SecProbe.io

CORRESP
1
filename1.htm

July 13, 2023

VIA EDGAR TRANSMISSION

Office of Energy & Transportation

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

Attention: Jennifer O’Brien and Raj Rajan

Re:          TotalEnergies
SE

Form 20-F for Fiscal Year Ended December 31,
2022

Filed March 24, 2023

File No. 001-10888

Dear Ms. O’Brien and Mr. Rajan:

This letter is in response to the letter dated
June 16, 2023, from the Staff of the Division of Corporation Finance (the “Staff”) of the U.S. Securities and Exchange
Commission, relating to the above-referenced Annual Report on Form 20-F (the “Form 20-F”).

The Staff’s comments are set forth below
in bold, followed by the Company’s responses to the comments.

Please note that the “Company,” “TotalEnergies,”
 “we” or “our” refers to TotalEnergies SE, and unless the context otherwise requires, all references to page numbers
correspond to the pages in the Form 20-F. All terms used but not defined herein have the meanings assigned to such terms in
the Form 20-F.

Form 20-F for Fiscal Year Ended
December 31, 2022

Item 5. Operating and Financial Review and Prospects, page 2

1.
We note your statement on page (i) that the Annual Report and the Universal Registration Document 2022
contain certain measures that are not defined by GAAP. However, we also note that you have not specifically identified or labeled each
non-GAAP measure accordingly within this Item. Where applicable, please revise your presentation to clearly identify and label each non-GAAP
measure, including any required disclosures, in order to fully comply with Item 10(e) of Regulation S-K or tell us why such disclosure
is not required.

    1

We acknowledge the Staff’s comment and confirm
that in future filings, we will better identify, label and define each non-GAAP measure, provide the reasons why management believes these
non-GAAP financial measures are useful to investors, present the most directly comparable GAAP measures with equal or greater prominence
than the non-GAAP measures, and include a reconciliation to the most directly comparable GAAP measure. In particular, we will develop
the existing reconciliation tables presented in the Form 20-F (see page 5) by adding reconciliation tables for Adjusted net
operating income, Adjusted net income, Capital employed used in Return on Average Capital Employed (ROACE), and Net debt used in Gearing.

As a preliminary comment, management presents
adjusted financial indicators to assist investors in better understanding, in conjunction with the Company’s financial results presented
in accordance with IFRS, the economic performance of the Company. Adjustment items are of three types: inventory valuation effect, effect
of changes in fair value, and special items. In particular, concerning the inventory valuation effect, management uses the replacement
cost method that approximates the LIFO (Last-In, First-Out) method, which is a feature of US GAAP. Therefore, by applying the replacement
cost method, which is commonly used in the Oil & Gas industry, adjusted financial indicators can facilitate the comparability of the
Company’s performance with those of its main competitors that report under US GAAP.

The following reflects the revised disclosures
for the non-GAAP financial measures in our future filings, and in particular in the Annual Report on Form 20-F for year-end 2023:

 · Adjusted EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) is a non-GAAP financial
measure and its most directly comparable IFRS measure is Net income. It refers to the adjusted earnings before depreciation, depletion
and impairment of tangible and intangible assets and mineral interests, income tax expense and cost of net debt, i.e., all operating income
and contribution of equity affiliates to net income. This indicator can be a valuable tool for decision makers, analysts and shareholders
alike to measure and compare the Company’s profitability with utility companies.

 · Adjusted operating income is a non-GAAP financial measure and its most comparable IFRS measure
is Operating income. Adjusted operating income refers to Operating income less adjustment items. Operating income refers to Net operating
income before Net income (loss) from equity affiliates and other items and Tax on net operating income. This indicator can be a valuable
tool for decision makers, analysts and shareholders alike to evaluate the Company’s operating results and understand its operating
trends, by removing the impact of non-operational results and special items.

 · Adjusted net operating income is a non-GAAP financial measure and its most directly comparable
IFRS measure is Net income. Adjusted net operating income refers to Net operating income less adjustment items. Net operating income refers
to Net income before net cost of net debt, i.e., cost of net debt net of its tax effects. This indicator can be a valuable tool for decision
makers, analysts and shareholders alike to evaluate the Company’s operating results and understanding its operating trends, by removing
the impact of non-operational results and special items and is used to evaluate the return on capital employed (ROACE) as explained below.

