Russia: TotalEnergies Decides to Withdraw Its Directors From Novatek And Will No Longer Equity Account for Its Stake in Novatek and Record a 3.7 b$ Impairment in Q4

Rhea-AI Summary

TotalEnergies is withdrawing from its Russian assets while maintaining gas supply to Europe. It holds a 19.4% stake in Novatek but is currently unable to sell it due to shareholder agreements and sanctions. TotalEnergies has decided to withdraw its directors from Novatek's board, leading to an impairment loss of approximately $3.7 billion for Q4 2022. Consequently, it will no longer account for its stake in Novatek as significant influence, affecting its proved reserves of about 1.7 billion barrels but maintaining a production life of over 11 years.

Positive

• None.

Negative

• Impairment loss of approximately $3.7 billion for Q4 2022 due to loss of influence over Novatek.
• No longer able to account for 19.4% stake in Novatek as significant influence, impacting shareholder value.
• Reduction in reported proved reserves by 1.7 billion barrels.

PARIS--(BUSINESS WIRE)-- Regulatory News:

Further to its principles of conduct defined for its activities in relation to Russia, published on March 22, 2022, TotalEnergies (Paris:TTE) (LSE:TTE) (NYSE:TTE) has gradually started to withdraw from its Russian assets while ensuring that it continues to supply gas to Europe.

TotalEnergies holds a 19.4% stake in the company Novatek, a stake that it cannot sell given the prevailing shareholders’ agreements, as it is forbidden for TotalEnergies to sell any asset to one of Novatek's main shareholders who is under sanction.

In view of the European sanctions in force since the beginning of the war, the two directors representing TotalEnergies on the board of directors of Novatek are led to abstain from voting in meetings of the board of directors of this company, in particular on financial matters. They are therefore no longer in a position to fully carry out their duties on the board which might become an issue for the governance of this company.

Under these circumstances, the Board of Directors of TotalEnergies has decided to withdraw the representatives of the Company from the board of PAO Novatek with immediate effect.

As a result, the criteria for significant influence no longer being met within the meaning of the accounting regulations that apply to the Company, TotalEnergies will no longer equity account for its 19.4% stake in Novatek in the Company's accounts.

This will lead to record an impairment of approximately $3.7 billion in the accounts for the 4th quarter of 2022. In addition, TotalEnergies will no longer book reserves for its interest in Novatek, with an impact on the Company's reported proved reserves at the end of 2021 of 1.7 billion of barrels. However, the life duration of the Company's proved reserves will remain above 11 years of production.

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About TotalEnergies

TotalEnergies is a global multi-energy company that produces and markets energies: oil and biofuels, natural gas and green gases, renewables and electricity. Our more than 100,000 employees are committed to energy that is ever more affordable, cleaner, more reliable and accessible to as many people as possible. Active in more than 130 countries, TotalEnergies puts sustainable development in all its dimensions at the heart of its projects and operations to contribute to the well-being of people.

@TotalEnergies TotalEnergies TotalEnergies TotalEnergies

Cautionary Note

This press release, from which no legal consequences may be drawn, is for information purposes only. The entities in which TotalEnergies SE directly or indirectly owns investments are separate legal entities. TotalEnergies SE has no liability for their acts or omissions. The terms “Company” or “TotalEnergies company” refer collectively to the company TotalEnergies SE and the companies it controls directly or indirectly. Such terms are used solely for the sake of convenience for purposes of the present communication. Likewise, the words “we”, “us” and “our” may also be used to refer to subsidiaries in general or to those who work for them. This document may contain forward-looking information and statements that are based on a number of economic data and assumptions made in a given economic, competitive and regulatory environment. They may prove to be inaccurate in the future and are subject to a number of risk factors. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20221209005123/en/

TotalEnergies Contacts

Media Relations: +33 1 47 44 46 99 l presse@totalenergies.com l @TotalEnergiesPR

Investor Relations: +33 (0)1 47 44 46 46 l ir@totalenergies.com

Source: TOTALENERGIES SE

FAQ

What is the financial impact of TotalEnergies' withdrawal from Russia?

TotalEnergies will record an impairment loss of approximately $3.7 billion in Q4 2022.

How does TotalEnergies' decision affect its stake in Novatek?

TotalEnergies will no longer equity account for its 19.4% stake in Novatek, affecting its financial statements.

What will happen to TotalEnergies' proved reserves after this announcement?

The company will reduce its reported proved reserves by 1.7 billion barrels but will maintain a production life exceeding 11 years.