method is used to assess the segments’ performance and facilitate the
comparability of the segments’ performance with those of TotalEnergies’
principal competitors.
In the replacement cost method, which approximates the LIFO (Last-In,
First-Out) method, the variation of inventory values in the statement of
income is, depending on the nature of the inventory, determined using either
the month-end price differentials between one period and another or the
average prices of the period rather than the historical value. The inventory
valuation effect is the difference between the results according to the FIFO
(First-In, First-Out) and the replacement cost.
(iii)Effect of changes in fair value
The effect of changes in fair value presented as an adjustment item reflects,
for some transactions, differences between internal measures of performance
used by TotalEnergies’ management and the accounting for these transactions
under IFRS.
IFRS requires that trading inventories be recorded at their fair value using
period-end spot prices. In order to best reflect the management of economic
exposure through derivative transactions, internal indicators used to measure
performance include valuations of trading inventories based on forward prices.
TotalEnergies, in its trading activities, enters into storage contracts, whose
future effects are recorded at fair value in TotalEnergies’ internal
economic performance. IFRS precludes recognition of this fair value effect.
Furthermore, TotalEnergies enters into derivative instruments to risk manage
certain operational contracts or assets. Under IFRS, these derivatives are
recorded at fair value while the underlying operational transactions are
recorded as they occur. Internal indicators defer the fair value on
derivatives to match with the transaction occurrence.
The adjusted results (adjusted operating income, adjusted net operating
income, adjusted net income) are defined as replacement cost results, adjusted
for special items, excluding the effect of changes in fair value.
Euro amounts presented for the fully adjusted-diluted earnings per share
represent dollar amounts converted at the average euro-dollar (€-$) exchange
rate for the applicable period and are not the result of financial statements
prepared in euros.
Cautionary Note to U.S. Investors – The SEC permits oil and gas companies,
in their filings with the SEC, to separately disclose proved, probable and
possible reserves that a company has determined in accordance with SEC rules.
We may use certain terms in this press release, such as “potential
reserves” or “resources”, that the SEC’s guidelines strictly prohibit
us from including in filings with the SEC. U.S. investors are urged to
consider closely the disclosure in the Form 20-F of TotalEnergies SE, File N°
1-10888, available from us at 2, place Jean Millier – Arche Nord
Coupole/Regnault - 92078 Paris-La Défense Cedex, France, or at our website
totalenergies.com. You can also obtain this form from the SEC by calling
1-800-SEC-0330 or on the SEC’s website sec.gov.
2. Consolidated Financial Statements as of June 30, 2023
2.1 Statutory Auditors’ Review Report on the half-yearly Financial
Information
This is a free translation into English of the statutory auditors' review
report on the half-yearly financial information issued in French and is
provided solely for the convenience of English-speaking users. This report
includes information relating to the specific verification of information
given in the Group’s half-yearly management report. This report should be
read in conjunction with, and construed in accordance with, French law and
professional standards applicable in France.
For the period from January 1st to June 30, 2023
To the Shareholders,
In compliance with the assignment entrusted to us by your Annual General
Meeting and in accordance with the requirements of article L. 451-1-2 III of
the French monetary and financial code (“code monétaire et financier”),
we hereby report to you on:
* the review of the accompanying condensed half-yearly consolidated financial
statements of TotalEnergies SE for the period from January 1st to June 30,
2023,
* the verification of the information presented in the half-yearly management
report.
These condensed half-yearly consolidated financial statements are the
responsibility of the Board of Directors. Our role is to express a conclusion
on these financial statements based on our review.
I – CONCLUSION ON THE FINANCIAL STATEMENTS
We conducted our review in accordance with professional standards applicable
in France.
A review of interim financial information consists of making inquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with professional
standards applicable in France and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to
believe that the accompanying condensed half-yearly consolidated financial
statements are not prepared, in all material respects, in accordance with IAS
34 – standard of the IFRSs as adopted by the European Union applicable to
interim financial information.
II – SPECIFIC VERIFICATION
We have also verified the information presented in the half-yearly management
report on the condensed half-yearly consolidated financial statements subject
to our review.
We have no matters to report as to its fair presentation and consistency with
the condensed half-yearly consolidated financial statements.
Neuilly-sur-Seine and Paris-La Défense, July 26, 2023
The Statutory Auditors
French original signed by
PricewaterhouseCoopers Audit ERNST & YOUNG Audit
Olivier Lotz Cécile Saint-Martin Laurent Vitse Stéphane Pédron
Partner
Partner
Partner
Partner
2.2 Consolidated statement of income – half-yearly
TotalEnergies
(unaudited)
(M$)(a) 1st half 2023 1st half 2022
Sales 118,874 143,380
Excise taxes (9,107) (8,985)
Revenues from sales 109,767 134,395
Purchases, net of inventory variation (72,215) (85,091)
Other operating expenses (15,691) (15,664)
Exploration costs (154) (978)
Depreciation, depletion and impairment of tangible assets and mineral (6,168) (6,781)
interests
Other income 457 572
Other expense (666) (3,595)
Financial interest on debt (1,434) (1,034)
Financial income and expense from cash & cash equivalents 903 459
Cost of net debt (531) (575)
Other financial income 671 434
Other financial expense (356) (271)
Net income (loss) from equity affiliates 1,227 (1,503)
Income taxes (6,558) (10,088)
CONSOLIDATED NET INCOME 9,783 10,855
TotalEnergies share 9,645 10,636
Non-controlling interests 138 219
Earnings per share ($) 3.88 4.04
Fully-diluted earnings per share ($) 3.86 4.02
(a) Except for per share amounts.
2.3 Consolidated statement of comprehensive income – half-yearly
TotalEnergies
(unaudited)
(M$) 1st half 2023 1st half 2022
CONSOLIDATED NET INCOME 9,783 10,855
Other comprehensive income
Actuarial gains and losses 138 204
Change in fair value of investments in equity instruments 3 (17)
Tax effect (51) (42)
Currency translation adjustment generated by the parent company 1,409 (7,137)
ITEMS NOT POTENTIALLY RECLASSIFIABLE TO PROFIT AND LOSS 1,499 (6,992)
Currency translation adjustment (1,299) 3,535
Cash flow hedge 1,891 2,959
Variation of foreign currency basis spread 8 70
Share of other comprehensive income of equity affiliates, net amount (95) 2,464
Other (1) (1)
Tax effect (472) (1,059)
ITEMS POTENTIALLY RECLASSIFIABLE TO PROFIT AND LOSS 32 7,968
TOTAL OTHER COMPREHENSIVE INCOME (NET AMOUNT) 1,531 976
COMPREHENSIVE INCOME 11,314 11,831
–TotalEnergies share 11,226 11,658
–Non-controlling interests 88 173
2.4 Consolidated statement of income – quarterly
TotalEnergies
(unaudited)
(M$)(a) 2nd quarter 1st quarter 2nd quarter
2023
2023
2022
Sales 56,271 62,603 74,774
Excise taxes (4,737) (4,370) (4,329)
Revenues from sales 51,534 58,233 70,445
Purchases, net of inventory variation (33,864) (38,351) (45,443)
Other operating expenses (7,906) (7,785) (8,041)
Exploration costs (62) (92) (117)
Depreciation, depletion and impairment of tangible assets and mineral (3,106) (3,062) (3,102)
interests
Other income 116 341 429
Other expense (366) (300) (1,305)
Financial interest on debt (724) (710) (572)
Financial income and expense from cash & cash equivalents 510 393 245
Cost of net debt (214) (317) (327)
Other financial income 413 258 231
Other financial expense (173) (183) (136)
Net income (loss) from equity affiliates 267 960 (1,546)
Income taxes (2,487) (4,071) (5,284)
CONSOLIDATED NET INCOME 4,152 5,631 5,804
TotalEnergies share 4,088 5,557 5,692
Non-controlling interests 64 74 112
Earnings per share ($) 1.65 2.23 2.18
Fully-diluted earnings per share ($) 1.64 2.21 2.16
(a) Except for per share amounts.
