TotalEnergies achieves ‘robust’ multi-billion profit while balancing energy transition scales

Even though the energy landscape is surrounded by uncertainty, TotalEnergies has managed to tuck strong financial and operating results for the fourth quarter and full year 2023 under its belt. The French energy giant’s adherence to its strategy, which employs a balanced approach between oil and gas, with an emphasis on LNG, and low-carbon and green sources that drive the energy transition journey forward, seems to have paid off.

Based on the oil majors’ results for 4Q and the full year 2024, their profits took a hit due to a significant drop in oil and gas prices from the 2022 highs. However, all of these players have reported multi-billion-dollar profits, as hammered home by Shell, Chevron, ExxonMobil, and BP, which posted profits of $28 billion in 2023 compared to $39.9 billion in 2022; $21.37 billion last year versus $35.5 billion in 2022; $36 billion in 2023 in comparison with $55.7 billion from the year before; and $13.8 billion in 2023 compared with $27.7 billion in 2022, respectively.

While announcing “robust” results in line with its objectives and confirming the relevance of its strategy in an uncertain environment, TotalEnergies, which is celebrating its 100th birthday in 2024, disclosed a net income of $5.06 billion for the fourth quarter of 2023, compared to a net income of $6.7 billion in the third quarter of 2023 and $3.3 billion in the fourth quarter of 2022.

The firm also disclosed a net income of $21.4 billion for the full year 2023, a 4% increase compared to $20.5 billion for the full year 2022. The French giant’s adjusted net income was $5.2 billion in 4Q 2023, compared to $6.5 billion in 3Q 2023 and $7.6 billion in 4Q 2022. The firm’s adjusted net income for 2023 was $23.2 billion, a 36% decrease compared to $36.2 billion for the full year 2022.

This content is available after accepting the cookies.

Change cookie-settings View on Twitter.

Patrick Pouyanné, CEO of TotalEnergies, commented: “In an uncertain environment, TotalEnergies’ balanced transition strategy, which combines growth in Oil & Gas, in particular in LNG, and Integrated Power, delivered strong results in 2023, in line with its objectives. During the fourth quarter, TotalEnergies generated adjusted net income of $5.2 billion and cash flow of $8.5 billion. IFRS net income was $5.1 billion.”

Pouyanné further added that TotalEnergies once again achieved top tier 20% return on equity and 19% return on average capital employed while investing $16.8 billion, including 35% for low-carbon energies mainly in power. The company’s ordinary dividends increased by 7.1% and the $9 billion buybacks were wrapped up, of which $1.5 billion was linked to the Canadian asset disposals.

The French giant’s adjusted net operating income from business segments was $5.7 billion in 4Q 2023, compared to $6.8 billion in 3Q 2023 and $8.2 billion in 4Q 2022, due to lower oil and gas prices and refining margins compared to the exceptional environment in 2022. TotalEnergies’ adjusted net operating income from business segments for the full year 2023 was $25.1 billion, a drop of 35% compared to $38.5 billion for the full year 2022.

The company posted an adjusted EBITDA of $11.7 billion for the fourth quarter of 2023, compared to $13.06 billion for 3Q 2023 and $15.99 billion in 4Q 2022. The firm’s adjusted EBITDA was $50.03 billion for the full year 2023, which represents a 30% fall from $71.6 billion recorded for the full year 2022.

Furthermore, TotalEnergies’ cash flow from operations excluding working capital (CFFO) was $8.5 billion in 4Q 2023, compared with $9.34 billion in 3Q 2023 and $9.14 billion in 4Q 2022. The cash flow from operations excluding working capital for full-year 2023 was $35.95 billion, down 21% compared to $45.73 billion in 2022.

The company’s cash flow from operating activities was $16.15 billion in 4Q 2023, compared with $9.50 billion in 3Q 2023 and $5.62 billion in 4Q 2022. The cash flow from operating activities for full-year 2023 was $40.68 billion, down 14% compared to $47.37 billion in 2022.

