TotalEnergies says Q3 LNG earnings dip due to lower prices

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

The company’s integrated LNG adjusted net income reached about $1.34 billion in the third quarter, a drop of 61 percent when compared to the third quarter in 2022 and a slight rise when compared to $1.33 billion in the previous quarter.

TotalEnergies attributed the drop mainly due to lower LNG prices, as well as “exceptional” trading results in the third quarter 2022, partially offset by higher production.

Cash flow from operations excluding working capital (CFFO) for integrated LNG was $1.65 billion in the third quarter, down 34 percent year-on-year (excluding Novatek), mainly due to lower LNG prices, it said.

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

The average LNG price was $9.56/MMBtu in the July-September period, logging a decrease when compared to $9.84/MMBtu in the previous quarter.

Also, the price nosedived compared to $21.51/MMBtu in the July-September period last year, when European demand surged as European countries worked to replace pipeline gas supplies with LNG.

Overall, TotalEnergies reported adjusted net income of $6.45 billion in the third quarter. This compares to $4.95 billion in the prior quarter and $9.86 billion in the same quarter last year.

“While implementing its balanced transition strategy that combines oil and gas and integrated power, TotalEnergies demonstrates once again this quarter its ability to leverage a supportive price environment, generating adjusted net income of $6.5 billion and return on average capital employed of over 20 percent,” chief executive Patrick Pouyanne, said.

He said that cash flow from operations increased to $9.3 billion in the third quarter and totaled $27.4 billion in the first nine months of 2023.

In the oil and gas business, production at nearly 2.5 Mboe/d is up 5 percent year-on-year, thanks to the start-up of several oil projects in Brazil and Iraq and gas projects in Oman and Azerbaijan, the CEO said.

“Integrated LNG confirms the robustness of its global integrated portfolio, with adjusted net operating income of $1.3 billion and cash flow of $1.6 billion,” Pouyanne said.

The company’s board decided the distribution of the third interim dividend for the 2023 financial year in the amount of €0.74/share, up 7.25 percent year-on-year, the CEO added.

LNG sales

During the third quarter, TotalEnergies sold 10.5 million tonnes of LNG, slightly up when compared to 10.4 million tonnes in the same period last year, and a drop compared to 11 million tonnes in the prior quarter.

TotalEnergies said LNG sales stabilized year-on-year and decreased quarter-to-quarter, due to the decrease in spot traded volumes in a “less volatile” environment.

During January-September, LNG sales decreased by 8 percent to 32.5 million tonnes.

Hydrocarbon production for LNG, excluding Novatek, stabilized quarter-to-quarter and was up by 18 percent year-on-year to 433 kboe/d mainly to due to a planned maintenance impacting production at Ichthys field in the third quarter 2022, it said.

Also, hydrocarbon production for LNG dropped by 3 percent in the January-September period to 445 kboe/d, the firm said.

Average LNG price in Q4 above $10 per MMBtu

“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.

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 above $10/MMbtu in the fourth quarter.

TotalEnergies expects hydrocarbon production to range between 2.4 and 2.5 Mboe/d in the fourth quarter, which reflects the impact of the sale of its oil sands assets in Canada.

The company confirmed 2023 guidance of net investments between $16 and $17 billion.

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