    2

 · Debt adjusted cash flow (DACF) is a non-GAAP financial measure and its most directly comparable
IFRS measure is Cash flow from operating activities. DACF is defined as operating cash flow before working capital changes and without
financial charges. This indicator can be a valuable tool for decision makers, analysts and shareholders alike because it corresponds to
the funds theoretically available to the Company for investments, debt repayment and distribution to shareholders, and therefore facilitates
comparison of the Company’s results of operations with those of other registrants, independent of their capital structure and working
capital requirements. By exception, DACF at segment level excludes financial charges except those related to leases. This sub-indicator
can be a valuable tool for decision makers, analysts and shareholders alike because it corresponds to the funds theoretically generated
by the segment once we have excluded financial charges, except those related to leases.

 · Operating cash flow before working capital changes is a non-GAAP financial measure and its most
directly comparable IFRS measure is Cash flow from operating activities. Operating cash flow before working capital changes is defined
as cash flow from operating activities before changes in working capital at replacement cost, excluding the mark-to-market effect of Integrated
Gas and Integrated Power contracts, including capital gain from renewable projects sales and including organic loan repayments from equity
affiliates. This indicator can be a valuable tool for decision makers, analysts and shareholders alike to help understand changes in cash
flow from operating activities, excluding the impact of working capital changes across periods on a consistent basis and with the performance
of peer companies in a manner that, when viewed in combination with the Company’s results prepared in accordance with GAAP, provides
a more complete understanding of the factors and trends affecting the Company’s business and performance. This performance indicator
is used by the Company as a base for its cash flow allocation and notably to guide on the share of its cash flow to be allocated to the
distribution to shareholders.

 · Net cash flow is a non-GAAP financial measure and its most directly comparable IFRS measure
                                                                                                                                                                                                is Cash flow from operating activities. Net cash flow refers to Operating cash flow before working capital changes minus net
                                                                                                                                                                                                investments. Net investments is a non-GAAP
financial measure and its most directly comparable IFRS measure is Cash flow used in investing activities. Net investments refer to Cash
flow used in investing activities including other transactions with non-controlling interests, including change in debt from renewable
projects financing, including expenditures related to carbon credits, excluding organic loan repayment from equity affiliates and excluding
capex linked to capitalized leasing contracts. Net cash flow can be a valuable tool for decision makers, analysts and shareholders alike
because it illustrates cash flow generated by the operations of the Company post allocation of cash for organic investments and net acquisitions
(acquisitions - assets sales - other operations with non-controlling interests). This performance indicator corresponds to the cash flow
available to repay debt and allocate cash to shareholder distribution or share buybacks.

 · Free cash flow after organic investments, without net asset sales is a non-GAAP financial measure
and its most directly comparable IFRS measure is Cash flow from operating activities. Free cash flow after organic investments, without
net asset sales refers to Operating cash flow before working capital changes minus organic investments. Organic investments refer to net
investments excluding acquisitions, asset sales and other transactions with non-controlling interests. This indicator can be a valuable
tool for decision makers, analysts and shareholders alike because it illustrates operating cash flow generated by the business post allocation
of cash for organic investments.

    3

 · Adjusted net income is a non-GAAP financial measure and its most directly comparable IFRS measure
is Net income. Adjusted net income refers to net income less adjustment items to net income. Adjustment items are inventory valuation
effect, effect of changes in fair value, and special items. This indicator can be a valuable tool for decision makers, analysts and shareholders
alike to evaluate the Company’s operating results and to understand its operating trends by removing the impact of non-operational
results and special items.

 · Return on Average Capital Employed (ROACE) is a non-GAAP financial measure and its most directly
comparable IFRS measure is the ratio of Net operating income to average capital employed between the beginning and the end of the period.
ROACE is the ratio of adjusted net operating income to average capital employed at replacement cost between the beginning and the end
of the period. This indicator can be a valuable tool for decision makers, analysts and shareholders alike to measure the profitability
of the Company’s capital employed in its business operations and is used by the Company to benchmark its performance internally
and externally with its peers.