This content is available after accepting the cookies.

Change cookie-settings View on Twitter.

Pouyanné highlighted: “In the Oil & Gas business, fourth quarter production was 2.46 Mboe/d, which benefited from 7% LNG production growth quarter-to-quarter. In a softening Brent environment, Exploration & Production delivered a strong quarter, with adjusted net operating income of $2.8 billion and cash flow of $4.7 billion. Operating costs decreased to 5.1 $/boe thanks to the divestment of high-cost Canadian oil sands assets.

“Full-year 2023 total production increased 2% year-on-year (excluding Novatek), driven by strong LNG production growth of 9%, and Exploration & Production generated strong adjusted net operating income of $10.9 billion and cash flow of $19.1 billion. TotalEnergies’ exploration successes continued in Namibia, Suriname, and Nigeria. The company reports a reserves replacement ratio of 141% in 2023 and a proven reserves life index of 12 years as of December 31, demonstrating the strength of its project portfolio.”

The hydrocarbon production was 2,462 thousand barrels of oil equivalent per day (kboe/d) in 4Q 2023, down 1% quarter-over-quarter, thanks to LNG production growth, which partially compensated for the Canadian oil sands assets disposals. On the other hand, the hydrocarbon production was 2,483 thousand barrels of oil equivalent per day (kboe/d) in 2023, up 2% year-on-year, excluding Novatek.

This is comprised of a 4% boost due to start-ups and ramp-ups, including Johan Sverdrup Phase 2 in Norway, Mero 1 in Brazil, Ikike in Nigeria, Block 10 in Oman, and Absheron in Azerbaijan; a 1% addition due to improved security conditions in Nigeria and Libya; and a 1% increase due to lower planned maintenance and unplanned shutdowns, encompassing the Kashagan field in Kazakhstan.

In addition, there is a decrease of 1% related to the end of the Bongkot operating licenses in Thailand, exit from Termokarstovoye in Russia, disposal of the Canadian oil sands assets, and effective withdrawal from Myanmar, partially offset by the entries in the producing fields of SARB Umm Lulu in the United Arab Emirates, Sépia and Atapu in Brazil, Ratawi in Iraq, and the increased participation in the Waha concessions in Libya, along with a drop of 3% due to the natural field declines.

“Integrated LNG results remain robust with fourth quarter adjusted net operating income of $1.5 billion and cash flow of $1.8 billion, up 8% and 7% quarter-over-quarter, respectively, and driven by higher production and strengthening prices. For full-year 2023, Integrated LNG generated annual adjusted net operating income of $6.2 billion and cash flow of $7.3 billion, which is lower than the exceptional results in 2022 but higher than 2021 thanks to growth in its portfolio,” underlined Pouyanné.

TotalEnergies’ hydrocarbon production for LNG, excluding Novatek, was up 7% quarter-to-quarter, reflecting lower unplanned shutdowns. For the full year 2023, hydrocarbon production for LNG, without Novatek, was up 9% compared to 2022 due to increased supply to NLNG in Nigeria and higher availability of Ichthys LNG in Australia and Snøvhit in Norway.

During 4Q 2023, LNG sales increased 13% quarter-to-quarter, mainly due to higher production and higher spot volumes while LNG sales for full-year 2023 were down 8% compared to 2022, mainly due to lower spot volumes related to lower demand in Europe, as a result of a milder winter weather and high inventories.

Pouyanné underscored: “During the fourth quarter, Integrated Power continued its profitable growth with higher adjusted net operating income and cash flow of $527 million and $705 million, respectively. Full-year 2023 cash flow totaled $2.2 billion, which is more than double compared to 2022. Integrated Power achieved an ROACE of 9.8% in 2023, demonstrating the relevance of the company’s integrated business model.

