TotalEnergies reports lower LNG earnings, sales

France’s TotalEnergies said on Wednesday that the company’s integrated LNG business logged a decline in its adjusted net operating income in the fourth quarter of 2023 due to lower prices.

The company’s integrated LNG adjusted net income reached about $1.46 billion in the fourth quarter, a drop of 40 percent compared to the fourth quarter in 2022.

Compared to $1.34 billion in the previous quarter, integrated LNG adjusted net income rose 8 percent, reflecting the evolution of prices and production volumes, TotalEnergies said.

For full-year 2023, integrated LNG adjusted net operating income was $6.2 billion, down 37 percent year-on-year, excluding Novatek, mainly due to the “exceptional environment in 2022 linked to the energy crisis in Europe resulting from the Russia-Ukraine conflict,” the firm said.

Cash flow from operations excluding working capital for integrated LNG was $1.76 billion in the fourth quarter 2023, up 7 percent quarter-to-quarter, reflecting the evolution of prices and production volumes.

Integrated LNG CFFO was down 25 percent year-on-year, mainly due to lower LNG prices that were partially offset by high margins captured in 2022 on LNG cargoes delivered in 2023, TotalEnergies said.

Last month, TotalEnergies said its average price for LNG equity sales in the fourth quarter was $10.28/MMBtu, up by 7 percent compared to $9.56/MMBtu in the previous quarter.

However, the price declined 31 percent compared to $14.83/MMBtu in the fourth quarter of 2022, when European demand was high as European countries worked to replace pipeline gas supplies with LNG.

“Uncertain environment”

Overall, TotalEnergies reported adjusted net income of $5.2 billion in the fourth quarter. This compares to $6.45 billion in the prior quarter and $7.56 billion in the same quarter in 2022.

“In an uncertain environment, TotalEnergies’ balanced transition strategy, which combines growth in oil & gas, in particular in LNG, and integrated power, delivered strong results in 2023, in line with its objectives. During the fourth quarter, TotalEnergies generated adjusted net income of $5.2 billion and cash flow of $8.5 billion. IFRS net income was $5.1 billion,” chief executive Patrick Pouyanne, said.

He said that in 2023 TotalEnergies reported adjusted net income of $23.2 billion and cash flow of $35.9 billion.

2023 IFRS net income was $21.4 billion, up 4 percent year-on-year.

“This year the company once again achieved top tier 20 percent return on equity and 19 percent return on average capital employed. TotalEnergies invested $16.8 billion, including 35 percent for low-carbon energies mainly in power,” Pouyanne said.

In the oil & gas business, fourth quarter production was 2.46 Mboe/d, which benefited from 7 percent LNG production growth quarter-to-quarter.

Moreover, full-year 2023 total production increased 2 percent year-on-year, excluding Novatek, driven by strong LNG production growth of 9 percent, he said.

Pouyanne said integrated LNG results “remain robust” and they rose compared to the previous quarter driven by higher production and strengthening prices.

“For full year 2023, integrated LNG generated annual adjusted net operating income of $6.2 billion and cash flow of $7.3 billion, which is lower than the exceptional results in 2022 but higher than 2021 thanks to growth in its portfolio,” the CEO added.

LNG sales down

During the fourth quarter, TotalEnergies sold 11.8 million tonnes of LNG, down 7 percent compared to 12.7 million tonnes in the same period last year, and a rise compared to 10.5 million tonnes in the prior quarter.

In the fourth quarter, LNG sales increased 13 percent quarter-to-quarter, mainly due to higher production and higher spot volumes.

The company’s LNG sales decreased 8 percent year-on-year to 44.3 million tonnes in 2023.

TotalEnergies said LNG sales were down mainly due to lower spot volumes related to lower demand in Europe as a result of a milder winter weather and high inventories.

Hydrocarbon production for LNG, excluding Novatek, was up 7 percent quarter-to-quarter to 464 kboe/d, reflecting lower unplanned shutdowns.

For full-year 2023, hydrocarbon production for LNG, excluding Novatek, was up 9 percent to compared to 2022 due to increased supply to NLNG in Nigeria and higher availability of Ichthys LNG in Australia and Snovhit in Norway, TotalEnergies said.

LNG markets “should remain in tension”

Looking ahead, TotalEnergies said LNG markets “should remain in tension due to very limited LNG capacity additions expected in 2024 (2 percent) and growing demand thanks to lower LNG prices.”

TotalEnergies expects LNG sales above 40 Mt over the year.

“Given the evolution of oil and gas prices in recent months and the lag effect on price formulas, TotalEnergies anticipates that its average LNG selling price should be stable around $10/Mbtu in the first quarter 2024,” it said.

“Despite entering the winter period with high natural gas inventories in Europe, in a tense market, gas prices remain very reactive to production disruptions,” TotalEnergies said.

TotalEnergies expects hydrocarbon production to be above 2.4 Mboe/d in the first quarter of this year due to the start-up of Mero 2 in Brazil and the disposals of Canadian upstream assets, effective during fourth quarter 2023.

In 2024, the company expects net investments of $17-18 billion, of which $5 billion dedicated to integrated power.

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