2.5 Consolidated statement of comprehensive income – quarterly
TotalEnergies
(unaudited)
(M$) 2nd quarter 1st quarter 2nd quarter
2023
2023
2022
CONSOLIDATED NET INCOME 4,152 5,631 5,804
Other comprehensive income
Actuarial gains and losses 135 3 204
Change in fair value of investments in equity instruments (1) 4 (20)
Tax effect (43) (8) (53)
Currency translation adjustment generated by the parent company (57) 1,466 (5,387)
ITEMS NOT POTENTIALLY RECLASSIFIABLE TO PROFIT AND LOSS 34 1,465 (5,256)
Currency translation adjustment (49) (1,250) 2,523
Cash flow hedge 689 1,202 3,222
Variation of foreign currency basis spread 11 (3) 21
Share of other comprehensive income of equity affiliates, net amount 3 (98) 2,548
Other (4) 3 (1)
Tax effect (136) (336) (1,112)
ITEMS POTENTIALLY RECLASSIFIABLE TO PROFIT AND LOSS 514 (482) 7,201
TOTAL OTHER COMPREHENSIVE INCOME (NET AMOUNT) 548 983 1,945
COMPREHENSIVE INCOME 4,700 6,614 7,749
–TotalEnergies share 4,676 6,550 7,705
–Non-controlling interests 24 64 44
2.6 Consolidated balance sheet
TotalEnergies
(M$) June 30, March 31, December 31, June 30,
2023
2023
2022
2022
(unaudited)
(unaudited)
(unaudited)
ASSETS
Non-current assets
Intangible assets, net 31,717 33,234 31,931 37,020
Property, plant and equipment, net 104,174 107,499 107,101 101,454
Equity affiliates: investments and loans 30,425 29,997 27,889 28,210
Other investments 1,190 1,209 1,051 1,383
Non-current financial assets 2,494 2,357 2,731 1,612
Deferred income taxes 3,649 4,772 5,049 4,737
Other non-current assets 2,573 2,709 2,388 3,075
TOTAL NON-CURRENT ASSETS 176,222 181,777 178,140 177,491
Current assets
Inventories, net 18,785 22,786 22,936 28,542
Accounts receivable, net 22,163 24,128 24,378 30,796
Other current assets 23,111 28,153 36,070 55,553
Current financial assets 6,725 7,535 8,746 7,863
Cash and cash equivalents 25,572 27,985 33,026 32,848
Assets classified as held for sale 8,441 668 568 313
TOTAL CURRENT ASSETS 104,797 111,255 125,724 155,915
TOTAL ASSETS 281,019 293,032 303,864 333,406
LIABILITIES & SHAREHOLDERS’ EQUITY
Shareholders’ equity
Common shares 7,850 7,828 8,163 8,163
Paid-in surplus and retained earnings 123,511 123,357 123,951 125,554
Currency translation adjustment (12,859) (12,784) (12,836) (14,019)
Treasury shares (4,820) (2,820) (7,554) (3,010)
TOTAL SHAREHOLDERS’ EQUITY – TotalEnergies SHARE 113,682 115,581 111,724 116,688
Non-controlling interests 2,770 2,863 2,846 3,309
TOTAL SHAREHOLDERS’ EQUITY 116,452 118,444 114,570 119,997
Non-current liabilities
Deferred income taxes 11,237 11,300 11,021 12,169
Employee benefits 1,872 1,840 1,829 2,341
Provisions and other non-current liabilities 21,295 21,270 21,402 23,373
Non-current financial debt 40,427 42,915 45,264 46,868
TOTAL NON-CURRENT LIABILITIES 74,831 77,325 79,516 84,751
Current liabilities
Accounts payable 32,853 36,037 41,346 49,700
Other creditors and accrued liabilities 38,609 42,578 52,275 62,498
Current borrowings 15,542 17,884 15,502 16,003
Other current financial liabilities 443 597 488 401
Liabilities directly associated with the assets classified as held for sale 2,289 167 167 56
TOTAL CURRENT LIABILITIES 89,736 97,263 109,778 128,658
TOTAL LIABILITIES & SHAREHOLDERS’ EQUITY 281,019 293,032 303,864 333,406
2.7 Consolidated statement of cash flow – half-yearly
TotalEnergies
(unaudited)
(M$) 1st half 2023 1st half 2022
CASH FLOW FROM OPERATING ACTIVITIES
Consolidated net income 9,783 10,855
Depreciation, depletion, amortization and impairment 6,382 7,899
Non-current liabilities, valuation allowances and deferred taxes 395 3,965
(Gains) losses on disposals of assets (322) (178)
Undistributed affiliates’ equity earnings 34 3,261
(Increase) decrease in working capital (1,294) (2,425)
Other changes, net 55 524
CASH FLOW FROM OPERATING ACTIVITIES 15,033 23,901
CASH FLOW USED IN INVESTING ACTIVITIES
Intangible assets and property, plant and equipment additions (8,838) (8,607)
Acquisitions of subsidiaries, net of cash acquired (155) (82)
Investments in equity affiliates and other securities (1,929) (225)
Increase in non-current loans (755) (519)
Total expenditures (11,677) (9,433)
Proceeds from disposals of intangible assets and property, plant and equipment 99 330
Proceeds from disposals of subsidiaries, net of cash sold 221 151
Proceeds from disposals of non-current investments 182 250
Repayment of non-current loans 340 1,342
Total divestments 842 2,073
CASH FLOW USED IN INVESTING ACTIVITIES (10,835) (7,360)
CASH FLOW USED IN FINANCING ACTIVITIES
Issuance (repayment) of shares:
–Parent company shareholders 383 371
–Treasury shares (4,105) (3,164)
Dividends paid:
–Parent company shareholders (3,686) (3,753)
–Non-controlling interests (126) (119)
Net issuance (repayment) of perpetual subordinated notes (1,081) –
Payments on perpetual subordinated notes (238) (274)
Other transactions with non-controlling interests (99) (5)
Net issuance (repayment) of non-current debt 104 542
Increase (decrease) in current borrowings (5,385) (2,046)
Increase (decrease) in current financial assets and liabilities 2,384 4,863
CASH FLOW FROM (USED IN) FINANCING ACTIVITIES (11,849) (3,585)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,651) 12,956
Effect of exchange rates 197 (1,450)
Cash and cash equivalents at the beginning of the period 33,026 21,342
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 25,572 32,848
2.8 Consolidated statement of cash flow – quarterly
TotalEnergies
(unaudited)
(M$) 2nd quarter 1st quarter 2nd quarter
2023
2023
2022
CASH FLOW FROM OPERATING ACTIVITIES
Consolidated net income 4,152 5,631 5,804
Depreciation, depletion, amortization and impairment 3,195 3,187 3,321
Non-current liabilities, valuation allowances and deferred taxes 81 314 1,427
(Gains) losses on disposals of assets (70) (252) (165)
Undistributed affiliates’ equity earnings 383 (349) 2,999
(Increase) decrease in working capital 2,125 (3,419) 2,498
Other changes, net 34 21 400
CASH FLOW FROM OPERATING ACTIVITIES 9,900 5,133 16,284
CASH FLOW USED IN INVESTING ACTIVITIES
Intangible assets and property, plant and equipment additions (3,870) (4,968) (5,150)
Acquisitions of subsidiaries, net of cash acquired (19) (136) (82)
Investments in equity affiliates and other securities (522) (1,407) (136)
Increase in non-current loans (366) (389) (278)
Total expenditures (4,777) (6,900) (5,646)
Proceeds from disposals of intangible assets and property, plant and equipment 31 68 153
Proceeds from disposals of subsidiaries, net of cash sold 38 183 63
Proceeds from disposals of non-current investments 133 49 35
Repayment of non-current loans 102 238 413
Total divestments 304 538 664
CASH FLOW USED IN INVESTING ACTIVITIES (4,473) (6,362) (4,982)
CASH FLOW USED IN FINANCING ACTIVITIES
Issuance (repayment) of shares:
–Parent company shareholders 383 – 371
–Treasury shares (2,002) (2,103) (1,988)
Dividends paid:
–Parent company shareholders (1,842) (1,844) (1,825)
–Non-controlling interests (105) (21) (97)
Net issuance (repayment) of perpetual subordinated notes (1,081) – (1,958)
Payments on perpetual subordinated notes (80) (158) (138)
Other transactions with non-controlling interests (13) (86) (10)
Net issuance (repayment) of non-current debt (14) 118 508
Increase (decrease) in current borrowings (4,111) (1,274) (2,703)
Increase (decrease) in current financial assets and liabilities 990 1,394 (731)
CASH FLOW FROM (USED IN) FINANCING ACTIVITIES (7,875) (3,974) (8,571)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,448) (5,203) 2,731
Effect of exchange rates 35 162 (1,159)
Cash and cash equivalents at the beginning of the period 27,985 33,026 31,276
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 25,572 27,985 32,848
2.9 Consolidated statement of changes in shareholders’ equity
TotalEnergies
(unaudited)
(M$) Common shares issued Paid-in surplus and retained earnings Currency translation adjustment Treasury shares Shareholders’ equity – TotalEnergies Share Non-controlling interests Total shareholders’ equity
Number Amount Number Amount
AS OF JANUARY 1, 2022 2,640,429,329 8,224 117,849 (12,671) (33,841,104) (1,666) 111,736 3,263 114,999
Net income of the first half 2022 – – 10,636 – – – 10,636 219 10,855
Other comprehensive income – – 2,370 (1,348) – – 1,022 (46) 976
COMPREHENSIVE INCOME – – 13,006 (1,348) – – 11,658 173 11,831
Dividend – – (3,803) – – – (3,803) (119) (3,922)
