TotalEnergies (NYSE: TTE) reported disappointing third-quarter earnings on Thursday, largely due to weak refining margins, lower LNG production, and declining oil prices. The company’s adjusted net income for the quarter was $4.1 billion, marking a 13% decrease from the previous quarter and down from $6.45 billion a year ago. This result represents TotalEnergies’ lowest quarterly profit in three years and fell short of analyst expectations, which had estimated earnings of $4.27 billion.
Following the announcement, TotalEnergies’ shares fell by 2.5% in Paris, while its New York-listed shares dropped 1.5% in pre-market trading.
The decline in earnings was primarily attributed to weak refining margins, which negatively impacted profits. Additionally, lower oil prices and unexpected production outages in Libya and at the Ichthys LNG project in Australia contributed to the disappointing results, compounding issues in the downstream business.
In the third quarter of 2024, TotalEnergies averaged 2.409 million barrels of oil equivalent per day (boepd) in oil and gas production, a 1% decline from the previous quarter. This decrease was due to unplanned shutdowns at Ichthys LNG and security issues in Libya, which were not entirely offset by increased production at the Mero 2 project in Brazil.
TotalEnergies had previously indicated that weak refining margins would significantly affect its third-quarter performance. Other European oil giants, BP and Shell, also noted challenges in the refining sector but managed to exceed analyst expectations when they reported their Q3 earnings earlier this week.
CEO Patrick Pouyanné stated that the “very sharp decrease in refining margins in Europe” and elsewhere contributed to a roughly 40% drop in adjusted net operating income and cash flow for the downstream division compared to the previous quarter. However, he mentioned that marketing and trading activities helped mitigate some of the impact from the steep decline in refining.
Despite the earnings downturn, TotalEnergies plans to maintain its share buyback program, announcing $2 billion in repurchases for the fourth quarter of 2024. This aligns with the company’s goal of achieving a total of $8 billion in buybacks for the year.
TotalEnergies also confirmed its net investment guidance for 2024, estimating between $17 billion and $18 billion.
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