TotalEnergies to Buy Back $2 Billion of Shares After Net Profit Rises — 3rd Update

By Pierre Bertrand

TotalEnergies said it would buy back $2 billion of shares this quarter after net profit rose in the first three months of the year, beating analysts' expectations.

The French oil-and-gas company said net profit was $5.72 billion compared with $5.56 billion a year earlier and analysts' expectations of $4.88 billion, according to a Visible Alpha consensus. On an adjusted basis, net profit rose 22% to $5.1 billion, largely due to softened natural-gas prices.

The company said it would hike its first interim dividend by around 7% to 0.79 euros ($0.85) a share for 2024.

Sales in the quarter fell to $56.28 billion from $62.60 billion as hydrocarbon production declined 2% on year to 2.46 million barrels of oil equivalent a day, while crude-oil prices rose but natural-gas prices fell. The company had previously anticipated first-quarter hydrocarbon production of more than 2.4 million barrels of oil equivalent a day.

The company, which earlier this week said it would further expand its natural-gas holdings in Malaysia, said it benefited from growth in liquefied natural gas production and from the start of operations in Brazil and Nigeria.

It expects hydrocarbon production in the second quarter to slip to between 2.4 million and 2.45 million barrels of oil equivalent a day due to planned maintenance.

Average Brent crude prices came to $83.2 a barrel during the quarter, a 3% on-year increase, while Henry Hub gas prices fell 22%, TotalEnergies said.

Brent crude prices have risen to around $90 a barrel during the second quarter so far, boosted by geopolitical tensions and by the decision of OPEC+ countries to keep quotas on oil production, it said.

These higher prices are hurting the company's previously elevated refining margins, it said.

Itsrefining utilization rate--which measures the proportion of actual refining relative to its maximum refining capacity--was 79% in the first quarter, and is expected to rise to above 85% in the current quarter, TotalEnergies said.

In the second quarter so far, European gas prices have traded within a range of $8 to $10 per million British thermal units. The company expects prices to rise above $11 per MMbtu in the 2024-25 winter period, it said. Henry Hub gas prices averaged at $2.1/MMbtu in the first quarter, TotalEnergies said.

Adjusted earnings from upstream activities, which fill the bulk of the company's coffers, declined 4% on year, while integrated LNG earnings fell 41% in the quarter. The company also posted on-year declines in adjusted earnings at its marketing and refining business units.

Adjusted earnings from the integrated power segment climbed by 65% to $611 million, making it the only business segment to report growth in the quarter. The unit reported net power production of 9.6 terawatt hours, up 14% on year, while renewable power production increased 56% on year. The unit's net installed capacity as of the end of the quarter stood at 19.5 gigawatts, a 54% on-year increase, TotalEnergies said.

The company has been working on expanding and developing its integrated power unit as part of its energy-transition strategy. Late last year, TotalEnergies bought three gas-fired power plants in Texas with a total capacity of 1.5 gigawatts for $635 million.

TotalEnergies confirmed on Friday its plan to invest $5 billion in the business segment, part of the $17 billion to $18 billion of net investments planned for the year.

Write to Pierre Bertrand at pierre.bertrand@wsj.com

(END) Dow Jones Newswires

April 26, 2024 05:57 ET (09:57 GMT)

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