Issuance of common shares 9,367,482 26 345 – – – 371 – 371
Purchase of treasury shares – – – – (58,458,536) (3,164) (3,164) – (3,164)
Sale of treasury shares(a) – – (315) – 6,168,197 315 – – –
Share-based payments – – 157 – – – 157 – 157
Share cancellation (30,665,526) (87) (1,418) – 30,665,526 1,505 – – –
Net issuance (repayment) of perpetual subordinated notes – – (44) – – – (44) – (44)
Payments on perpetual subordinated notes – – (183) – – – (183) – (183)
Other operations with non-controlling interests – – 4 – – – 4 (9) (5)
Other items – – (44) – – – (44) 1 (43)
AS OF JUNE 30, 2022 2,619,131,285 8,163 125,554 (14,019) (55,465,917) (3,010) 116,688 3,309 119,997
Net income of the second half 2022 – – 9,890 – – – 9,890 299 10,189
Other comprehensive income – – (5,303) 1,174 – – (4,129) 44 (4,085)
COMPREHENSIVE INCOME – – 4,587 1,174 – – 5,761 343 6,104
Dividend – – (6,186) – – – (6,186) (417) (6,603)
Issuance of common shares – – (1) – – – (1) – (1)
Purchase of treasury shares – – – – (81,749,207) (4,547) (4,547) – (4,547)
Sale of treasury shares(a) – – (3) – 27,457 3 – – –
Share-based payments – – 72 – – – 72 – 72
Share cancellation – – – – – – – – –
Net issuance (repayment) of perpetual subordinated notes – – – – – – – – –
Payments on perpetual subordinated notes – – (148) – – – (148) – (148)
Other operations with non-controlling interests – – 41 9 – – 50 46 96
Other items – – 35 – – – 35 (435) (400)
AS OF DECEMBER 31, 2022 2,619,131,285 8,163 123,951 (12,836) (137,187,667) (7,554) 111,724 2,846 114,570
Net income of the first half 2023 – – 9,645 – – – 9,645 138 9,783
Other comprehensive income – – 1,576 5 – – 1,581 (50) 1,531
COMPREHENSIVE INCOME – – 11,221 5 – – 11,226 88 11,314
Dividend – – (3,868) – – – (3,868) (126) (3,994)
Issuance of common shares 8,002,155 22 361 – – – 383 – 383
Purchase of treasury shares – – – – (66,647,852) (4,705) (4,705) – (4,705)
Sale of treasury shares(a) – – (396) – 6,461,256 396 – – –
Share-based payments – – 172 – – – 172 – 172
Share cancellation (128,869,261) (335) (6,708) – 128,869,261 7,043 – – –
Net issuance (repayment) of perpetual subordinated notes – – (1,107) – – – (1,107) – (1,107)
Payments on perpetual subordinated notes – – (151) – – – (151) – (151)
Other operations with non-controlling interests – – 39 (28) – – 11 (38) (27)
Other items – – (3) – – – (3) – (3)
AS OF JUNE 30, 2023 2,498,264,179 7,850 123,511 (12,859) (68,505,002) (4,820) 113,682 2,770 116,452
(a)Treasury shares related to the performance share grants.
2.10 Notes to the Consolidated Financial Statements for the first six months
2023 (unaudited)
1) Basis of preparation of the consolidated financial statements
The consolidated financial statements are prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union and IFRS as published by the International Accounting Standards Board
(IASB).
The interim consolidated financial statements of TotalEnergies SE and its
subsidiaries (the Company) as of June 30, 2023, are presented in U.S. dollars
and have been prepared in accordance with International Accounting Standard
(IAS) 34 “Interim Financial Reporting”.
The accounting principles applied for the consolidated financial statements at
June 30, 2023, are consistent with those used for the financial statements at
December 31, 2022.
The preparation of financial statements in accordance with IFRS for the
closing as of June 30, 2023 requires the General Management to make estimates,
assumptions and judgments that affect the information reported in the
Consolidated Financial Statements and the Notes thereto.
These estimates, assumptions and judgments are based on historical experience
and other factors believed to be reasonable at the date of preparation of the
financial statements. They are reviewed on an on-going basis by General
Management and therefore could be revised as circumstances change or as a
result of new information.
The main estimates, judgments and assumptions relate to the estimation of
hydrocarbon reserves in application of the successful efforts method for the
oil and gas activities, asset impairments, employee benefits, asset retirement
obligations and income taxes. These estimates and assumptions are described in
the Notes to the Consolidated Financial Statements as of December 31, 2022.
The consolidated financial statements as of December 31, 2022 were impacted by
the Russian-Ukrainian conflict. The Russian assets were fully depreciated,
except for those relating to Yamal LNG. As of June 30, 2023, in the absence of
any new event, assessments and judgments taken into account in the valuation
of assets remain in place.
Different estimates, assumptions and judgments could significantly affect the
information reported, and actual results may differ from the amounts included
in the Consolidated Financial Statements and the Notes thereto.
Furthermore, when the accounting treatment of a specific transaction is not
addressed by any accounting standard or interpretation, the General Management
of the Company applies its judgment to define and apply accounting policies
that provide information consistent with the general IFRS concepts: faithful
representation, relevance and materiality.
2) Changes in the Company structure
2.1) MAIN ACQUISITIONS AND DIVESTMENTS
EXPLORATION & PRODUCTION
In March 2023, TotalEnergies has signed an agreement with CEPSA to acquire
CEPSA’s upstream assets in the United Arab Emirates with an effective date
of January 1, 2023. The assets to be acquired are:
* a 20% participating interest in the Satah Al Razboot (SARB), Umm Lulu, Bin
Nasher and Al Bateel (SARB and Umm Lulu) offshore concession. The SARB and Umm
Lulu concession includes two major offshore fields. ADNOC holds a 60% interest
in this concession, alongside OMV (20%). The concession is operated by ADNOC
Offshore.
* a 12.88% indirect interest in the Mubarraz concession held by Abu Dhabi Oil
Company Ltd (ADOC), through the acquisition of 20% of Cosmo Abu Dhabi Energy
Exploration & Production Co. Ltd (CEPAD), a company holding a 64.4%
interest in ADOC. The Mubarraz concession is comprised of four producing
offshore fields.
The SARB and Umm Lulu transaction was completed on March 15, 2023. The
Mubarraz transaction was not completed following Cosmo’s decision to
exercise its right of first refusal on the proposed transaction on April 21,
2023 in accordance with the terms of the agreements.
INTEGRATED LNG
On June 12, 2022, following the request for proposals in relation to partner
selection for the North Field East (NFE) liquified natural gas project,
TotalEnergies has been awarded, a 25% interest in a new joint venture (JV),
alongside the national company QatarEnergy (75%). The new JV will hold a 25%
interest in the 32 million tons per annum (Mtpa) NFE project, equivalent to
one 8 Mtpa LNG train. The acquisition of the interest in this project was
finalized in January 2023.
INTEGRATED POWER
On October 26, 2022, TotalEnergies and Casa dos Ventos (CDV), Brazil's leading
renewable energy developer, announced the creation of a 34%(TTE)/66%(CDV)
joint venture to jointly develop, build and operate the renewable portfolio of
Casa Dos Ventos. This portfolio includes 700 MW of onshore wind capacity in
operation, 1 GW of onshore wind under construction, 2.8 GW of onshore wind and
1.6 GW of solar projects under well advanced development (COD(21) within 5
years). Besides, the newly formed JV will have the right to acquire the
current and new projects that are or will be developed by CDV as they reach
execution stage. The transaction amounts to a payment of $0.5 billion and an
earn-out of up to $30 million for the acquisition of a 34% stake in the JV. In
addition, TotalEnergies will have the option to acquire an additional 15%
equity share in 2027. The transaction was completed in January 2023.
2.2) MAJOR BUSINESS COMBINATIONS
EXPLORATION & PRODUCTION
Acquisition of participating interest in SARB and Umm Lulu offshore concession
In accordance with IFRS 3 “Business combinations”, TotalEnergies is
assessing the fair value of identifiable acquired assets, liabilities and
contingent liabilities on the basis of available information. A preliminary
purchase price allocation has been done in the second quarter following the
acquisition, this assessment will be finalized within 12 months following the
acquisition date.
