Company Reports

No-moat TotalEnergies' first-quarter adjusted net income fell to $5.1 billion from $6.5 billion in first-quarter 2023, largely due to lower gas prices and weaker refining margins. The decline in gas prices—the major European benchmark NBP is down 46% from a year ago—particularly weighed on integrated LNG results. Refining and chemical adjusted net income fell 41% year-over-year, largely due to weaker refining margins, which declined 21% from the prior year. Integrated power was a bright spot in the results as earnings increased 65% from a year ago as net capacity doubled. Oil and gas production decreased 2% from the year before to 2,461 thousand barrels of oil equivalent per day, excluding the impact of divested Canadian assets, production increased by 1.5% from the year before.

TotalEnergies' strategic plan aims to grow energy production on all fronts while pursuing its ambition of net-zero emissions by 2050 and delivering near-term cash flow growth even at relatively low oil prices. The emissions reduction goal matches many of its European peers', but in contrast, Total does not plan a quick retreat from hydrocarbons. Instead, it plans to grow oil and gas production near term while reducing portfolio emissions over time by expanding its ownership of renewable power and low carbon assets.

No-moat TotalEnergies' fourth-quarter adjusted net income fell to $5.2 billion from $7.6 billion the year before because of lower oil and gas prices and weaker refining margins, slightly missing market expectations. As with the third quarter, the decline in gas prices in particular weighed on E&P and integrated LNG results. Integrated power maintained its momentum with continued earnings growth, which management expects to carry over to 2024 with cash flow of between $2.5 billion and $3.0 billion. Excluding Novatek volumes, oil and gas production fell slightly in the fourth quarter but increased 2% from the year before to 2,483 thousand barrels of oil equivalent per day.

No-moat TotalEnergies' third-quarter adjusted net income fell to $6.5 billion from $9.9 billion in third-quarter 2022 because of lower oil and gas prices and weaker refining margins. The decline in gas prices—major benchmarks were down about 70% from a year ago—in particular weighed on E&P and integrated LNG results and also likely contributed to the latter segment’s weaker trading results compared with the exceptional result a year ago. Integrated power proved to be a bright, albeit still small, spot in the results as earnings continue to grow, more than doubling from a year ago, given growing renewable capacity. Excluding Novatek volumes, oil and gas production increased 5% from the year before to 2,476 thousand barrels of oil equivalent per day.

As its annual strategic update, Total Energies maintained its prior strategy of growing total energy production through the two pillars of oil and gas and integrated power. Oil and gas production is expected to grow 2%-3% per year on average through 2028, driven by LNG volumes, leading to over $3 billion in cash flow growth. In integrated power, Total plans to deliver $2 billion in cash flow growth through 2028, at which point it will be free cash flow positive and deliver returns on capital employed of 12%. Combined with a $1 billion increase from downstream assets, it will add $6 billion in total cash flow from 2023 levels by 2028, assuming a flat nominal price deck. It maintained its capital spending guidance of $16 billion-$18 billion per year, while retaining the flexibility to further reduce it by $2 billion if conditions warrant.

TotalEnergies' strategic plan aims to grow energy production on all fronts while pursuing its ambition of net-zero emissions by 2050 and delivering near-term cash flow growth even at relatively low oil prices. The emissions reduction goal matches many of its European peers', but in contrast, Total does not plan a quick retreat from hydrocarbons. Instead, it plans to grow oil and gas production near term while delivering a reduction in portfolio emissions over time by expanding its ownership of renewable power and low carbon assets.

No-moat TotalEnergies' second-quarter adjusted net income results fell to $5.0 billion from $9.8 billion in second-quarter 2022 due to lower oil and gas prices and weaker refining margins. Excluding Novatek volumes, production increased 2% from the year before to 2,471 mboed. Our fair value estimate is unchanged.

TotalEnergies' strategic plan aims to grow energy production on all fronts while pursuing its ambition of net-zero emissions by 2050 and delivering near-term cash flow growth even at relatively low oil prices. The emissions reduction goal matches many of its European peers', but in contrast, Total does not plan a quick retreat from hydrocarbons. Instead, it plans to grow oil and gas production near term while delivering a reduction in portfolio emissions over time by expanding its ownership of renewable power and low carbon assets.

