On 23 September 2015 Patrick Pouyanné, CEO of Total, will present the company’s strategy and outlook to the financial community. The highlights will be as follows:
Strong discipline on organic Capex
Total is executing its plan to reduce capital expenditures to US$23 - 24 billion in 2015, from the peak of US$28 billion in 2013. The Group will further reduce investment down to US$20 – 21 billion in 2016, before returning to a sustainable level of US$17-19 billion from 2017 onwards.
Opex reduction target increased by 50% from US$2 billion to US$3 billion by 2017
In 2014 Total was the first major to launch a global cost reduction program. In February 2015, as part of a robust response to lower oil prices, the Group reinforced the program to achieve US$1.2 billion savings in 2015. At the end of the 1H15, 66% of the annual target has already been reached. Leveraging the momentum from these results and taking into account future cost deflation, the Group is further increasing its Opex reduction target by 50% from US$2 billion to US$3 billion by 2017.
Strong production growth
Total achieved a production increase of 11% year on year during the 1H15. Production is planned to grow by an average of 6-7% per year between 2014 and 2017 and by an average of 5% per year between 2014 and 2019. Main drivers for production growth include twenty major start-ups, eight of which are in 2015, and increasing production efficiency.
Free cash flow to organically cover dividend by 2017 at US$60/bbl
The Group has demonstrated resilience to lower oil prices in 1H15. Capital discipline, further Opex reduction and growing production will deliver improving cash flows. The Group confirms that organic free cash flow will cover the dividend by 2017 at US$60/bbl.
The Group is committed to its oil and gas integrated business model and plans to allocate its capital employed 75% to Upstream and 25% to Downstream. The Group also plans to invest Capex of around US$500 million per year to build profitable businesses in new energies.
Read the article online at: https://www.hydrocarbonengineering.com/refining/23092015/total-strategy-and-outlook-presentation-1459/