Exhibit 99.2
RECENT DEVELOPMENTS
“TOTAL” or the “Group” as used in this exhibit refer to TOTAL SE collectively with its direct and indirect consolidated subsidiaries located in or outside of France.
Total Gabon divests its portfolio of mature non-operated assets
On July 30, 2020, TOTAL announced that its 58% owned affiliate Total Gabon signed an agreement with Perenco to divest its interests in seven mature non-operated offshore fields, along with its interests and operatorship in the Cap Lopez oil terminal. The transaction remains subject to approval by the Gabonese authorities.
The price to be paid by Perenco is expected to be between $290 million and $350 million, depending on future Brent prices. The production divested by Total Gabon amounted to approximately 8,000 SEC barrels of oil per day in 2019.
| | | | | | | | |
List of assets included in the transaction |
| Area | | Field | | Total Gabon’s Interests | | Total Gabon’s
interest after the
transaction | | Operator |
Grondin | | Grondin | | 65.275% | | 0% | | Perenco Oil & Gas Gabon |
| | Gonelle | | 65.275% | | 0% |
| | Barbier | | 65.275% | | 0% |
| | Mandaros | | 65.275% | | 0% |
Torpille | | Girelle | | 65.275% | | 0% |
| | Pageau | | 65.275% | | 0% |
| | Hylia | | 37.5% | | 0% |
Cap Lopez oil terminal | | 100% | | 0% | | Total Gabon |
TOTAL announces third significant discovery in Block 58 offshore Suriname
On July 30, 2020, TOTAL announced that it and Apache Corporation have made a significant third discovery with the Kwaskwasi-1 well, in Block 58 off the coast of Suriname. This follows previous discoveries at Maka Central in January and Sapakara West in April 2020.
The Kwaskwasi-1 exploration well was drilled by Apache, as operator with 50% working interest, with TOTAL as the joint venture partner with 50% working interest. The next and fourth exploration well is expected to be drilled should be back-to-back on the Keskesi prospect. TOTAL is expected to take over as operator of the Block after the drilling of the fourth well.
In early 2021, an appraisal campaign is expected to be carried out to better characterize the 2020 discoveries, along with an additional exploration campaign.
TOTAL maintains the second 2020 interim dividend at €0.66/share
The Board of Directors met on July 29, 2020, and declared the distribution of the second 2020 interim dividend at €0.66/share, stable compared to the first 2020 interim dividend. This interim dividend will be paid in cash exclusively, according to the following timetable:
| | | | |
| | | Shareholders | | ADS holders |
Ex-dividend date | | January 4, 2021 | | December 30, 2020 |
Payment date | | January 11, 2021 | | January 25, 2021 |
Short term price revision and Climate Ambition: TOTAL announces exceptional $8 billion asset impairments including $7 billion in Canadian oil sands
For the calculation of impairment tests of its assets, TOTAL set in 2019 a price scenario with a 2050 Brent price of 50$/b, in line with the “well below 2 °C” scenario of the International Energy Agency (IEA) This scenario is described in the 2019 Annual Report on Form 20-F (note 3 of Chapter 8 of Exhibit 15.1).
Given the drop in the oil price in 2020, TOTAL decided to revise the price assumptions over the next years and selected the following profile for the Brent price: 35$/b in 2020, 40$/b in 2021, 50$/b in 2022 and 60$/b in 2023; gas prices have been adjusted accordingly.
For the longer term, TOTAL maintains its analysis that the weakness of investments in the hydrocarbon sector since 2015 accentuated by the health and economic crisis of 2020 by is expected to result by 2025 in insufficient worldwide production capacities and a rebound in prices. Beyond 2030, given technological developments, particularly in the transportation sector, TOTAL anticipates oil demand will have reached its peak and Brent prices should tend toward the long-term price of 50$/b, in line with the IEA SDS scenario.
The average Brent price over the period 2020-2050 thus stands at 56.8$2020/b.
As a result of this short-term price revision, TOTAL recognized in the second quarter 2020 an exceptional asset impairment charge of $2.6 billion, mainly on Canadian oil sands assets for $1.5 billion and LNG assets in Australia for $0.8 billion, both being giant projects with high construction costs. These limited impacts (less than 2% of TOTAL’s overall assets) reflect the strength of the Group’s balance sheet.
In addition, in line with its new Climate Ambition announced on May 5, 2020, which aims at carbon neutrality, TOTAL has reviewed its oil assets that can be qualified as “stranded”, meaning with reserves beyond 20 years and high production costs, whose overall reserves may therefore not be produced by 2050. The only projects identified in this category are the Canadian oil sands projects Fort Hills and Surmont.
For impairment calculations, TOTAL’s Board of Directors has decided to take into account only proven reserves on these 2 assets – unlike the general practice which considers both proven and probable reserves. This leads to an additional exceptional asset impairment of $5.5 billion. Consequently, TOTAL will take into account for its proven and probable reserves in Canada only the proved reserves. The proved and probable reserves life of the Group is thus reduced from 19.0 to 18.5 years. In addition, TOTAL will not approve any new project of capacity increase on these Canadian oil sands assets. Finally, still consistent with the Climate Ambition announced on May 5, 2020, TOTAL decided to withdraw from the Canadian Association of Petroleum Producers considering the misalignment between their public positions and those of the Group.