2.3) DIVESTMENT PROJECTS
EXPLORATION & PRODUCTION
On April 27, 2023, TotalEnergies announced the signature of an agreement with
Suncor Energy Inc. for the sale of the entirety of the shares of TotalEnergies
EP Canada Ltd for a consideration including a 5.5 billion Canadian dollar cash
payment at closing (about US$4.1 billion) and additional payments that could
reach a maximum of 600 million Canadian dollar (about US$450 million) under
specific conditions. The transaction was subject to the waiver of
TotalEnergies EP Canada Ltd’s partners pre-emption rights and customary
closing conditions, notably the required approval from public authorities.
On May 26, 2023 ConocoPhillips has notified TotalEnergies that it is
exercising its preemption right to purchase the 50% interest in the Surmont
asset held by TotalEnergies EP Canada Ltd. TotalEnergies will receive from
ConocoPhillips a cash payment upon closing of 4.0 billion Canadian dollar
(about US$3 billion) and additional payments that could reach a maximum of 440
million Canadian dollar (about US$325 million) under specific conditions for
its 50% non-operated interest in the Surmont asset and associated logistics
commitments. Closing is expected in the second half year of 2023.
Following the exercise by ConocoPhillips of its preemption right,
TotalEnergies and Suncor are continuing discussions regarding the sale of
TotalEnergies EP Canada Ltd shares, including the Fort Hills working interest
and the associated logistics.
As of June 30, 2023, the assets and liabilities have been respectively
classified in the consolidated balance sheet as “assets classified as held
for sale” for an amount of $5,435 million and “liabilities classified as
held for sale” for an amount of $893 million. These assets mainly include
tangible assets.
MARKETING & SERVICES
On March 16, 2023, TotalEnergies and Alimentation Couche-Tard have signed
agreements covering TotalEnergies' retail networks in four European countries.
As part of this agreement, TotalEnergies will join forces with Couche-Tard in
Belgium and Luxembourg and transfer its networks in Germany and the
Netherlands.
This planned transaction, which is based on an enterprise value of 3.1 billion
euros, is subject to the usual conditions for completion, including the
consultation processes of employee representatives and securing of the
mandatory authorizations from competition authorities.
As of June 30, 2023, the assets and liabilities have been respectively
classified in the consolidated balance sheet as “assets classified as held
for sale” for an amount of $1,901 million and “liabilities classified as
held for sale” for an amount of $1,227 million. These assets mainly include
tangible assets.
3) Business segment information
DESCRIPTION OF THE BUSINESS SEGMENTS
Financial information by business segment is reported in accordance with the
internal reporting system and shows internal segment information that is used
to manage and measure the performance of TotalEnergies and which is reviewed
by the main operational decision-making body of the Company, namely the
Executive Committee.
The operational profit and assets are broken down by business segment prior to
the consolidation and inter-segment adjustments.
Sales prices between business segments approximate market prices.
The profitable growth in the LNG and power integrated value chains are two of
the key axes of TotalEnergies’s strategy.
In order to give more visibility to these businesses, the Board of Directors
has decided that from the first quarter 2023, Integrated LNG and Integrated
Power results, previously grouped in the Integrated Gas, Renewables &
Power (iGRP) segment, would be reported separately as two segments.
A new reporting structure for the business segments’ financial information
has been put in place, effective January 1, 2023. It is based on the following
five business segments:
* An Exploration-Production segment;
* An Integrated LNG segment covering LNG production and trading activities as
well as biogas, hydrogen and gas trading activities;
* An Integrated Power segment covering generation, storage, electricity trading
and B2B-B2C distribution of gas and electricity;
* A Refining & Chemicals segment constituting a major industrial hub
comprising the activities of refining, petrochemicals and specialty chemicals.
This segment also includes the activities of oil Supply, Trading and marine
Shipping;
* A Marketing & Services segment including the global activities of supply
and marketing in the field of petroleum products;
In addition the Corporate segment includes holdings operating and financial
activities.
This new segment reporting has been prepared in accordance with IFRS 8 and
according to the same principles as the internal reporting followed by the
TotalEnergies's Executive Committee.
For the Integrated LNG and Integrated Power segments, the principles for the
preparation of this segment information are as follows:
* The management of balance sheet positions (including margin calls) related to
centralized markets access for LNG, gas and power activities since 2022 has
been fully included in the Integrated LNG segment.
* Effects of changes in the fair value of gas and LNG positions are allocated to
the operating income of Integrated LNG segment.
* Effects of changes in the fair value of power positions are allocated to the
operating income of Integrated Power segment.
Due to the change in the Company's internal organizational structure affecting
the composition of the business segments, the segment reporting data for the
years 2021 and 2022 has been restated.
ADJUSTMENT ITEMS
Performance indicators excluding the adjustment items, such as adjusted
operating income, adjusted net operating income, and adjusted net income are
meant to facilitate the analysis of the financial performance and the
comparison of income between periods.
Adjustment items include:
(i)Special items
Due to their unusual nature or particular significance, certain transactions
qualified as "special items" are excluded from the business segment figures.
In general, special items relate to transactions that are significant,
infrequent or unusual. However, in certain instances, transactions such as
restructuring costs or assets disposals, which are not considered to be
representative of the normal course of business, may be qualified as special
items although they may have occurred within prior years or are likely to
occur again within the coming years.
(ii)The inventory valuation effect
The adjusted results of the Refining & Chemicals and Marketing &
Services segments are presented according to the replacement cost method. This
method is used to assess the segments’ performance and facilitate the
comparability of the segments’ performance with those of its competitors.
In the replacement cost method, which approximates the LIFO (Last-In,
First-Out) method, the variation of inventory values in the statement of
income is, depending on the nature of the inventory, determined using either
the month-end prices differential between one period and another or the
average prices of the period rather than the historical value. The inventory
valuation effect is the difference between the results according to the FIFO
(First-In, First-Out) and the replacement cost methods.
(iii)Effect of changes in fair value
The effect of changes in fair value presented as adjustment items reflects for
certain transactions differences between the internal measure of performance
used by TotalEnergies’s management and the accounting for these transactions
under IFRS.
IFRS requires that trading inventories be recorded at their fair value using
period end spot prices. In order to best reflect the management of economic
exposure through derivative transactions, internal indicators used to measure
performance include valuations of trading inventories based on forward prices.
TotalEnergies, in its trading activities, enters into storage contracts, whose
future effects are recorded at fair value in the Company’s internal economic
performance. IFRS precludes recognition of this fair value effect.
Furthermore, TotalEnergies enters into derivative instruments to risk manage
certain operational contracts or assets. Under IFRS, these derivatives are
recorded at fair value while the underlying operational transactions are
recorded as they occur. Internal indicators defer the fair value on
derivatives to match with the transaction occurrence.
The adjusted results (adjusted operating income, adjusted net operating
income, adjusted net income) are defined as replacement cost results, adjusted
for special items and the effect of changes in fair value.
3.1) INFORMATION BY BUSINESS SEGMENT
1st half 2023 Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
External sales 3,388 6,892 14,804 49,704 44,071 15 – 118,874
Intersegment sales 20,836 8,777 2,355 17,691 321 121 (50,101) –
Excise taxes – – – (415) (8,692) – – (9,107)
REVENUES FROM SALES 24,224 15,669 17,159 66,980 35,700 136 (50,101) 109,767
Operating expenses (9,924) (13,242) (16,165) (63,934) (34,459) (437) 50,101 (88,060)
Depreciation, depletion and impairment of tangible assets and mineral (4,183) (565) (98) (808) (465) (49) – (6,168)
interests
OPERATING INCOME 10,117 1,862 896 2,238 776 (350) – 15,539
Net income (loss) from equity affiliates and other items 53 1,276 (320) 55 307 (38) – 1,333
Tax on net operating income (5,287) (342) (152) (512) (281) 23 – (6,551)
NET OPERATING INCOME 4,883 2,796 424 1,781 802 (365) – 10,321
Net cost of net debt – – – – – – – (538)
Non-controlling interests – – – – – – – (138)
NET INCOME – TotalEnergies SHARE – – – – – – – 9,645
1st half 2023 (adjustments)(a) Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
External sales – – – – – – – –
Intersegment sales – – – – – – – –
Excise taxes – – – – – – – –
REVENUES FROM SALES – – – – – – – –
Operating expenses (33) (700) 67 (640) (177) (57) – (1,540)
Depreciation, depletion and impairment (147) – – (36) – – – (183)
of tangible assets and mineral interests (180) (700) 67 (676) (177) (57) – (1,723)
OPERATING INCOME(b) (179) 12 (457) (96) 217 2 – (501)
Tax on net operating income 240 82 (6) (69) 33 15 – 295
NET OPERATING INCOME(b) (119) (606) (396) (841) 73 (40) – (1,929)
Net cost of net debt – – – – – – – 80
Non-controlling interests – – – – – – – (3)
NET INCOME – TotalEnergies SHARE – – – – – – – (1,852)
(a)Adjustments include special items, inventory valuation effect and the
effect of changes in fair value.