“TotalEnergies announced several acquisitions, further enhancing its Integrated Power business model in the U.S. and in Europe: 1.5 GW of flexible CCGT capacity in Texas and a renewable energy aggregator (9 GW) and a battery storage developer (2 GW) in Germany.”

The French giant’s net power production was 8.0 TWh in the fourth quarter of 2023, down 10% quarter-to-quarter due to lower CCGT generation. For the full-year 2023, net power production was 33.4 TWh, up 1% year-on-year as lower generation from flexible capacity, whose utilization rate was exceptional in 2022 due to the energy crisis in Europe, was more than compensated by growing electricity generation from renewables that is related to the integration of 100% of Total Eren and contribution from Clearway in the U.S. and Casa dos Ventos in Brazil.

The firm’s gross installed renewable power generation capacity reached more than 22 GW at the end of the fourth quarter of 2023, up by more than 2 GW quarter-to-quarter, including 1.3 GW installed in the U.S. (Clearway, Danish) and 0.5 GW from the creation of a new 50/50 JV with AGEL in India. In 2023, gross installed renewable capacity grew by nearly 6 GW.

The company’s Scope 1 and 2 emissions from operated installations were down 22% year-on-year in the fourth quarter of 2023, thanks to the continuous decline in flaring emissions on exploration and production facilities and the use of gas-fired power plants in 2022.

TotalEnergies’ 2023 methane emissions from operated facilities were down 19% compared to 2022 mainly due to a continuous decrease in flaring and fugitive emissions in the Exploration & Production segment. These emissions were also down 47% compared to the 2020 reference level.

According to TotalEnergies, Brent prices are navigating around 80 $/b at the start of 2024 against the backdrop of an uncertain economic environment, with oil markets facing geopolitical tensions in the Middle East due to the Red Sea and Israel-Gaza crises on one hand and non-OPEC production growth balanced by OPEC+ policy on the other hand.

Based on the data from the International Energy Agency (IEA), global oil demand is anticipated to grow 1.2 Mb/d in 2024, which is in line with the average annual demand growth rate during 2000-2023 of 1.2% per year. TotalEnergies expects LNG sales above 40 Mt over the year, as LNG markets are anticipated to remain enveloped in tension due to very limited, only 2%, LNG capacity additions forecasted in 2024 and growing demand thanks to lower LNG prices.

Moreover, the French player anticipates that its average LNG selling price should be stable at around $10/Mbtu in the first quarter of 2024, given the evolution of oil and gas prices in recent months and the lag effect on price formulas. The company’s 1Q 2024 expected hydrocarbon production should be above 2.4 Mboe/d due to the start-up of Mero 2 in Brazil and the disposals of Canadian upstream assets, effective during 4Q 2023.

TotalEnergies predicts hydrocarbon production growth of 2% in 2024 compared to 2023, excluding Canada, due to several additional project start-ups, including Tyra in Denmark and Anchor in the U.S. The firm’s full-year refining utilization rate is expected to increase to above 85% in 2024 with no major turnarounds planned.

The French energy giant emphasizes that growth momentum will continue in Integrated Power during 2024 with cash flow before working capital forecast to increase to between $2.5 and $3 billion. The increase is supported by a net electricity generation boost to over 45 TWh; in the context of renewables gross installed capacity is increasing by about 6 GW to 28 GW. Throughout 2024, TotalEnergies expects net investments of $17-18 billion, of which $5 billion is dedicated to Integrated Power.

“Confident in the strong fundamentals of the company, which celebrates its 100-year anniversary in 2024, the board of directors confirmed a shareholder return policy for 2024 targeting >40% CFFO payout, which will combine an increase in interim dividends of 6.8% to €0.79/share and $2 billion of share buybacks in the first quarter of 2024,” explained the firm.

This will be done in line with the company’s cash flow allocation priorities, encompassing a sustainable ordinary dividend through cycles that were not cut during the Covid crisis, and whose increase is supported by underlying cash flow growth; investments to support a strategy balanced between the various energies; maintaining a strong balance sheet; and buybacks to share surplus cash flow generated at high prices.