 · Gearing is a non-GAAP financial measure and its most directly comparable IFRS measure is the ratio
of total financial liabilities to total equity. Gearing is a Net-debt-to-capital ratio, which is calculated as the ratio of Net debt excluding
leases to Equity + Net debt excluding leases. This indicator can be a valuable tool for decision makers, analysts and shareholders alike
to assess the strength of the Company’s balance sheet.

2. In addition to the above, please revise
to provide a statement disclosing the reason(s) why management believes that the presentation of each non-GAAP measure provides useful
information to investors regarding your financial condition and results of operations and the additional purposes, if any, for which management
uses the non-GAAP financial measure. In this regard, we note you include a single statement, which indicates that presentation of this
information “is useful to investors because it allows investors to understand the primary method used by management to evaluate
performance on a meaningful basis.” It does not appear that this statement adequately explains why each individual non-GAAP measure
is considered useful. Refer to Item 10(e)(1)(i)(C) and (D) of Regulation S-K.

We acknowledge the Staff’s comment and confirm
that, in future filings, we will improve our disclosures to clearly provide a statement disclosing the reason(s) why management believes
that the presentation of each non-GAAP measure provides useful information to investors regarding our financial condition and results
of operations and the additional purposes, if any, for which management uses the non-GAAP financial measure.

Please see our response to comment 1 for our proposed
disclosures.

    4

5.2 TotalEnergies results 2020-2022

3.
We note the reconciliation under this heading begins with the non-GAAP measure labeled ‘Operating cash flow
before working capital changes w/o financial charges (DACF),’ which appears to give undue prominence to this non-GAAP measure. Please
revise this reconciliation so that it presents the most directly comparable GAAP measure, cash flow from operating activities, first and
provide the disclosures required by Item 10(e) of Regulation S-K. Refer to Question 102.10(b) of the Non-GAAP Financial Measures
Compliance & Disclosure Interpretations.

We acknowledge the Staff’s comment and confirm
that, in future filings, we will present the GAAP measures with equal or greater prominence than the non-GAAP measures and provide the
disclosures required by Item 10(e) of Regulation S-K as mentioned in our responses to comment 1 and comment 2.

The following reflects the revised reconciliation
table:

Cash Flow

    in millions of dollars
    2022
    2021
    2020

    Cash flow from operating activities
      47,367
      30,410
      14,803

    Less (Increase)
    decrease in working capital
      2,831
      188
      753

    Less Inventory
    effect
      501
      1,796
      (1,440 )

    Less Capital
    gain from renewable project sales
      (64 )
      (89 )
      (96 )

    Less Organic
    loan repayments from equity affiliates
      (1,630 )
      (626 )
      (111 )

    = Operating cash flow before working capital changes ( a )
      45,729
      29,140
      15,697

    Financial charges
      (1,296 )
      (1,520 )
      (1,938 )

    Operating cash flow before working capital changes w/o financial charges (DACF)
      47,025
      30,660
      17,635

    Organic investments ( b )
      11,852
      12,675
      10,339

    Free cash flow after organic investments, w/o net asset sales ( a - b )
      33,877
      16,465
      5,358

    Net investments ( c )
      16,303
      13,307
      12,989

    Net cash flow ( a - c )
      29,426
      15,833
      2,708

5.3 Business segment reporting, page 9

4.
We note you present multiple segment performance measures for each segment here. Considering comment 6 below, please
disclose the single measure of segment profitability for each reportable segment as required by IFRS 8, paragraph 23. It appears that
your presentation of additional segment performance measures could be considered non-GAAP financial measures that are subject to the provisions
of Item 10(e) of Regulation S-K. Refer to Question 104.03 of the Non-GAAP Financial Measures Compliance & Disclosure Interpretations
and revise to provide the disclosures required by Item 10(e) of Regulation S-K or tell us why they are not required.

    5

We confirm that, as discussed in our response
to comment 6, Adjusted operating income, Adjusted net operating income and ROACE are the measures of segment profitability for each reportable
segment.

We
respectfully note to the Staff that we believe these financial measures at segment level are not non-GAAP financial measures based on
Question 104.01 of the Non-GAAP Financial Measures Compliance & Disclosure Interpretations, because such financial measures are
measures reported to the main operational decision-making