TotalEnergies: Strong Rises Next Winter
French energy giant TotalEnergies reported a 22% drop in first-quarter earnings, slightly below analysts’ expectations. The good margins obtained by the refining sector partially offset the sharp decline in natural gas profits.
Adjusted net profit for the three months to the end of March was $5.1 billion, the company said today in a statement carried by Reuters. The $5 billion expected by the consensus of analysts’ forecasts, drawn up by LSEG, was exceeded. Cash flow from operating activities was $2.2 billion, up from $5.1 billion a year earlier. Net debt rose to $14.2 billion from $6.3 billion at the end of 2023. According to JPMorgan analysts, the higher debt represents a “modest headwind,” adding that results are “fundamentally strong” .
Profits at oil and gas companies are still down from record levels in 2022, when natural gas prices spiked due to Russia’s invasion of Ukraine. Spot gas prices in Europe have fallen 45% over the past year thanks to mild winter weather and easing supply concerns.
Lower market volatility has eroded trading opportunities, although Total expects natural gas profits to rise again in the winter of 2024-2025. Total expects a winter gas price above $11/Mbtu, compared to a current European price of between $8-10/Mbtu. Chief Executive Patrick Pouyanne said he wants to take advantage of the current drop in gas prices to strike new contracts with Asian buyers, who he says are keen to lock in supplies as growing demand outpaces newly available capacity until 2027.
