PARIS – TotalEnergies (NYSE: TTE) said its fourth-quarter results would benefit from a slight pickup in refining margins, increased production, and stronger gas trading and power sales, signaling a potential turnaround at the end of a year marked by low oil prices and refined products demand.
The world’s top oil and gas companies have watched their profits decline throughout 2024 following record earnings in the previous two years, as global oil demand faltered and energy prices steadied after jumps triggered by Europe’s loss of Russian gas supply.
Total’s adjusted net income dropped for five straight quarters to hit a three-year low at the end of September, hurt by upstream outages and a collapse in European refining margins.
However, the French oil major, in a trading update on Thursday, said its European refining margin marker rose to $25.90 per metric ton in the final three months of 2024 from $15.40 in the previous quarter, although it was still only half the $50.10 achieved a year earlier.
Integrated LNG results will benefit from a 6% increase in production and sales prices above $10 per million British thermal units, with trading “back to the performance” of late 2023, Total said.
However, Upstream results will be hit by a $5 per barrel fall in oil prices, while the downstream refining and chemicals environment remains “weak.”
BP (NYSE: BP), Shell (NYSE: SHEL), and Exxon Mobil (NYSE: XOM) have all issued profit warnings this month.
RBC analyst Biraj Borkhataria said Total’s “resilient” update bucks the trend of the wider sector and should reassure investors that its annual $8 billion in share buybacks can be maintained.
Total’s shares were 2.02% higher by 0955 GMT.
In a research note, Jefferies analyst Giacomo Romeo said he expected Total’s adjusted net income for the quarter to reach $4.8 billion, which would be a 17% increase from last quarter.
The company said annual cash flow will be above $2.5 billion as guided, thanks to its integrated power division, which made between $500 million and $600 million in the fourth quarter.
Its debt-to-equity ratio will drop below 10% due to a $5 billion contribution from working capital.