No-moat TotalEnergies reported first-quarter results that were lower from the same quarter a year before on the back of lower oil and gas prices, but largely met market expectations. Adjusted earnings fell to $6.5 billion from $9.0 billion in first-quarter 2022. We are not changing our $67/EUR 62 fair value estimate.

TotalEnergies reported fourth-quarter 2022 results that were modestly higher from the same quarter a year before on the back of higher oil and gas prices and refining margins, but still fell slightly short of market expectations. Adjusted earnings increased to $7.6 billion from $6.8 billion in fourth-quarter 2021.

TotalEnergies' strategic plan aims to grow energy production on all fronts while pursuing its ambition of net-zero emissions by 2050 and delivering near-term cash flow growth even at relatively low oil prices. The emissions reduction goal matches many of its European peers', but in contrast, Total does not plan a quick retreat from hydrocarbons. Instead, it plans to grow oil and gas production near term while delivering a reduction in portfolio emissions over time by expanding its ownership of renewable power and low carbon assets.

Although the third quarter brought record earnings for Exxon and nearly a record for Chevron, including both exceeding market expectations, we do not plan any material increases to our fair value estimates. As a result, both trade at a premium of 9% and 21%, respectively.

TotalEnergies reported strong third-quarter results that were modestly higher than the second quarter's despite lower oil prices and weaker refining margins, thanks to much stronger liquefied natural gas prices. Adjusted earnings of $9.9 billion slightly exceeded market expectations and soared from $4.8 billion last year. Adjusted earnings exclude a new $3.1 billion impairment charge related to the company's stake in Russia.

TotalEnergies' strategic plan aims to grow energy production on all fronts while pursuing its ambition of net-zero emissions by 2050 and delivering near-term cash flow growth even at relatively low oil prices. The emissions reduction goal matches many of its European peers', but in contrast, Total does not plan a quick retreat from hydrocarbons. Instead, it plans to grow oil and gas production near term while delivering a reduction in portfolio emissions over time by expanding its ownership of renewable power and low carbon assets.

After updating our fair value estimates for the no-moat European major integrated oils—BP (0.74 price to fair value), Shell (0.79), and TotalEnergies (0.76)—they continue to trade significant discounts to their narrow-moat U.S. counterparts Chevron (1.04) and Exxon (0.92). Outside of idiosyncratic company issues, the reason for the discount between the two groups is not entirely clear but is probably the result of a confluence of factors.

TotalEnergies' strategic plan aims to achieve net zero emissions by 2050 while delivering near-term financial performance in the event of a lower-oil-price environment. The emissions reduction goal is in line with many of its European peers', but in contrast to some, Total does not plan a quick retreat from oil and gas through divestment. Instead, it plans to reduce emissions over time by expanding its ownership of renewable power and low carbon assets.

TotalEnergies reported strong second-quarter results thanks to higher commodity prices, wider refining margins, and strong trading results. Adjusted earnings of $9.8 billion slightly exceeded market expectations and soared from $3.5 billion last year. Adjusted earnings exclude a $3.5 billion impairment charge related to the potential impact of sanctions on its stake in Russian oil company Novatek.

TotalEnergies reported strong first-quarter results thanks to higher commodity prices, wider refining margins, and strong trading results. Adjusted earnings of $9.0 billion exceeded market expectations and improved from $3.0 billion last year. Adjusted earnings exclude a $4.1 billion impairment charge related to the Arctic LNG 2 project taken by Total, given sanctions prohibiting export of liquefied natural gas technologies benefiting Russian companies.

After incorporating the most recent oil and gas prices into our models, we have increased our fair value estimates for Shell, BP and TotalEnergies by 18% on average. Our models now include oil prices of $101/barrel and $95/bbl in 2022 and 2023, respectively, while our long-term midcycle price assumption remains $60/bbl. Total now trades at the greatest discount at 0.74 of our fair value estimate. All three remain rated as no-moat firms.

TotalEnergies' strategic plan aims to achieve net zero emissions by 2050 while delivering near-term financial performance in the event of a lower-oil-price environment. The emissions reduction goal is in line with many of its European peers', but in contrast to some, Total does not plan a quick retreat from oil and gas through divestment. Instead, it plans to reduce emissions over time by expanding its ownership of renewable power and low carbon assets.