TotalEnergies 2Q benefits from oil, gas price boost

TotalEnergies, formerly Total, benefited from higher oil and gas prices in the second quarter when it reported a profit even despite lower production. This allowed it to reduce its net debt and announce a share buyback programme.

Including inventory effects, the company made a profit of $2.21bn in the April-June period, compared with $3.34bn in the previous quarter and an impairments-driven loss of $8.37bn a year earlier. It took a exceptional capital loss of $1.38bn during the quarter from the sale of its interest in Venezuela's Petrocedeno, which it announced today.

Oil and gas production fell by 3pc year on year to 2.75mn b/d of oil equivalent (boe/d), driven by natural field declines. Oil production fell by 6pc, and gas output was unchanged.

"Given the outlook for Opec+ quotas in the second half of 2021, TotalEnergies anticipates its full-year 2021 hydrocarbon production to be around 2.85mn boe/d," it said. "The start-up and ramp-up of new projects, including Zinia Phase 2 in Angola, North Russkoye in Russia and Iara in Brazil, will contribute to increased production in the second half of 2021."

Higher oil and gas prices offset the fall in output and meant TotalEnergies' operating cash flow rose to $7.55bn in the quarter from $5.60bn in the previous three months and $3.48bn a year earlier.

"Downstream delivered very good performance, thanks to the strength of its integrated model, which allowed it to benefit from very high margins in petrochemicals and the rebound of Marketing and Services results to pre-crisis results, despite depressed European refining margins," said chief executive Patrick Pouyanne.

Refinery runs fell by 14pc year on year to 1.07mn b/d in the second quarter, during which time TotalEnergies shuttered its 222,000 b/d Donges refinery on economic grounds and undertook a planned shutdown of its 210,000 b/d Leuna refinery in eastern Germany. The firm permanently closed its 93,000 b/d Grandpuits refinery and sold the 109,000 b/d UK Lindsey refinery in the UK in the first quarter.

TotalEnergies' net debt gearing — including leases — fell to 22.9pc at the end of June from 23.7pc three months earlier. Excluding leases, gearing was 18.5pc, below the company's target of 20pc.

As a result, TotalEnergies will allocate 40pc of additional cash generated above $60/bl Brent to share buybacks. Unlike BP and Shell, the company did not cut its dividend last year, and it has kept it unchanged for the second quarter.

TotalEnergies plans its 2021 net investments in a $12bn-13bn range, with a quarter of that "dedicated to renewables and electricity."

By Konstantin Rozhnov