Weak refining margins, lower LNG production, and declining oil prices weighed on the third-quarter earnings of TotalEnergies (NYSE: TTE), which came below expectations.
TotalEnergies reported on Thursday an adjusted net income of $4.1 billion for the third quarter, down by 13% from the second quarter, and down from $6.45 billion a year earlier. The earnings, TotalEnergies’s lowest quarterly profit in three years, missed the analyst estimate of $4.27 billion.
After the results were published, TotalEnergies shares slumped by 2.5% in Paris and its New York-listed shares were down by 1.5% in pre-market trade.
Weak refining margins dented the French supermajor’s earnings. Lower oil prices and unplanned production outages in Libya and the Ichtys LNG project in Australia combined with the weakening downstream business to drag profits below analyst forecasts.
The company’s oil and gas production averaged 2.409 million barrels of oil equivalent per day (boepd) in the third quarter 2024, down by 1% quarter-to-quarter, as unplanned shutdowns in Ichthys LNG and security-related disruptions in Libya couldn’t fully offset the ramp-up at the Mero 2 project in Brazil.
TotalEnergies had already flagged weak refining margins as the key drivers of expected lower third-quarter results.
The other European supermajors, BP and Shell, have also warned of the weaker refining environment, but they both beat analyst estimates when they reported Q3 earnings this week.
At TotalEnergies, the “very sharp decrease in refining margins in Europe (-66% quarter-to-quarter) and in the Rest of the World”, dragged down the downstream division’s adjusted net operating income and cash flow by around 40% quarter-over-quarter, CEO Patrick Pouyanné said. Marketing and trading activities partly compensated for the very sharp decline in refining, the executive added.
Despite the drop in earnings, TotalEnergies is keeping its pace of share buybacks, announcing repurchases of $2 billion in the fourth quarter of 2024, in line with its target to reach a total of $8 billion buybacks throughout the year.
The supermajor also confirmed its net investment guidance of $17 billion-$18 billion in 2024.
Oilprice.com