TotalEnergies(TTE) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - TotalEnergies reported an adjusted net income of $5.1 billion for Q1 2024, down only 2$8.2 billion [28][12] - The return on average capital employed was 16.5%, and the company maintained a net investment guidance of $17 billion to$18 billion for 2024 [12][11] - The interim dividend was increased by 7% year-on-year to EUR 0.79 per share, reflecting a strong commitment to shareholder returns [17][9] Business Line Data and Key Metrics Changes - Exploration and production reported adjusted net operating income of $2.6 billion and cash flow of$4.5 billion, with upstream production costs at $4.6 per barrel [13][12] - Integrated LNG adjusted net operating income was$1.2 billion, impacted by lower LNG prices, with cash flow totaling $1.3 billion [14][12] - Downstream refinery utilization rate was stable at close to 80$480 million [15][16] Market Data and Key Metrics Changes - Brent prices were flat quarter-to-quarter, down only 1% to $83 per barrel, while refining margins increased by 36% [28][12] - European gas prices declined by 35% due to a mild winter and high storage levels [28][12] - First quarter LNG sales decreased by 9% quarter-to-quarter, primarily due to lower demand in Europe [30][12] Company Strategy and Development Direction - The company is advancing its two-pillar strategy focused on oil and gas production and integrated power development, aiming to become net cash positive by 2028 [4][22] - TotalEnergies is making progress on several projects, including the Cameia project in Angola and the Marsa LNG project in Oman, which sets a new low-carbon intensity standard [6][7] - The company is also expanding its LNG position and acquiring assets in Malaysia to enhance its integrated gas business [8][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining production guidance of 2.4 million to 2.5 million barrels of oil equivalent per day for 2024, reflecting a 2% growth year-on-year [29][12] - The company anticipates an increase in refining utilization rates to around 85% in Q2 2024 as operations normalize [32][12] - Management remains optimistic about the LNG market, expecting demand to grow despite potential delays in new capacities [81][12] Other Important Information - The company celebrated its 100th anniversary, emphasizing its commitment to energy transition and sustainable practices [3][21] - TotalEnergies is now the number one company in Europe in terms of employee capital ownership, with over EUR 11 billion owned by employees [27][12] - Gearing increased to around 10% at the end of Q1 2024, compared to 5% at the end of the previous year [33][12] Q&A Session Summary Question: What is the outlook for the LNG market given potential EU sanctions on Russian LNG? - Management indicated that if EU sanctions were imposed on Yamal LNG, it could lead to an increase in LNG prices, benefiting TotalEnergies' portfolio [94][12] Question: Can you provide details on the FID for Namibia and the size of resources? - Management stated that they are comfortable with the FID in Namibia and expect to be the first to produce oil there, with ongoing exploration to capture additional resources [67][69] Question: What is the rationale behind the acquisition of SapuraOMV? - The acquisition strengthens TotalEnergies' position in Malaysia and is seen as a strategic move to enhance its gas business, particularly in relation to LNG pricing [110][12] Question: How does the company view the potential for a U.S. listing? - Management confirmed that the Board is considering a U.S. listing to better access U.S. shareholders and will report back by September [104][12] Question: What are the expectations for share buybacks in the current environment? - Management indicated that share buybacks would be considered if cash flows exceed the base case, but no specific formula is in place [86][12]