(b)Of which inventory valuation effect
–On operating income – – – (607) (147) –
–On net operating income – – – (659) (109) –
1st half 2023 (adjusted) Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
External sales 3,388 6,892 14,804 49,704 44,071 15 – 118,874
Intersegment sales 20,836 8,777 2,355 17,691 321 121 (50,101) –
Excise taxes – – – (415) (8,692) – – (9,107)
REVENUES FROM SALES 24,224 15,669 17,159 66,980 35,700 136 (50,101) 109,767
Operating expenses (9,891) (12,542) (16,232) (63,294) (34,282) (380) 50,101 (86,520)
Depreciation, depletion and impairment of tangible assets and mineral (4,036) (565) (98) (772) (465) (49) – (5,985)
interests
ADJUSTED OPERATING INCOME 10,297 2,562 829 2,914 953 (293) – 17,262
Net income (loss) from equity affiliates and other items 232 1,264 137 151 90 (40) – 1,834
Tax on net operating income (5,527) (424) (146) (443) (314) 8 – (6,846)
ADJUSTED NET OPERATING INCOME 5,002 3,402 820 2,622 729 (325) – 12,250
Net cost of net debt – – – – – – – (618)
Non-controlling interests – – – – – – – (135)
ADJUSTED NET INCOME – TotalEnergies SHARE – – – – – – – 11,497
1st half 2023 Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
Total expenditures 6,621 1,821 2,041 714 415 65 – 11,677
Total divestments 57 94 298 60 329 4 – 842
Cash flow from operating activities 8,583 4,868 999 1,072 (8) (481) – 15,033
1st half 2022 Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
External sales 4,672 9,408 13,167 66,069 50,056 8 – 143,380
Intersegment sales 27,623 7,438 1,009 22,062 983 133 (59,248) –
Excise taxes – – – (378) (8,607) – – (8,985)
REVENUES FROM SALES 32,295 16,846 14,176 87,753 42,432 141 (59,248) 134,395
Operating expenses (11,468) (13,030) (14,686) (80,653) (40,294) (850) 59,248 (101,733)
Depreciation, depletion and impairment of tangible assets and mineral (4,773) (554) (94) (769) (514) (77) – (6,781)
interests
OPERATING INCOME 16,054 3,262 (604) 6,331 1,624 (786) – 25,881
Net income (loss) from equity affiliates and other items (3,426) (1,869) 192 505 56 179 – (4,363)
Tax on net operating income (7,739) (553) (1) (1,391) (521) 97 – (10,108)
NET OPERATING INCOME 4,889 840 (413) 5,445 1,159 (510) – 11,410
Net cost of net debt – – – – – – – (555)
Non-controlling interests – – – – – – – (219)
NET INCOME – TotalEnergies SHARE – – – – – – – 10,636
1st half 2022 (adjustments)(a) Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
External sales – (18) 15 – – – – (3)
Intersegment sales – – – – – – – –
Excise taxes – – – – – – – –
REVENUES FROM SALES – (18) 15 – – – – (3)
Operating expenses (873) 45 (768) 1,722 641 (433) – 334
Depreciation, depletion and impairment of tangible assets and mineral (539) (14) – – (33) (9) – (595)
interests
OPERATING INCOME(b) (1,412) 13 (753) 1,722 608 (442) – (264)
Net income (loss) from equity affiliates and other items (3,770) (4,508) 11 169 (7) 106 – (7,999)
Tax on net operating income 337 (13) 71 (326) (180) 98 – (13)
NET OPERATING INCOME(b) (4,845) (4,508) (671) 1,565 421 (238) – (8,276)
Net cost of net debt – – – – – – – 193
Non-controlling interests – – – – – – – (54)
NET INCOME – TotalEnergies SHARE – – – – – – – (8,137)
(a)Adjustments include special items, inventory valuation effect and the
effect of changes in fair value.
(b)Of which inventory valuation effect
–On operating income – – – 1,722 684 –
–On net operating income – – – 1,597 503 –
1st half 2022 (adjusted)(a) Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
External sales 4,672 9,426 13,152 66,069 50,056 8 – 143,383
Intersegment sales 27,623 7,438 1,009 22,062 983 133 (59,248) –
Excise taxes – – – (378) (8,607) – – (8,985)
REVENUES FROM SALES 32,295 16,864 14,161 87,753 42,432 141 (59,248) 134,398
Operating expenses (10,595) (13,075) (13,918) (82,375) (40,935) (417) 59,248 (102,067)
Depreciation, depletion and impairment of tangible assets and mineral (4,234) (540) (94) (769) (481) (68) – (6,186)
interests
ADJUSTED OPERATING INCOME 17,466 3,249 149 4,609 1,016 (344) – 26,145
Net income (loss) from equity affiliates and other items 344 2,639 181 336 63 73 – 3,636
Tax on net operating income (8,076) (540) (72) (1,065) (341) (1) – (10,095)
ADJUSTED NET OPERATING INCOME 9,734 5,348 258 3,880 738 (272) – 19,686
Net cost of net debt – – – – – – – (748)
Non-controlling interests – – – – – – – (165)
ADJUSTED NET INCOME – TotalEnergies SHARE – – – – – – – 18,773
1st half 2022 Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
Total expenditures 6,099 575 1,736 561 428 34 – 9,433
Total divestments 346 1,237 244 83 151 12 – 2,073
Cash flow from operating activities 14,536 6,021 (1,736) 4,633 1,478 (1,031) – 23,901
2nd quarter 2023 Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
External sales 1,434 2,020 6,249 24,849 21,712 7 – 56,271
Intersegment sales 10,108 2,778 670 8,630 201 64 (22,451) –
Excise taxes – – – (231) (4,506) – – (4,737)
REVENUES FROM SALES 11,542 4,798 6,919 33,248 17,407 71 (22,451) 51,534
Operating expenses (5,162) (3,797) (6,334) (32,042) (16,672) (276) 22,451 (41,832)
Depreciation, depletion and impairment of tangible assets and mineral (2,117) (277) (51) (394) (241) (26) – (3,106)
interests
OPERATING INCOME 4,263 724 534 812 494 (231) – 6,596
Net income (loss) from equity affiliates and other items (15) 472 (250) 3 64 (17) – 257
Tax on net operating income (1,889) (137) (41) (187) (162) (40) – (2,456)
NET OPERATING INCOME 2,359 1,059 243 628 396 (288) – 4,397
Net cost of net debt – – – – – – – (245)
Non-controlling interests – – – – – – – (64)
NET INCOME – TotalEnergies SHARE – – – – – – – 4,088
2nd quarter 2023 (adjustments)(a) Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
External sales – 76 – – – – – 76
Intersegment sales – – – – – – – –
Excise taxes – – – – – – – –
REVENUES FROM SALES – 76 – – – – – 76
Operating expenses (25) (400) 137 (216) (76) (57) – (637)
Depreciation, depletion and impairment of tangible assets and mineral (147) – – – – – – (147)
interests
OPERATING INCOME(b) (172) (324) 137 (216) (76) (57) – (708)
Net income (loss) from equity affiliates and other items (106) 16 (346) (59) – 2 – (493)
Tax on net operating income 288 37 2 (101) 23 15 – 264
NET OPERATING INCOME(b) 10 (271) (207) (376) (53) (40) – (937)
Net cost of net debt – – – – – – – 72
Non-controlling interests – – – – – – – (3)
NET INCOME – TotalEnergies SHARE – – – – – – – (868)
(a)Adjustments include special items, inventory valuation effect and the
effect of changes in fair value.
