TotalEnergies reports lower Q1 LNG earnings, sales

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

The company’s integrated LNG adjusted net income reached about $1.22 billion in the first quarter, a drop of 41 percent compared to the first quarter in 2023.

Compared to $1.46 billion in the previous quarter, integrated LNG adjusted net income dropped 16 percent.

TotalEnergies attributed the drop to lower LNG prices and sales.

“Due to the low price volatility observed this quarter, the LNG trading result was in line with the historical average,” it said.

Cash flow from operations excluding working capital (CFFO) for integrated LNG was $1.35 billion in the first quarter 2024, down 24 percent quarter-to-quarter, for the same reasons and due to the timing effect in dividend payments from some equity affiliates, TotalEnergies said.

Earlier this month, TotalEnergies said its average LNG price was $9.58/MMBtu in the January-March period, down by 6.8 percent compared to $10.28/MMBtu in the previous quarter.

The average price dipped compared to $13.27/MMBtu in the first quarter of 2023, while the company’s average price was $9.56/MMBtu in the third quarter last year and $9.84/MMBtu in the second quarter.

100th year anniversary

Overall, TotalEnergies reported adjusted net income of $5.1 billion in the first quarter. This compares to $5.2 billion in the prior quarter and $6.5 billion in the same quarter in 2023.

““Celebrating its 100th year anniversary in 2024, TotalEnergies demonstrates once again this quarter the relevance of its balanced transition strategy that is anchored on two pillars, hydrocarbons and power, delivering strong results and an attractive shareholder return,” chief executive Patrick Pouyanne, said.

“In a context of sustained oil prices and refining margins but softening gas prices, the company announced first quarter 2024 adjusted net income of $5.1 billion and cash flow of $8.2 billion, in line with its ambitious 2024 objectives,” he said.

During the first quarter, oil and gas production was 2.46 Mboe/d, benefiting from 6 percent quarter-to-quarter production growth in LNG and from start-ups at Mero 2 in Brazil and Akpo West in Nigeria.

Pouyanne said the company strengthened its integration in the LNG value chain with the acquisition of Lewis Energy Group’s upstream natural gas assets in the Eagle Ford Basin in the United States, and with the signature of an LNG sales agreement to Sembcorp in Asia.

The company further deployed its multi-energy strategy in Oman, launching the fully-electric Marsa LNG project.

“Given these strong results, in line with TotalEnergies’ ambitious 2024 objectives, the board of directors decided the distribution of a first interim dividend of 0.79 €/share for fiscal year 2024, an increase close to 7 percent compared to 2023, and authorized the company to buy back shares for $2 billion in the second quarter of 2024,” the CEO added.

LNG sales down

During the first quarter, TotalEnergies sold 10.7 million tonnes of LNG, down 3 percent compared to 11 million tonnes in the same period last year, and down 9 percent compared to 11.8 million tonnes in the prior quarter.

TotalEnergies said LNG sales decreased quarter-to-quarter mainly due to lower demand in Europe as a result of milder winter weather and high inventories.

Volumes were also impacted by partial downtime at Freeport LNG in the United States this quarter, it said.

Hydrocarbon production for LNG was up 6 percent quarter-to-quarter to 492 kboe/d, thanks to higher installations availability, mainly on Ichthys in Australia and QatarEnergy LNG N(2) in Qatar, as well as the increased supply of NLNG in Nigeria, TotalEnergies said.

Recovering Asian LNG demand

TotalEnergies said Brent prices are “strong” at around $90/b at the start of the second quarter 2024, supported by elevated geopolitical tensions and by the OPEC+ decision to maintain production quotas through the second quarter 2024.

These elevated prices are impacting refining margins, which had been elevated since the beginning of the year, it said.

Despite exiting winter at high gas storage levels, European gas prices have been trading within a range of $8 to $10/Mbtu at the beginning of the second quarter 2024, TotalEnergies noted.

“Recovering Asian LNG demand and limited global LNG capacity additions in 2024 support forward prices above $11/Mbtu for the 2024-2025 winter period,” it said.

“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 between $9 and $10/Mbtu in the second quarter 2024,” it said.

Second quarter 2024 hydrocarbon production is expected to be between 2.4 and 2.45 Mboe/d, impacted by planned maintenance that is partially compensated by ramp-ups of Mero 2 in Brazil and Tyra in Denmark.

The company confirmed net investments guidance of $17-$18 billion in 2024, of which $5 billion is dedicated to integrated power.

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