TotalEnergies says Q2 LNG earnings, sales drop

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

The company’s integrated LNG adjusted net income reached about $1.33 billion, a drop of 40 percent when compared to the second quarter in 2022 and also down when compared to $2.07 billion in the previous quarter.

TotalEnergies attributed the drop mainly due to lower spot and forward LNG prices.

Earlier this month, TotalEnergies reported a drop in its average price for LNG equity sales in the second quarter.

The average LNG price was $9.84/MMBtu in the April-June period, logging a significant decrease when compared to the previous three-month period but also year-on-year.

Overall, the group reported adjusted net income of $5 billion in the second quarter, down by 49 percent year-on-year and down when compared $6.5 billion in the prior quarter.

“In a favorable but softening oil and gas environment TotalEnergies once again delivered this quarter robust results, strong cash flow, and attractive shareholder distribution,” chief executive Patrick Pouyanne, said.

He said that TotalEnergies generated $8.5 billion in cash flow in the second quarter and $18 billion in the first half of 2023, while production of 2.5 Mboe/d was up 2 percent year-on-year, thanks to new project start-ups.

“The integrated LNG segment posted cash flow of $1.8 billion, benefiting from the high margins captured in 2022. Adjusted net operating income was $1.3 billion reflecting lower LNG prices (averaging 10 $/MMBtu in the second quarter) and softer trading results in less volatile markets,” Pouyanne said.

The company’s board decided the distribution of a second interim dividend for the 2023 financial year in the amount of €0.74/share, up 7.25 percent year-on-year, and authorized the company to buy back shares for $2 billion in the third quarter of 2023, the CEO added.

LNG sales down due to lower demand in Europe

During the second quarter, TotalEnergies sold 11 million tonnes of LNG, down by 6 percent when compared to the year before and flat compared to the prior quarter.

TotalEnergies said LNG sales decreased year-on-year due to lower demand in Europe and are stable quarter-on-quarter, beneficiating from the restart of Freeport LNG.

Hydrocarbon production for LNG, excluding Novatek, rose by 8 percent to 438 kboe/d in the same quarter from the same quarter last year due to the increased supply of NLNG following improved security conditions in Nigeria and the restart of Snohvit in Norway during the second quarter 2022, the firm said.

During January-June, LNG sales dropped by 12 percent to 22 million tonnes, while hydrocarbon production for LNG rose by 8 percent to 451 kboe/d, it said.

Average LNG price in Q3 between $9 and $10 per MMBtu

TotalEenergies said that European natural gas prices are currently around $10/MMBtu due to high inventories in Europe, while demand recovery in Asia and tension on supply capacities in Europe support forward prices above $15/MMBtu for the winter of 2023/2024.

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/MMBtu in the third quarter 2023.

For the third quarter 2023, TotalEnergies expects hydrocarbon production of around 2.5 Mboe/d, notably supported by the start-up of Absheron field in Azerbaijan.

The company confirmed 2023 guidance of net investments between $16 and $18 billion, including $5 billion in low-carbon energies.

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