Total, Creation of the Integrated Gas, Renewables & Power business segment

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Beleggingsadvies 07/04/2019 09:31
The profitable growth in the gas and low carbon electricity integrated value chains is one of the key axes of Total’s strategy. In order to give more visibility to these businesses, a new reporting structure for the business segments’ financial information has been put in place, effective January 1, 2019 and organized around four business segments: Exploration & Production (EP), Integrated Gas, Renewables & Power segment (iGRP), Refining & Chemicals (RC) and Marketing & Services (MS).
The iGRP segment spearheads Total’s ambitions in integrated gas (including LNG, liquefied natural gas) and low carbon electricity businesses. It consists of the upstream and midstream LNG activity that was previously reported
in the EP segment (refer to the indicative list of assets in the Annex) and the activity previously reported in the Gas Renewables & Power segment. The new EP segment is adjusted accordingly.
The RC and MS segments are not affected.
The tables below show the key figures for the years 2017 and 2018 restated in order to reflect these changes.

Group hydrocarbon production
2017 2018 1Q18 2Q18 3Q18 4Q18
Group production (kboe/d) 2,566 2,775 2,703 2,717 2,804 2,876
EP (kboe/d) 2,229 2,394 2,359 2,375 2,433 2,408
iGRP (kboe/d) 337 381 344 342 371 468
Group production (kboe/d) 2,566 2,775 2,703 2,717 2,804 2,876
Oil (including bitumen) (kb/d) 1,167 1,378 1,297 1,400 1,431 1,382
Gas (including Condensates and associated LPG)
(kboe/d) 1,398 1,397 1,406 1,317 1,373 1,493
Group production (kboe/d) 2,566 2,775 2,703 2,717 2,804 2,876
Liquids (kb/d) 1,346 1,566 1,481 1,582 1,611 1,589
Gas (Mcf/d) 6,662 6,599 6,664 6,176 6,557 6,994

EP – Exploration-Production (redefined scope)
> Production
> Key financial metrics
* Excluding financial charges

Hydrocarbon production 2017 2018 1Q18 2Q18 3Q18 4Q18
EP (kboe/d) 2,229 2,394 2,359 2,375 2,433 2,408
Liquids (kb/d) 1,310 1,527 1,445 1,544 1,575 1,541
Gas (Mcf/d) 4,995 4,724 4,976 4,536 4,678 4,710
In millions of dollars 2017 2018 1Q18 2Q18 3Q18 4Q18
Adjusted operating income 6,208 13,408 2,902 3,726 3,947 2,833
Effective tax rate 40.5% 46.2% 48.7% 46.6% 47.5% 41.2%
Adjusted net operating income 4,541 8,547 1,817 2,315 2,439 1,976
including income from equity affiliates 827 1140 228 327 316 269
Investments 10,005 13,789 5,545 2,612 2,472 3,160
Divestments 1,793 3,674 2,176 466 494 538
Organic investments 9,110 7,953 1,798 1,785 1,605 2,765
Operating cash flow before working capital changes * 12,758 17,832 3,921 4,800 5,200 3,911
Cash flow from operations * 10,719 18,537 3,322 4,474 4,431 6,310

Note: For definitions, refer to the Group quarterly result press release

iGRP - Integrated Gas, Renewables & Power
> Production and LNG sales
* Equity production can be sold either by Total or by JV

* Excluding financial charges
Hydrocarbon production 2017 2018 1Q18 2Q18 3Q18 4Q18
iGRP (kboe/d) 337 381 344 342 371 468
Liquids (kb/d) 36 40 36 38 36 48
Gas (Mcf/d) 1,668 1,875 1,688 1,640 1,879 2,284
Liquefied natural gas (Mt) 2017 2018 1Q18 2Q18 3Q18 4Q18
Overall LNG sales 15.6 21.8 3.8 3.9 6.2 7.9
incl. sales from equity production* 11.2 11.1 2.5 2.5 2.8 3.3
incl. sales by Total from equity production and
third party 7.6 17.1 2.6 2.7 5.1 6.7

> Key financial metrics
In millions of dollars 2017 2018 1Q18 2Q18 3Q18 4Q18
Adjusted operating income 1,435 1,174 235 217 373 349
Adjusted net operating income 1,929 2,419 481 565 697 676
including income from equity affiliates 804 1,249 228 250 324 447
Investments 3,594 5,032 575 447 3,325 685
Divestments 198 2,209 153 439 198 1,419
Organic investments 2,553 1,745 336 388 407 614
Operating cash flow before working capital changes * 2,289 2,055 393 492 553 617
Cash flow from operations * 3,157 596 68 258 (164) 434

* Excluding financial charges

Indicative list of assets reported in EP segment until end-2018
and in iGRP segment from January 1, 2019 onwards
Country Asset % equity
Angola Angola LNG 13.60%
Australia Gladstone LNG 27.50%
Australia Ichthys 26.00%
Indonesia Mahakam Until end 2017 (Mahakam license expired)
Nigeria Nigeria LNG 15.00%
Nigeria OML 58 40.00%
Norway Snohvit 18.40%
Oman Oman LNG 5.54%
Oman Qalhat LNG 2.04%. indirect participation through Oman LNG
Papua New Guinea Papua LNG 40.10%
Qatar Qatargas 1 Upstream 20.00%
Qatar Qatargas 1 Downstream 10.00%
Qatar Qatargas 2 Train 5 16.70%
Russia Arctic LNG 2*
10.00% direct working interest (21.64 % including
indirect interest** and considering a 60% participation
of Novatek in the project)
Russia Yamal LNG 20.02% direct working interest (29.72% including
indirect interest**)
United Arab Emirates ADNOC LNG 5.00%
USA Barnett Shale *** 90.92% in average
Yemen Yemen LNG 39.62%

* Total signed definitive agreements for entry into Arctic LNG 2 on the 5th of March 2019
** The iGRP segment includes the interests that Total holds in Arctic LNG 2 and Yamal LNG projects through its 19.4% ownership in
Novatek. The other Novatek assets remain included in the EP figures.
*** Barnett shale consolidated in iGRP reporting along with the other Group’s LNG assets, such as the Group’s equity in Cameron LNG
or Tellurian Inc., which were already reported in GRP end-2018

The restated data presented herein have been derived from TOTAL’s internal reporting system and have not been audited by TOTAL’s statutory
auditors. Such related financial data are presented solely for information purposes. To the extent permitted by law, TOTAL S.A. disclaims all liability
from the use of the restated financial data.
The list of assets in the Annex is presented for indicative purposes, and mentions the assets previously reported in the EP reporting segment,
which are, as from January 1, 2019, reported in the iGRP reporting segment. This list refers to assets or contractual rights which may group the
contributions of multiple subsidiaries and/or consolidated entities.
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 TOTAL. 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). These indicators are meant to facilitate the analysis of the financial performance of TOTAL and the comparison of
income between periods. They allow investors to track the measures used internally to manage and measure the performance of the Group. 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 its
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 TOTAL’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.
Furthermore, TOTAL, in its trading activities, enters into storage contracts, whose future effects are recorded at fair value in Group’s internal
economic performance. IFRS precludes recognition of this fair value effect.
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.
Additional information concerning the risk factors and uncertainties that may have an impact on the Group's financial results or activities is available
in the most recent versions of the Registration Document (Document de référence) filed with the French Autorité des marchés financiers (AMF)
and the Annual Report on Form 20-F filed with the United States Securities and Exchange Commission (SEC).

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