(b)Of which inventory valuation effect
–On operating income – – – (192) (60) –
–On net operating income – – – (332) (45) –
2nd quarter 2023 (adjusted) Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
External sales 1,434 1,944 6,249 24,849 21,712 7 – 56,195
Intersegment sales 10,108 2,778 670 8,630 201 64 (22,451) –
Excise taxes – – – (231) (4,506) – – (4,737)
REVENUES FROM SALES 11,542 4,722 6,919 33,248 17,407 71 (22,451) 51,458
Operating expenses (5,137) (3,397) (6,471) (31,826) (16,596) (219) 22,451 (41,195)
Depreciation, depletion and impairment of tangible assets and mineral (1,970) (277) (51) (394) (241) (26) – (2,959)
interests
ADJUSTED OPERATING INCOME 4,435 1,048 397 1,028 570 (174) – 7,304
Net income (loss) from equity affiliates and other items 91 456 96 62 64 (19) – 750
Tax on net operating income (2,177) (174) (43) (86) (185) (55) – (2,720)
ADJUSTED NET OPERATING INCOME 2,349 1,330 450 1,004 449 (248) – 5,334
Net cost of net debt – – – – – – – (317)
Non-controlling interests – – – – – – – (61)
ADJUSTED NET INCOME – TotalEnergies SHARE – – – – – – – 4,956
2nd quarter 2023 Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
Total expenditures 2,569 626 807 489 256 30 – 4,777
Total divestments 26 45 149 52 28 4 – 304
Cash flow from operating activities 4,047 1,332 2,284 1,923 665 (351) – 9,900
2nd quarter 2022 Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
External sales 2,521 3,901 6,380 35,061 26,907 4 – 74,774
Intersegment sales 13,805 3,940 488 12,785 716 70 (31,804) –
Excise taxes – – – (186) (4,143) – – (4,329)
REVENUES FROM SALES 16,326 7,841 6,868 47,660 23,480 74 (31,804) 70,445
Operating expenses (5,760) (6,144) (7,392) (43,242) (22,310) (557) 31,804 (53,601)
Depreciation, depletion and impairment of tangible assets and mineral (2,112) (276) (51) (389) (241) (33) – (3,102)
interests
OPERATING INCOME 8,454 1,421 (575) 4,029 929 (516) – 13,742
Net income (loss) from equity affiliates and other items (3,668) 626 197 349 98 71 – (2,327)
Tax on net operating income (3,876) (292) 32 (866) (296) (8) – (5,306)
NET OPERATING INCOME 910 1,755 (346) 3,512 731 (453) – 6,109
Net cost of net debt – – – – – – – (305)
Non-controlling interests – – – – – – – (112)
NET INCOME – TotalEnergies SHARE – – – – – – – 5,692
2nd quarter 2022 (adjustments)(a) (M$) Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
company
External sales – (15) – – – – – (15)
Intersegment sales – – – – – – – –
Excise taxes – – – – – – – –
REVENUES FROM SALES – (15) – – – – – (15)
Operating expenses (82) 152 (758) 775 373 (301) – 159
Depreciation, depletion and impairment of tangible assets and mineral (46) (14) – – (4) – – (64)
interests
OPERATING INCOME (128) 123 (758) 775 369 (301) – 80
Net income (loss) from equity affiliates and other items (3,756) (560) 2 52 (4) – – (4,266)
Tax on net operating income 75 (23) 70 (75) (100) 78 – 25
NET OPERATING INCOME (3,809) (460) (686) 752 265 (223) – (4,161)
Net cost of net debt – – – – – – – 80
Non-controlling interests – – – – – – – (23)
NET INCOME – TotalEnergies SHARE – – – – – – – (4,104)
(a)Adjustments include special items, inventory valuation effect and the
effect of changes in fair value.
(b)Of which inventory valuation effect
–On operating income – – – 775 376 –
–On net operating income – – – 752 275 –
2nd quarter 2022 (adjusted) Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
External sales 2,521 3,916 6,380 35,061 26,907 4 – 74,789
Intersegment sales 13,805 3,940 488 12,785 716 70 (31,804) –
Excise taxes – – – (186) (4,143) – – (4,329)
REVENUES FROM SALES 16,326 7,856 6,868 47,660 23,480 74 (31,804) 70,460
Operating expenses (5,678) (6,296) (6,634) (44,017) (22,683) (256) 31,804 (53,760)
Depreciation, depletion and impairment of tangible assets and mineral (2,066) (262) (51) (389) (237) (33) – (3,038)
interests
ADJUSTED OPERATING INCOME 8,582 1,298 183 3,254 560 (215) – 13,662
Net income (loss) from equity affiliates and other items 88 1,186 195 297 102 71 – 1,939
Tax on net operating income (3,951) (269) (38) (791) (196) (86) – (5,331)
ADJUSTED NET OPERATING INCOME 4,719 2,215 340 2,760 466 (230) – 10,270
Net cost of net debt – – – – – – – (385)
Non-controlling interests – – – – – – – (89)
ADJUSTED NET INCOME – TotalEnergies SHARE – – – – – – – 9,796
2nd quarter 2022 Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Inter Total
(M$)
company
Total expenditures 4,128 285 587 333 288 25 – 5,646
Total divestments 63 393 73 56 72 7 – 664
Cash flow from operating activities 8,768 3,802 168 3,526 580 (560) – 16,284
3.2) RECONCILIATION OF THE INFORMATION BY BUSINESS SEGMENT WITH CONSOLIDATED
FINANCIAL STATEMENTS
1st half 2023 (M$) Adjusted Adjustments(a) Consolidated statement of income
Sales 118,874 – 118,874
Excise taxes (9,107) – (9,107)
Revenues from sales 109,767 – 109,767
Purchases net of inventory variation (70,858) (1,357) (72,215)
Other operating expenses (15,506) (185) (15,691)
Exploration costs (156) 2 (154)
Depreciation, depletion and impairment of tangible assets and mineral (5,985) (183) (6,168)
interests
Other income 193 264 457
Other expense (393) (273) (666)
Financial interest on debt (1,434) – (1,434)
Financial income and expense from cash & cash equivalents 775 128 903
Cost of net debt (659) 128 (531)
Other financial income 649 22 671
Other financial expense (356) – (356)
Net income (loss) from equity affiliates 1,741 (514) 1,227
Income taxes (6,805) 247 (6,558)
CONSOLIDATED NET INCOME 11,632 (1,849) 9,783
TotalEnergies share 11,497 (1,852) 9,645
Non-controlling interests 135 3 138
(a) Adjustments include special items, inventory valuation effect and the
effect of changes in fair value.
1st half 2022 (M$) Adjusted Adjustments(a) Consolidated statement of income
Sales 143,383 (3) 143,380
Excise taxes (8,985) – (8,985)
Revenues from sales 134,398 (3) 134,395
Purchases net of inventory variation (86,785) 1,694 (85,091)
Other operating expenses (15,029) (635) (15,664)
Exploration costs (253) (725) (978)
Depreciation, depletion and impairment of tangible assets and mineral (6,186) (595) (6,781)
interests
Other income 550 22 572
Other expense (798) (2,797) (3,595)
Financial interest on debt (1,034) – (1,034)
Financial income and expense from cash & cash equivalents 189 270 459
Cost of net debt (845) 270 (575)
Other financial income 350 84 434
Other financial expense (271) – (271)
Net income (loss) from equity affiliates 3,805 (5,308) (1,503)
Income taxes (9,998) (90) (10,088)
CONSOLIDATED NET INCOME 18,938 (8,083) 10,855
TotalEnergies share 18,773 (8,137) 10,636
Non-controlling interests 165 54 219
(a) Adjustments include special items, inventory valuation effect and the
effect of changes in fair value.
2nd quarter 2023 (M$) Adjusted Adjustments(a) Consolidated statement of income
Sales 56,195 76 56,271
Excise taxes (4,737) – (4,737)
Revenues from sales 51,458 76 51,534
Purchases net of inventory variation (33,379) (485) (33,864)
Other operating expenses (7,754) (152) (7,906)
Exploration costs (62) – (62)
Depreciation, depletion and impairment of tangible assets and mineral (2,959) (147) (3,106)
interests
Other income 116 – 116
Other expense (256) (110) (366)
Financial interest on debt (724) – (724)
Financial income and expense from cash & cash equivalents 402 108 510
Cost of net debt (322) 108 (214)
Other financial income 401 12 413
Other financial expense (173) – (173)
Net income (loss) from equity affiliates 662 (395) 267
Income taxes (2,715) 228 (2,487)
CONSOLIDATED NET INCOME 5,017 (865) 4,152
TotalEnergies share 4,956 (868) 4,088
Non-controlling interests 61 3 64
(a) Adjustments include special items, inventory valuation effect and the
effect of changes in fair value.