After the French oil major disclosed its results for 2023, some NGOs alongside climate and environmental activists have been quick to express their disapproval at the record profits, citing the climate and cost of living crises, alongside inflation as justification for the opposition.

Just like all other major oil and gas players, TotalEnergies did not escape such criticism, especially since the 2023 results are perceived to be the “highest profit” in the firm’s history, according to Greenpeace. This performance is underpinned by the success of the liquefied natural gas and electricity divisions.

This content is available after accepting the cookies.

Change cookie-settings View on Twitter.

Those who were angered by the company’s profits pointed out that the firm invested three times more money in fossil fuels and shareholder pay-outs than in climate mitigation measures.

“If you had earned €230,000 per day since the French Revolution, you still would not have made as much money as TotalEnergies in just one year,” wrote Greenpeace France in a social media post while commenting on the French firm’s profit for 2023.

This content is available after accepting the cookies.

Change cookie-settings View on Twitter.

---

ADVERTISE ON OFFSHORE ENERGY

𝐃𝐨 𝐲𝐨𝐮 𝐰𝐚𝐧𝐭 𝐭𝐨 𝐠𝐫𝐚𝐛 𝐭𝐡𝐞 𝐚𝐭𝐭𝐞𝐧𝐭𝐢𝐨𝐧 𝐨𝐟 𝐲𝐨𝐮𝐫 𝐭𝐚𝐫𝐠𝐞𝐭 𝐚𝐮𝐝𝐢𝐞𝐧𝐜𝐞 𝐢𝐧 𝐨𝐧𝐞 𝐦𝐨𝐯𝐞? 𝐋𝐨𝐨𝐤 𝐧𝐨 𝐟𝐮𝐫𝐭𝐡𝐞𝐫 𝐭𝐡𝐚𝐧 𝐎𝐟𝐟𝐬𝐡𝐨𝐫𝐞 𝐄𝐧𝐞𝐫𝐠𝐲! 𝐎𝐮𝐫 𝐜𝐨𝐧𝐭𝐞𝐧𝐭 𝐢𝐬 𝐫𝐞𝐚𝐝 𝐛𝐲 𝐭𝐡𝐨𝐮𝐬𝐚𝐧𝐝𝐬 𝐨𝐟 𝐩𝐫𝐨𝐟𝐞𝐬𝐬𝐢𝐨𝐧𝐚𝐥𝐬 𝐞𝐧𝐠𝐚𝐠𝐞𝐝 𝐢𝐧 𝐨𝐢𝐥 & 𝐠𝐚𝐬, 𝐦𝐚𝐫𝐢𝐭𝐢𝐦𝐞, 𝐨𝐟𝐟𝐬𝐡𝐨𝐫𝐞 𝐰𝐢𝐧𝐝, 𝐠𝐫𝐞𝐞𝐧 𝐦𝐚𝐫𝐢𝐧𝐞, 𝐡𝐲𝐝𝐫𝐨𝐠𝐞𝐧, 𝐬𝐮𝐛𝐬𝐞𝐚, 𝐦𝐚𝐫𝐢𝐧𝐞 𝐞𝐧𝐞𝐫𝐠𝐲, 𝐚𝐥𝐭𝐞𝐫𝐧𝐚𝐭𝐢𝐯𝐞 𝐟𝐮𝐞𝐥𝐬, 𝐬𝐡𝐢𝐩𝐩𝐢𝐧𝐠, 𝐚𝐧𝐝 𝐨𝐭𝐡𝐞𝐫 𝐢𝐧𝐝𝐮𝐬𝐭𝐫𝐢𝐞𝐬 𝐨𝐧 𝐚 𝐝𝐚𝐢𝐥𝐲 𝐛𝐚𝐬𝐢𝐬.

ADVERTISING OPTIONS

Follow Offshore Energy’s Fossil Energy market on social media channels: