TOTAL S.A. (NYSE:TOT) Q2 2020 Earnings Conference Call - Final Transcript

Jul 30, 2020 • 07:30 am ET


TOTAL S.A. (NYSE:TOT) Q2 2020 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by, and welcome to the Total Second Quarter 2020 Results Conference Call hosted by Patrick Pouyanne and Jean-Pierre Sbraire [Operator Instructions]

I would now like to hand the conference over to Mr. Patrick Pouyanne, Chairman and CEO of Total. Please go ahead, sir.

Patrick Pouyanne

Hello, everybody. Good afternoon or good morning. I hope that all of you are well and staying safe. At Total, we are, almost all of us, back to Paris office, 75%, 80% of the staff, taking, of course, all the appropriate precautions, consistent with our safety culture. But it's good to be again together. We are more innovative when we are collectively at the office, not in front of screens. And in the fields, all the business units are fully operational today. And that's, of course, our big priority, our main priority, keeping people safe, but at the same time, maintaining all our business operational. I'm happy to welcome you this afternoon together with Jean-Pierre for this earnings call. I'm joining you today because we felt important that in with unprecedented times, the Chairman and CEO of the company can directly give you the big picture of where the company stands. And Jean-Pierre will explain to you in detail all the 2Q results, how resilient we had been before we go to the Q&A. So during this quarter, I will not be very original, we faced some very exceptional circumstances, the worst since 2014. The COVID-related lockdown led to unprecedented global demand destruction, and this was made worse by the drop in oil and gas prices. The Brent fell by 60%, dipping below $20 per barrel in April and averaging less than $30 per barrel for the quarter, with high differentials negative differentials between the Brent marker and the real crude prices, around $5 to $6 per barrel, because of low demand.

And the natural gas prices in Europe and Asia dropped by 60% to historic lows. Of course, the production restraint mainly by OPEC+ countries helped lead the way to a market recovery, but has seen Brent come back to an average of more than $40 per barrel since the beginning of June. And I will say we are optimistic about the willingness of all these producing countries to take actions and maintain the crude price above $40, which is, in fact, a low floor for most of them, if not all. Of course, given our exposure to some of these countries, the impact of quotas on Total was close to 100,000 barrels per day in the quarter. And so we have revised slightly our full year production outlook to be in the 2.9 million, 2.95 million barrel per day range because the discipline of OPEC+ countries is stronger than ever. But again, that's good news for the market and for the crude price, and it is a matter of value over volume. In the Downstream, refining margin collapsed to very low, even negative levels during several weeks. And we