TotalEnergies’ Profit Rises on Higher Oil Prices, Refining

(Bloomberg) -- TotalEnergies SE’s third-quarter profit rebounded, ending a run of three consecutive declines as the French energy giant benefited from higher oil prices and refining margins.

While oil majors earnings are below the record levels seen last year, the industry still has huge amounts of cash flowing into its coffers. That’s allowed them to boost payouts to shareholders and in recent weeks has prompted the biggest US takeovers in decades.

“TotalEnergies demonstrates once again this quarter its ability to leverage a supportive price environment,” Chief Executive Officer Patrick Pouyanne said in a statement on Thursday. 

Shares of the company fell 0.3% to 62.02 euros as of 9:55 a.m. in Paris. 

TotalEnergies’ adjusted net income for the third quarter rose 30% from prior period to $6.45 billion, the French company said in the statement. That beat the average analyst estimate of $5.95 billion. Compared with a year earlier, profit was 35% lower.

The largest increases from the prior quarter were seen in the company’s exploration and production unit, and in refining and chemicals. The former was boosted by higher energy prices while the latter enjoyed wider profit margins.

TotalEnergies’s third-quarter refining throughput was 7% lower than a year earlier due to planned maintenance and unplanned shutdowns. The Port Arthur plant in Texas should restart in mid-November, the company said. 

LNG Prices

Since Russia’s invasion of Ukraine last year, TotalEnergies’ liquefied natural gas business has been a major profit driver thanks to the lucrative trade in diverting cargoes to Europe from lower-price markets. The company expects gas markets to remain “tense” in the region this winter despite high inventories, according to the statement. 

Its average LNG selling price of $9.56 per million Btu in the third quarter should rise above $10 in the final three months of the year, according to the statement. Total hydrocarbon production in the fourth quarter will average 2.4 million to 2.5 million barrels of oil equivalent a day, little changed from 2.48 million barrels in the third quarter.

“The results continue to demonstrate the relevancy of the unchanged strategy,” meaning there’s no need for a large acquisition, Oswald Clint, an analyst at Bernstein, wrote in a note. Operational indications “suggest positive earnings momentum” into the fourth quarter. 

TotalEnergies reiterated that it will spend $9 billion on share buybacks this year as it shares part of the the proceeds from the sale of Canadian assets with investors. It announced an interim dividend of €0.74 a share, unchanged from the second quarter and up 7.3% from a year earlier.

(Updates with analyst quote in penultimate paragraph.)

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