TotalEnergies misses Q2 estimates as production falls 4.3%

TotalEnergies SE missed second-quarter earnings and revenue estimates as lower hydrocarbon production offset the benefit of higher crude prices and strong refining margins.

"The earnings miss reflects a production decline that outweighed a favorable pricing environment," said Omar Tariq, oil and gas analyst at Edgen. "The 4.3% drop in output to 2,395 thousand barrels of oil equivalent per day was the primary headwind."

The Paris-based company reported adjusted earnings of $2.68 per share for the three months ended June 30, lagging the $3.07 consensus by 12.7%. Revenue climbed 27.8% from a year earlier to $57.1 billion but missed the $60.18 billion estimate by 5.13%. Net income came in at $5.4 billion, according to the company's earnings statement.

The results highlight the tension between surging commodity prices and operational constraints facing major oil producers. Brent crude averaged $103.8 a barrel in the quarter, up 52.9% from a year earlier, yet TotalEnergies' liquid production fell 6.4% to 1,410 thousand barrels per day. The company expects third-quarter production to grow about 3% from a year earlier, excluding the impact of the Middle East conflict.

The Exploration & Production segment delivered operating earnings of $3.23 billion, up 6.4% from a year earlier, while Refining & Chemicals posted a 362.7% surge to $1.6 billion on improved margins. Integrated LNG earnings fell 22.5% to $800 million as realized gas prices dropped 39.6% to $5.55 per thousand British thermal units. Integrated Power contributed $533 million in operating income, down 7.1%.

Cash flow from operations more than doubled to $10.86 billion, and free cash flow after organic investments reached $5.11 billion, up from $1.8 billion a year earlier. The company repurchased 16.9 million shares worth $1.5 billion in the quarter and authorized up to $1.5 billion in buybacks for the third quarter. Net debt leverage improved, with gearing including leases falling to 17.9% from 22.6% a year earlier.

The SATORP refinery in Saudi Arabia has been operating at 70% of nominal capacity since early May and is expected to return to full capacity by the end of the third quarter. TotalEnergies maintained its full-year capital expenditure guidance of $15 billion, including investments in low-carbon energy.

The results come ahead of earnings from peers including Devon Energy Corp., Murphy Oil Corp. and Occidental Petroleum Corp., which are scheduled to report in early August. All three companies are expected to show year-over-year earnings growth, with Occidental's consensus estimate pointing to a 400% increase.

This article is for informational purposes only and does not constitute investment advice.