TotalEnergies(TTE) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported adjusted net income of $4.1 billion for Q3 2024 and$13.9 billion for the first nine months of the year, with a return on average capital employed of 14.6% [5][18] - The European refining margin marker decreased by 66% quarter-to-quarter, falling below the breakeven level of $25 per ton [5][14] - Brent crude oil prices decreased by 5$80 per barrel, while the average LNG price decreased by 6% [5] Business Segment Data and Key Metrics Changes - Hydrocarbon production for oil and gas was 2.41 million barrels of oil equivalent per day, within the guidance range [6] - Adjusted net operating income for integrated LNG was $1.1 billion in Q3, reflecting lower LNG production and gas trading performance [9] - Integrated Power's adjusted net operating income was close to$0.5 billion for Q3, totaling $1.6 billion year-to-date, up 21$10 per million BTU for Q4 2024, slightly higher than the previous quarter [10] Company Strategy and Development Direction - The company aims for a balanced strategy focusing on both hydrocarbons and integrated power, emphasizing cost discipline and a strong balance sheet [4] - The GranMorgu project in Suriname was sanctioned, expected to contribute to medium-term production growth of 3% per year through 2030 [8] - The company is enhancing its integration along the gas value chain by acquiring low-cost upstream dry gas supply in Texas [10] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging environment with deteriorating refining margins and emphasized the importance of maintaining a low breakeven portfolio [5][4] - The company remains moderately optimistic about refining margins improving in the future, despite current challenges [39] - Management highlighted the importance of cash flow generation and indicated that the company is on track to meet its guidance for the year [36] Other Important Information - The company reported $1.1 billion in negative adjustments to net income related to impairments, primarily linked to the bankruptcy of SunPower [16] - A working capital release of$2 billion is anticipated for Q1 2024, following a release of 0.4 billion in Q3 2024 [17] Q&A Session Summary Question: Cash flow concerns and Argentina plans - Management acknowledged a lag effect on cash flow due to timing issues with dividends and indicated that cash flow is expected to align with expectations [21][23] - Regarding Argentina, management stated that investment decisions depend on the ability to repatriate dividends, and they are evaluating options in the region [24][25] Question: Updates on Uganda and Mozambique projects - The Uganda project is progressing as planned, with production expected to start by mid-2026 [27] - In Mozambique, stability in the political environment is crucial for project restart, and management is working on financing aspects [28][30] Question: Refining margins and LNG capacity delays - Management expressed moderate optimism about refining margins improving, despite current low levels [39] - The anticipated wave of LNG capacity is expected to begin in 2027, with no significant additional supply expected in 2025 [46][48] Question: Renewable energy partnerships and acquisitions - Management confirmed successful negotiations with RWE for offshore wind projects and emphasized a preference for organic growth over acquisitions [51][55] Question: Refining portfolio and potential asset rationalization - Management indicated that while the breakeven is 25, they are not considering economic run cuts at this time, focusing instead on optimizing asset use [59][60] - The company is prepared to transform refineries based on structural weaknesses rather than current market conditions [68]