TotalEnergies SE Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Opening Remarks: Addressed challenging global environment, TotalEnergies' strengths in Oil & Gas portfolio (12+ years reserve life), 4% y-o-y Oil & Gas growth, 18% y-o-y Electricity growth, controlled costs, strong balance sheet. Maintained dividend €85 per share (7.6% y-o-y increase) and €2B share buyback for Q2.
• Jean-Pierre's Comments: Price environment in Q1 similar to Q4 2024. Adjusted net income $4.2B, FFO $7B. Hydrocarbons production growth, E&P strong results, LNG sales stable, Integrated Power progressing, downstream facing weak margins but resolving operational issues.

Segment Performance

• Hydrocarbons: Q1 production was 2.56 million barrel per equivalent per day, +4% y-o-y. Operating cost $4.9 per barrel equivalent. Full-year 2025 production growth guidance >3% y-o-y.
• Exploration & Production (E&P): Adjusted net operating income $2.5B, cash flow $4.3B in Q1, +6% and 9% q-to-q. Ballymore offshore field in US had first oil, Mero-4 in Brazil expected online Q3.
• Integrated LNG: LNG sales 10.6 million tonnes, adjusted net operating income $1.3B, +6% y-o-y, -10% q-o-q. Anticipates average LNG selling price $9-$9.5 per MBtu in Q2 2025.
• Integrated Power: Q1 adjusted net operating income $500M, cash flow $600M. Progressing on multiple fronts, signed 1.5 TWh power contract with SLB, deployed battery storage projects in Germany.
• Downstream: Adjusted net operating income $0.5B, cash flow $1.1B in Q1. Issues at Donges and productive refineries impacted cash flow, but refining utilization rate at 87% in Q1 2025.

Guidance

• Production: Reiterated full-year 2025 production growth guidance >3% y-o-y.
• Buybacks: Board announced up to €2B share buybacks for Q2, within guidance of $2B buyback in reasonable market conditions.
• CapEx: Reiterated full-year 2025 CapEx guidance $17B-$17.5B.

Risks

• Macroeconomic and Geopolitical: Uncertainties from Ukraine-Russia conflicts, US tariff policy, OPEC+ production cuts affecting oil demand and costs for US projects.
• Downstream Operational: Issues at Donges and productive refineries impacted cash flow in Q1.

Question and Answer

Q: Doug Leggate of Wolfe Research asked about sustaining buybacks and capital flexibility.

A: Patrick Pouyanné responded 40% cash flow for buyback is strong guidance, monitoring normalized gearing, and flexibility in CapEx based on market conditions.

Q: Michele della Vigna asked about tariff impact on US projects and electricity grid adaptation.

A: Patrick discussed tariff effects on US projects, LNG vessel concerns, and need for grid investment and flexible assets in electricity.

Q: Lydia Rainforth asked about growth CapEx and balance sheet deployment.

A: Patrick mentioned preserving fundamental growth projects, balance sheet countercyclical approach, and buybacks as current priority.

Q: Biraj Borkhataria asked about normalized gearing and Mozambique project.

A: Patrick explained normalized gearing calculation, Mozambique project progress.

Q: Irene Himona asked about buyback level and Namibia project.

A: Jean-Pierre discussed normalized gearing range and Namibia project timeline.

Q: Giacomo Romeo asked about buyback minimum and Argentina LNG.

A: Patrick referred to slide for buyback at $50, and Argentina not a priority due to unstable exchange policy.

Q: Matthew Lofting asked about payout revert and working capital.

A: Patrick discussed payout as at least 40% of cash flow, working capital seasonal and fiscal factors.

Q: Henri Patricot asked about integrated power farm downs and LNG FFO.

A: Jean-Pierre said farm downs are timing issues, LNG FFO guidance maintained.

Q: Martijn Rats asked about Russian gas return and LNG price.

A: Patrick was cautious on Russian gas return, LNG price guidance considers lag.

Q: Lucas Herrmann asked about FX impact on debt and associate dividends.

A: Jean-Pierre discussed FX neutrality and associate dividend timing.

Q: Paul Cheng asked about Egypt-Cyprus gas project.

A: Patrick discussed project progress and timeline.

Q: Christopher Kuplent asked about CFFO and renewable growth.

A: Jean-Pierre mentioned CFFO in line, renewable growth driven by demand.

Q: Jason Gabelman asked about LNG acquisition and trading.

A: Patrick discussed LNG acquisition contribution and trading difficulty.

Q: Alejandro Vigil asked about downstream outlook and marketing.

A: Jean-Pierre and Patrick discussed downstream margin pressure and marketing resilience.

Q: Henry Tarr asked about Russia peace deal.

A: Patrick said depends on peace deal conditions, Yamal Energy as prime asset.