Overall, the exceptional asset impairments that will therefore be taken into account in the second quarter of 2020 amount to $8.1 billion, including $7 billion on Canadian oil sands assets alone, impacting the gearing ratio of the Group by 1.3%.
Egypt: TOTAL announces gas discovery in shallow waters
On July 28, 2020, TOTAL announced that TOTAL, bp and Eni (as the Operator) have made a gas discovery with the Bashrush well on the North El Hammad license, located eleven kilometers off the Egyptian coast.
The well encountered gas in high quality sandstones of the Abu Madi formation. A production test was conducted with flow rates of up to 32 million standard cubic feet of gas per day (MMscf/d), limited by testing facilities. It is estimated that future deliverability per well could be up to 100 MMscf/d, along with up to 800 barrels of condensate per day. Future plans foresee development through tie-in to nearby existing infrastructures.
TOTAL holds a working interest of 25% in the North El Hammad license, alongside operator ENI (37.5%) and BP (37.5%).
TOTAL and Indian Oil Form Joint Company in India to offer high-quality bitumen derivatives
On July 27, 2020, TOTAL announced the formation with Indian Oil Corporation, India’s largest refiner and marketer of petroleum products, of a 50/50 joint venture (JV) company that will manufacture and market high-quality bitumen derivatives and specialty products for the growing road-building industry in India.
The two companies have already an established business relationship in India, notably in LPG and fuel additives businesses.
The new JV will combine the R&D and marketing strengths of both Indian Oil and Total to manufacture and market innovative bitumen formulations and superior quality products such as polymer-modified bitumen, crumb rubber modified bitumen, bitumen emulsions and other specialty products. The JV plans to set up manufacturing units across the country with cost-effective logistics solutions, keeping innovation, safety and sustainability at the helm of its operations. The JV will also explore possibilities to cater to other South Asian markets.
The demand for aggregate material and manufactured material for the highway construction and rehabilitation sector in India is very high, especially for good-quality bitumen derivatives. The JV intends to offer high-spec products using sustainable technologies.
United Kingdom: TOTAL Sells the Lindsey Refinery
On July 27, 2020, TOTAL announced it signed an agreement to sell the Lindsey refinery and its associated logistic assets, as well as all of the related rights and obligations, to the Prax Group.
Located in Immingham (Lincolnshire) in England, the Lindsey refinery has an annual production capacity of 5.4 million tons. This acquisition will make Prax – an independent British group specialising in the trade and sale of oil products and in possession of a growing network of 150 service stations and numerous supply chain assets – more integrated and competitive in the United Kingdom and will secure its local supply.
The sale is expected to be finalized by the end of the year, once the conditions of the sale have been satisfied.
TOTAL announced the signing of Mozambique LNG project financing
On July 17, 2020, TOTAL announced the signing of a $14.9 billion senior debt financing agreement for Mozambique LNG. This project is the country’s first onshore LNG development. It includes the development of the Golfinho and Atum natural gas fields located in Offshore Area 1 concession and the construction of a two-train liquefaction plant with a total capacity of 13.1 million tons per annum.
Mozambique LNG represents a total expected post-FID investment of approximately $20 billion. The project financing amounts to $14.9 billion and includes direct and covered loans from 8 Export Credit Agencies (ECAs), 19 commercial bank facilities, and a loan from the African Development Bank.
Total E&P Mozambique Area 1 Limitada, a wholly owned subsidiary of TOTAL, operates Mozambique LNG with a 26.5% participating interest alongside ENH Rovuma Área Um, S.A. (15%), Mitsui E&P Mozambique Area1 Limited (20%), ONGC Videsh Rovuma Limited (10%), Beas Rovuma Energy Mozambique Limited (10%), BPRL Ventures Mozambique B.V. (10%), and PTTEP Mozambique Area 1 Limited (8.5%).
Results of the option to receive the final 2019 dividend in shares
The Shareholders’ Meeting of TOTAL, held on May 29, 2020, offered the option for shareholders to receive the final 2019 dividend of 0.68 euro per share in cash or in new shares of the Company.
The share price for the new shares issued in payment of the final 2019 dividend was set on May 29, 2020 at €28.80. This price is equal to 90% of the average opening prices of the shares on Euronext Paris for the twenty trading days preceding the Shareholders’ Meeting, reduced by the net amount of the final dividend, and rounded up to the nearest euro cent.
The period to exercise the option ran from July 1 to July 10, 2020 included. At the end of the option period, 62% of rights were exercised in favour of receiving the payment for the final 2019 dividend in shares. As a result, 38,063,688 new shares were issued, representing 1.46% of the Company’s share capital based on the share capital as of June 30, 2020.
The settlement and delivery of the new shares as well as their admission to trading on Euronext Paris occurred on July 16, 2020. The new shares carry immediate dividend rights and were fully assimilated with existing TOTAL shares.
The cash dividend to be paid to the shareholders who did not elect to receive the final 2019 dividend in shares amounts to €663 million and the date for the payment in cash was set for July 16, 2020.
