TotalEnergies SE Q3 FY2024 earnings call

• Strategy and Resilience: Emphasized balanced strategy, cost discipline, and strong balance sheet. Received constructive investor feedback on strategy.
• Financials: Adjusted net income $4.1 billion Q3, $13.9 billion YTD. ROACE 14.6% for 12 months ending Sept.
• Hydrocarbons Production: Production within guidance, project ramp-ups (Mero 2, Suncor, Fénix), sanctioned GranMorgu project with estimated 750M+ barrels recoverable oil.
• Integrated LNG: Sales increased despite production decrease, signed medium-term sales contracts in Asia, acquired dry gas supply in US Eagle Ford.
• Integrated Power: Delivered on targets, achieved milestones in renewables and partnerships, including upstream dry gas supply acquisition in Texas.
• Downstream: Refining margins challenged, but utilization rate expected high in Q4. Turnaround planned at Leuna refinery in Oct 2024.
• Impairments and Working Capital: $1.1 billion negative adjustment to net income from impairments (SunPower Chapter 11, South Africa asset exit). Working capital expected to reverse with $2 billion release in Q1 2024.
• Capital Discipline and Shareholder Distributions: Confirmed 2024 net investment guidance $16 - 18 billion, $2 billion buyback in Q1 2024, dividend growth with third interim dividend up ~77% Y/Y.

Hydrocarbons (Oil and Gas Production)

• Production in Q3: 2.41 million barrels of oil equivalent per day (within guidance of 2.4 - 2.45 million boe/day). Adjusted net operating income $2.5 billion, cash flow $4.3 billion, ROCE 15.6%. Exploration and production OpEx per barrel equivalents $4.9 for first nine months 2024 (below $5 target).

Integrated LNG

• Hydrocarbon production for LNG decreased 7% QoQ due to unplanned maintenance on Ichthys LNG. LNG sales increased 8% QoQ. Adjusted net operating income $1.1 billion in Q3. Anticipates LNG selling price ~$10 per million BTU in Q4 2024, slightly higher than Q3's $9.9.

Integrated Power

• Adjusted net operating income YTD $1.6 billion (up 21% YoY), cash flow YTD $1.95 billion (up 35%). Achieved milestones like startup of giant solar farms in US, CCGT acquisition in UK, partnerships in India, Germany, Netherlands.

Downstream (Refining & Chemicals)

• Q3 adjusted net operating income $0.6 billion, cash flow $1.2 billion. European refining margin $15 per ton in Q3 (below breakeven $25). Expecting refining utilization rate >85% in Q4 2024. Marketing and services adjusted net operating income $0.4 billion, cash flow $0.6 billion.

• Production: Q4 2024 production expected 2.4 - 2.45 million boe/day, benefiting from Libya disruption end and Mero 3 startup.
• LNG Price: Anticipates LNG selling price ~$10 per million BTU in Q4 2024, slightly higher than Q3.
• Refining Utilization: Anticipates refining utilization rate >85% in Q4 2024.
• Net Investment: Confirmed 2024 net investment $16 - 18 billion.
• Share Buybacks: $2 billion buyback expected in Q1 2024, full year $8 billion.

• Refining Margins: Sharp deterioration in European refining margins, below breakeven at $25 per ton.
• Upstream Disruptions: Unplanned shutdowns in Ichthys LNG, security-related issues in Libya.
• Nigeria Challenges: Sale of onshore assets to Chappal, progress on Nigeria 7 development, gas off-take close to Nigeria LNG.
• South Africa Assets: Exit on Blocks 11B, 12B and 567 due to difficult monetization of gas discoveries.
• Argentina Dividends: Restricted dividend repatriation, affecting CapEx allocation in oil window acreage.

Q: Cash flow and Argentina plans A: Lag effect on LNG SME cash flow; evaluating Argentina acreage with CapEx considerations and dividend repatriation issues Q: Uganda project, Mozambique elections, COP29 A: Uganda project progressing, Mozambique project financing and security, COP29 focus on carbon credit framework Q: Cash generation and CapEx threshold A: Cash flow in ballpark, CapEx flexibility based on oil price Q: Refining margins and LNG capacity delays A: Moderate optimism on refining margins, LNG capacity wave delayed to 2027, TTF average around $12 in 2025 Q: Renewable partnerships and acquisitions A: Positive on RWE partnership, no comment on competitor acquisitions Q: Refining margins and balance sheet gearing A: Continue to run refineries if covering variable costs, gearing to return to 11-12% by year end with working capital release Q: Suriname project and CFFO gap A: Suriname project sanctioned, CFFO gap due to gas and refining margins Q: Nigeria assets and write-offs A: Nigeria onshore asset sale progress, Nigeria 7 development, write-offs from SunPower and South Africa assets Q: Ichthys outage and debt A: Ichthys restarting, debt management with low cost of debt Q: Chemicals cash flow and Integrated Power ROACE A: Chemicals margins low due to macro, Integrated Power ROACE to return to expectations with farm downs Q: PNG LNG and biofuel demand A: PNG LNG retendering, biofuel demand cautious due to oversupply Q: Russia dividends and CapEx guidance A: Stuck dividends from Novatek, CapEx guidance confirmed