2nd quarter 2022 (M$) Adjusted Adjustments(a) Consolidated statement of income
Sales 74,789 (15) 74,774
Excise taxes (4,329) – (4,329)
Revenues from sales 70,460 (15) 70,445
Purchases net of inventory variation (46,023) 580 (45,443)
Other operating expenses (7,620) (421) (8,041)
Exploration costs (117) – (117)
Depreciation, depletion and impairment of tangible assets and mineral (3,038) (64) (3,102)
interests
Other income 429 – 429
Other expense (529) (776) (1,305)
Financial interest on debt (572) – (572)
Financial income and expense from cash & cash equivalents 130 115 245
Cost of net debt (442) 115 (327)
Other financial income 231 – 231
Other financial expense (136) – (136)
Net income (loss) from equity affiliates 1,944 (3,490) (1,546)
Income taxes (5,274) (10) (5,284)
CONSOLIDATED NET INCOME 9,885 (4,081) 5,804
TotalEnergies share 9,796 (4,104) 5,692
Non-controlling interests 89 23 112
(a) Adjustments include special items, inventory valuation effect and the
effect of changes in fair value.
3.3) ADJUSTMENT ITEMS
The detail of the adjustment items is presented in the table below.
ADJUSTMENTS TO OPERATING INCOME
(M$) Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Total
2nd quarter 2023 Inventory valuation effect – – – (192) (60) – (252)
Effect of changes in fair value – (322) 165 – – – (157)
Restructuring charges – – – – – – –
Asset impairment and provisions charges (155) – – – – – (155)
Gains (losses) on disposals of assets – – – – – – –
Other items (17) (2) (28) (24) (16) (57) (144)
TOTAL (172) (324) 137 (216) (76) (57) (708)
2nd quarter 2022 Inventory valuation effect – – – 775 376 – 1,151
Effect of changes in fair value – 141 (738) – – – (597)
Restructuring charges – – (17) – – – (17)
Asset impairment and provisions charges (46) (18) – – 4 – (60)
Other items (82) – (3) – (11) (301) (397)
TOTAL (128) 123 (758) 775 369 (301) 80
1st half 2023 Inventory valuation effect – – – (607) (147) – (754)
Effect of changes in fair value – (698) 95 – – – (603)
Restructuring charges – – – – – – –
Asset impairment and provisions charges (155) – – (45) – – (200)
Gains (losses) on disposals of assets – – – – (14) – (14)
Other items (25) (2) (28) (24) (16) (57) (152)
TOTAL (180) (700) 67 (676) (177) (57) (1,723)
1st half 2022 Inventory valuation effect – – – 1,722 684 – 2,406
Effect of changes in fair value – 31 (716) – – – (685)
Restructuring charges – – (22) – – – (22)
Asset impairment and provisions charges (1,330) (18) – – (65) (9) (1,422)
Other items (82) – (15) – (11) (433) (541)
TOTAL (1,412) 13 (753) 1,722 608 (442) (264)
ADJUSTMENTS TO NET INCOME, TotalEnergies SHARE
(M$) Exploration & Production Integrated LNG Integrated Power Refining & Chemicals Marketing & Services Corporate Total
2nd quarter 2023 Inventory valuation effect – – – (333) (47) – (380)
Effect of changes in fair value – (286) 175 – – – (111)
Restructuring charges – – (5) – – – (5)
Asset impairment and provisions charges (123) – (346) – – – (469)
Gains (losses) on disposals of assets – – – – – – –
Other items 188 15 (31) (44) (8) (23) 97
TOTAL 65 (271) (207) (377) (55) (23) (868)
2nd quarter 2022 Inventory valuation effect – – – 738 255 – 993
Effect of changes in fair value – 118 (669) – – – (551)
Restructuring charges – – (8) – – – (8)
Asset impairment and provisions charges (3,493) (226) – – – – (3,719)
Gains (losses) on disposals of assets – – – – – – –
Other items (286) (352) – – (8) (173) (819)
TOTAL (3,779) (460) (677) 738 247 (173) (4,104)
1st half 2023 Inventory valuation effect – – – (658) (113) – (771)
Effect of changes in fair value – (617) 72 – – – (545)
Restructuring charges – – (5) – – – (5)
Asset impairment and provisions charges (123) – (346) (60) – – (529)
Gains (losses) on disposals of assets – – – – 203 – 203
Other items 103 11 (117) (122) (21) (59) (205)
TOTAL (20) (606) (396) (840) 69 (59) (1,852)
1st half 2022 Inventory valuation effect – – – 1,573 460 – 2,033
Effect of changes in fair value – 18 (649) – – – (631)
Restructuring charges – – (11) – – – (11)
Asset impairment and provisions charges (4,525) (4,174) – – (72) (9) (8,780)
Gains (losses) on disposals of assets – – – – – – –
Other items (272) (352) – (32) (8) (84) (748)
TOTAL (4,797) (4,508) (660) 1,541 380 (93) (8,137)
4) Shareholders’ equity
TREASURY SHARES (TotalEnergies SHARES HELD DIRECTLY BY TotalEnergies SE)
December 31, 2022 June 30, 2023
Number of treasury shares 137,187,667 68,505,002
Percentage of share capital 5.24% 2.74%
of which shares acquired with the intention to cancel them 128,869,261 65,043,639
of which shares allocated to TotalEnergies share performance plans for Company 8,231,365 3,362,143
employees
of which shares intended to be allocated to new share performance or purchase 87,041 99,220
options plans
DIVIDEND
The Shareholder’s Meeting of May 26, 2023 approved the distribution of an
ordinary dividend at €2.81 per share and confirmed the €1 per share
exceptional dividend for the fiscal year 2022, i.e. a total amount of €3.81
per share. The final dividend (ordinary and exceptional) for fiscal year 2022
was paid according to the following timetable:
Dividend 2022 First interim Special interim Second interim Third interim Final
Amount €0.69 €1.00 €0.69 €0.69 €0.74
Set date April 27, October 26, July 27, October 26, May 26,
2022
2022
2022
2022
2023
Ex-dividend date September 21, 2022 December 6, 2022 January 2, March 22, June 21,
2023
2023
2023
Payment date October 3, December 16, 2022 January 12, April 3, July 3,
2022
2023
2023
2023
The Board of Directors, during its April 26, 2023 meeting, set the first
interim dividend for the fiscal year 2023 at €0.74 per share. The
ex-dividend date of this interim dividend will be September 20, 2023 and it
will be paid in cash on October 2, 2023.
Furthermore, the Board of Directors, during its July 26, 2023 meeting, set the
second interim dividend for the fiscal year 2023 at €0.74 per share, i.e an
amount equal to the aforementioned first interim dividend. The ex-dividend
date of this interim dividend will be January 2, 2024 and it will be paid in
cash on January 12, 2024.
Dividend 2023 First interim Second interim
Amount €0.74 €0.74
Set date April 26, 2023 July 26, 2023
Ex-dividend date September 20, 2023 January 2, 2024
Payment date October 2, 2023 January 12, 2024
EARNINGS PER SHARE IN EURO
Earnings per share in Euro, calculated from the earnings per share in U.S.
dollars converted at the average Euro/USD exchange rate for the period,
amounted to €1.51 per share for the 2nd quarter 2023 (€2.08 per share for
the 1st quarter 2023 and €2.03 per share for the 2nd quarter 2022). Diluted
earnings per share calculated using the same method amounted to €1.51 per
share for the 2nd quarter 2023 (€2.06 per share for the 1st quarter 2023 and
€2.03 per share for the 2nd quarter 2022).
Earnings per share are calculated after remuneration of perpetual subordinated
notes.
PERPETUAL SUBORDINATED NOTES
TotalEnergies SE has not issued any perpetual subordinated notes during the
first six months of 2023.
TotalEnergies SE fully reimbursed the nominal amount of €1,000 million of
its perpetual subordinated notes 2.708% issued in October 2016, on their first
call date, on May 5th, 2023.
