July 25, 2024 [LNG Prime]- France’s TotalEnergies said on Thursday that the company’s integrated LNG business logged a decline in its adjusted net operating income in the second quarter of this year due to lower prices.
The company’s integrated LNG adjusted net income reached about $1.15 billion in the second quarter, a drop of 13 percent compared to the second quarter in 2023.
Compared to $1.22 billion in the previous quarter, integrated LNG adjusted net income dropped 6 percent.
TotalEnergies attributed the drop to lower LNG prices and sales.
“Moreover, gas trading did not fully benefit in markets characterized by lower volatility than during first half of 2023,” it said.
Cash flow from operations excluding working capital (CFFO) was $1.22 billion in the second quarter 2024, down 9 percent quarter-to-quarter, for the same reasons, TotalEnergies said.
Earlier this month, TotalEnergies said its average LNG price was $9.32/MMBtu in the April-June period, down by 2.7 percent compared to $9.58/MMBtu in the previous quarter.
The average price decreased compared to $9.84/MMBtu in the second quarter of 2023, while the company’s average price was $9.56/MMBtu in the third quarter last year and $10.28/MMBtu in the fourth quarter.
Net income at $4.7 billion
Overall, TotalEnergies reported adjusted net income of $4.67 billion in the second quarter.
This compares to $5.11 billion in the prior quarter and $4.95 billion in the same quarter in 2023.
“TotalEnergies generated robust financial results in the second quarter, with adjusted net income of $4.7 billion and cash flow of $7.8 billion resulting in first half adjusted net income and cash flow of close to $10 billion and $16 billion, respectively,” chief executive Patrick Pouyanne, said.
During the second quarter, upstream production was 2.44 Mboe/d, benefiting from high availability of production facilities, he said.
“Comforted by robust results at mid-year, in line with 2024 objectives, the board of directors decided to maintain the second interim dividend at 0.79 €/share for fiscal year 2024, an increase close to 7 percent compared to 2023, and authorized the company to buy back shares for up to $2 billion in the third quarter of 2024,” Pouyanne said.
LNG sales down
During the second quarter, TotalEnergies sold 8.8 million tonnes of LNG, down 20 percent compared to 11 million tonnes in the same period last year, and down 18 percent compared to 10 million tonnes in the prior quarter.
TotalEnergies said LNG sales decreased quarter-to-quarter notably due to lower spot purchases, in a context of lower LNG demand in Europe.
During January-June, LNG sales decreased 12 percent to 19.5 million tonnes.
Hydrocarbon production for LNG in the second quarter 2024 was up 1 percent quarter-to-quarter, notably linked to the entry into the Dorado gas field (Eagle Ford basin) in the United States early in the second quarter 2024, TotalEnergies said.
Average LNG selling price to be around $10/MMbtu in Q3
TotalEnergies said Brent prices remain above $80/b at the start of the third quarter, with the OPEC+ countries having declared in early June 2024 the intention to continue their policy to sustain a stable oil market.
Global refining margins, which have sharply decreased since the end of the first quarter 2024, remain impacted by low diesel demand in Europe, as well as by the market normalization following the disruption in Russian supply, it said.
Given the lower seasonal demand in Europe, European gas prices are expected to be between $8 and $10/MMbtu in the third quarter 2024.
However, in a context of supply tensions, Asian LNG prices are above $12/MMbtu, supported by higher demand, notably in China and India, TotalEnergies said.
Given the evolution of oil and gas prices in recent months and the lag effect on price formulas, TotalEnergies anticipates that its average LNG selling price should be around $10/MMbtu in the third quarter 2024.
Third quarter 2024 hydrocarbon production is expected to be between 2.4 and 2.45 Mboe/d.
The company confirmed net investments guidance of $17-$18 billion in 2024, of which $5 billion is dedicated to integrated power.
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