TotalEnergies Expects Flat Third-Quarter Hydrocarbon Output After Net Profit Slips — 2nd Update

By Pierre Bertrand

TotalEnergies said it expects third-quarter hydrocarbon production to remain largely unchanged from the second quarter, as it reported a fall in net profit for the three months to the end of June.

The French oil-and-gas major said it expects to produce between 2.4 million and 2.45 million barrels of oil equivalent a day in the third quarter.

Output in the second quarter slipped by 1% from the first three months of the year to 2.44 million barrels a day, dragged by an increase in planned maintenance, particularly in the North Sea. The company had previously guided for second-quarter oil and gas production of close to 2.45 million barrels a day.

Despite the production decline, TotalEnergies' exploration and production unit, responsible for the bulk of the company's coffers, benefited from the high availability of production facilities, it said Thursday. The unit posted a 5% on-quarter rise in adjusted net operating income, driven by higher oil prices that were partially offset by lower realized gas prices and production.

Integrated liquefied natural gas sales and adjusted net operating income fell by 18% and 6%, respectively, from the previous quarter amid lower demand for LNG in Europe lower spot purchases, the company said.

The company said it expected its average LNG selling prices in the third quarter should be around $10 per million British thermal units, up from the range of $9-$10 per million BTUs it was expecting for 2Q.

Adjusted downstream earnings, meanwhile, were hit hard and the company's refining and chemicals result declined 34% on quarter due to lower European and Middle Eastern refining margins, TotalEnergies said.

"Global refining margins, which have sharply decreased since the end of the first quarter 2024, remain impacted by low diesel demand in Europe, as well as by the market normalization following the disruption in Russian supply," the company said.

TotalEnergies' second-quarter release, the first from one of Europe's oil and gas majors, comes after smaller Portuguese peer Galp earlier this week nudged up its full-year earnings expectations after its second-quarter result was boosted by a 2% increase from upstream unit earnings and higher refining utilization.

TotalEnergies said net profit fell to $3.79 billion from $4.09 billion a year earlier. On an adjusted basis, profit came to $4.67 billion. Sales, meanwhile, fell 4.5% to $53.74 billion.

Analysts had expected net profit of $4.96 billion, according to Visible Alpha consensus.

TotalEnergies said it would buy back up to $2 billion of shares in the third quarter and declared a second interim dividend of EUR0.79 a share, flat on quarter.

Write to Pierre Bertrand at pierre.bertrand@wsj.com

(END) Dow Jones Newswires

July 25, 2024 05:49 ET (09:49 GMT)

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