OTHER COMPREHENSIVE INCOME
Detail of other comprehensive income is presented in the table below:
(M$) 1st half 2023 1st half 2022
Actuarial gains and losses 138 204
Change in fair value of investments in equity instruments 3 (17)
Tax effect (51) (42)
Currency translation adjustment generated by the parent company 1,409 (7,137)
SUB-TOTAL ITEMS NOT POTENTIALLY RECLASSIFIABLE TO PROFIT AND LOSS 1,499 (6,992)
Currency translation adjustment (1,299) 3,535
Unrealized gain/(loss) of the period (1,381) 3,532
Less gain/(loss) included in net income (82) (3)
Cash flow hedge 1,891 2,959
Unrealized gain/(loss) of the period 1,699 2,901
Less gain/(loss) included in net income (192) (58)
Variation of foreign currency basis spread 8 70
Unrealized gain/(loss) of the period (8) 49
Less gain/(loss) included in net income (16) (21)
Share of other comprehensive income of equity affiliates, net amount (95) 2,464
Unrealized gain/(loss) of the period (84) 2,427
Less gain/(loss) included in net income 11 (37)
Other (1) (1)
Tax effect (472) (1,059)
SUB-TOTAL ITEMS POTENTIALLY RECLASSIFIABLE TO PROFIT AND LOSS 32 7,968
TOTAL OTHER COMPREHENSIVE INCOME, NET AMOUNT 1,531 976
Tax effects relating to each component of other comprehensive income are as
follows:
(M$) 1st half 2023 1st half 2022
Pre-tax amount Tax effect Net amount Pre-tax amount Tax effect Net amount
Actuarial gains and losses 138 (50) 88 204 (53) 151
Change in fair value of investments in equity instruments 3 (1) 2 (17) 11 (6)
Currency translation adjustment generated by the parent company 1,409 – 1,409 (7,137) – (7,137)
SUB-TOTAL ITEMS NOT POTENTIALLY RECLASSIFIABLE TO PROFIT AND LOSS 1,550 (51) 1,499 (6,950) (42) (6,992)
Currency translation adjustment (1,299) – (1,299) 3,535 – 3,535
Cash flow hedge 1,891 (470) 1,421 2,959 (1,041) 1,918
Variation of foreign currency basis spread 8 (2) 6 70 (18) 52
Share of other comprehensive income of equity affiliates, net amount (95) – (95) 2,464 – 2,464
Other (1) – (1) (1) – (1)
SUB-TOTAL ITEMS POTENTIALLY RECLASSIFIABLE TO PROFIT AND LOSS 504 (472) 32 9,027 (1,059) 7,968
TOTAL OTHER COMPREHENSIVE INCOME 2,054 (523) 1,531 2,077 (1,101) 976
5) Financial debt
The Company has not issued any new senior bond during the first six months of
2023.
The Company reimbursed two senior bonds during the first six months of 2023:
* Bond 2.700% issued by TotalEnergies Capital International in 2012 and maturing
in January 2023 ($1,000 million);
* Bond 2.125% issued by TotalEnergies Capital International in 2012 (€500
million) and tapped in 2013 (€250 million) forming a single series (€750
million) and maturing in March 2023.
In addition, the $8 billion credit line, put in place in March 2022, has not
been extended and therefore ended in March 2023.
6) Related parties
The related parties are mainly equity affiliates and non-consolidated
investments.
There were no major changes concerning transactions with related parties
during the first six months of 2023.
7) Other risks and contingent liabilities
TotalEnergies is not currently aware of any exceptional event, dispute, risks
or contingent liabilities that could have a material impact on the assets and
liabilities, results, financial position or operations of the TotalEnergies,
other than those mentioned below.
YEMEN
In Yemen, the deterioration of security conditions in the vicinity of the
Balhaf site caused the company Yemen LNG, in which TotalEnergies holds a stake
of 39.62%, to stop its commercial production and export of LNG and to declare
force majeure to its various stakeholders in 2015. The plant has been put in
preservation mode.
MOZAMBIQUE
Considering the evolution of the security situation in the north of the Cabo
Delgado province in Mozambique, TotalEnergies has confirmed on April 26, 2021,
the withdrawal of all Mozambique LNG project personnel from the Afungi site.
This situation led TotalEnergies, as operator of Mozambique LNG project, to
declare force majeure.
DISPUTES RELATING TO CLIMATE
In France, the Corporation was summoned in January 2020 before Nanterre’s
Court of Justice by certain associations and local communities in order to
oblige the Company to complete its Vigilance Plan, by identifying in detail
risks relating to a global warming above 1.5 °C, as well as indicating the
expected amount of future greenhouse gas emissions related to the Company’s
activities and its product utilization by third parties and in order to obtain
an injunction ordering the Corporation to immediately cease exploration and
exploitation of new oil or gas fields, to reduce its oil and gas production by
2030 and 2050, and to reduce its net direct and indirect CO2 emissions by 40%
in 2040 compared with 2019. A new procedural law led to the transfer of these
proceedings to the Paris judicial court in February 2022. This action was
declared inadmissible on July 6, 2023, by the Paris judicial court.
TotalEnergies considers that it has fulfilled its obligations under the French
law on the vigilance duty.
Several associations in France brought a civil action against TotalEnergies
and TotalEnergies Gaz et Electricité France before the Paris judicial court,
with the aim of proving that since May 2021 – after the change of name of
TotalEnergies – the Company’s corporate communication and its publicity
campaign contain environmental claims that are either false or misleading for
the consumer. TotalEnergies considers that these accusations are unfounded.
In France, on July 4, 2023, nine shareholders (two companies and 7 individuals
holding a small number of the Corporation's shares) brought an action against
the Corporation before the Nanterre Commercial Court, seeking the annulment of
resolution no. 3 passed by the Corporation's Annual Shareholders’ Meeting on
May 26, 2023, recording the results for fiscal year 2022 and setting the
amount of the dividend to be distributed for fiscal year 2022. The plaintiffs
essentially allege an insufficient provision for impairment of the Company's
assets in the financial statements for the fiscal year 2022, due to the
insufficient consideration of future risks and costs related to the
consequences of greenhouse gas emissions emitted by its customers (scope 3)
and carbon cost assumptions presented as too low. The Corporation considers
this action to be unfounded.
In the United States, US subsidiaries of TotalEnergies (TotalEnergies EP USA,
Inc. and TotalEnergies Marketing USA, Inc.) were summoned, amongst many
companies and professional associations, in a number of "climate litigation"
cases, seeking to establish legal liability for past greenhouse gas emissions,
and to compensate plaintiff public authorities, in particular for adaptation
costs. The Corporation was summoned, along with one of its subsidiaries, in
one of these litigations. The Corporation and its subsidiaries consider that
the courts lack jurisdiction, and have many arguments to put forward, and
consider that the past and present behavior of the Corporation and its
subsidiaries does not constitute a fault susceptible to give rise to
liability.
8) Subsequent events
On June 30, 2023, TotalEnergies held an interest of 33.86% in Total Eren
Holding and an interest of 5.73% in Total Eren SA. On June 29, 2023, the
Company exercised the option it had to acquire all the shares of these two
companies, exercisable over a period of 3 months between April 1, 2023 and
June 30, 2023.
The acquisition of the shares was finalized on July 24, 2023 for a net
investment of around 1.5 billion euros.
TotalEnergies SE Financial Report first half 2023
Registered office:
Published in July 2023
2, place Jean Millier – La Défense 6
Produced by Acolad France
92400 Courbevoie – France
Reception:
+33 (0)1 47 44 45 46
Investor Relations:
+33 (0)1 47 44 46 46
Individual Shareholders Relations:
0800 039 039 from France
+33 (0) 1 47 44 24 02 from other countries
Share capital:
€6,245,660,447.50
542 051 180 RCS Nanterre
(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 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.
(3 )Certain transactions referred to in the highlights are subject to approval
by authorities or to conditions as per the agreements.
(4 )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 19.
(5 )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.
(6 )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).
(7 )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
(8) Organic investments = net investments excluding acquisitions, asset sales
and other operations with non-controlling interests.
(9 )Net acquisitions = acquisitions – assets sales – other transactions
with non-controlling interests (see page 20).
(10 )Net investments = organic investments + net acquisitions (see page 20).
(11 )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 Integrated LNG and
Integrated Power contracts and including capital gain from renewable projects
sale.
The inventory valuation effect is explained on page 23. The reconciliation
table for different cash flow figures is on page 20.
(12 )DACF = debt adjusted cash flow, is defined as operating cash flow before
working capital changes and financial charges.
(13 )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.
(14 )Scope 1+2 GHG emissions of operated 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 2022
Universal Registration Document) and indirect emissions attributable to
brought-in energy (electricity, heat, steam), excluding purchased industrial
gases (H2).
(15 )TotalEnergies reports Scope 3 GHG emissions, category 11, which
correspond to indirect GHG emissions related to the use by customers of energy
products, i.e., combustion of the products to obtain energy. The Company
follows the oil & gas industry reporting guidelines published by IPIECA,
which comply with the GHG Protocol methodologies. In order to avoid double
counting, this methodology accounts for the largest volume in the oil,
biofuels and gas value chains, i.e., the higher of the two production volumes
or sales to end customers. The highest point for each value chain for 2023
will be evaluated considering realizations over the full year, TotalEnergies
providing half-year estimate.
(16 )Adjustment items shown on page 23.
(17) Details shown on page 19 and in the appendix to the financial statements.
(18 )Net cash flow = cash flow - net investments (including other transactions
with non-controlling interest).
(19 )Return On Average Capital Employed (ROACE) is the ratio of Adjusted net
operating income to Average capital employed between the beginning and the end
of the period.
(20) Return On Average Capital Employed (ROACE) is the ratio of Adjusted net
operating income to Average capital employed between the beginning and the end
of the period.
(21) Commercial Operation Date
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