TotalEnergies has reported net income of $5.69 billion, up more than two and a half times from the first quarter, driven largely by its downstream and chemicals operations.
Adjusted EBITDA reached $18.74bn, versus $17.4bn in the first quarter. Cash flow from operations was $16.28bn, a big increase from the $7.62bn in the previous quarter.
Exploration and production contributed $4.72bn, a modest fall from the $5.02bn. Integrated gas, renewables and power also fell, from $3.05bn to $2.56bn.
However, refining and chemicals was up at $2.76bn, from $1.12bn and marketing reached $466 million, from $272mn.
“LNG sales rose to more than 25 million tonnes in the first half, with 60% in Europe, and TotalEnergies’ refineries raised the utilisation rate to nearly 90%,” Total CEO Patrick Pouyanné said.
The company took another $3.5bn impairment, largely based on international sanctions and its Novatek stake. Excluding Russia, adjusted net income was $9.1bn.
E&P provided cash flow of $7.4bn “despite a decrease in production in the quarter that was due to planned maintenance and security-related cuts in Nigeria and Libya”, Pouyanné said. “TotalEnergies approved the launch of projects such as Ballymore in the US, Begonia, CLOV Phase 3 in Angola as well as Eldfisk North in Norway.”
Oil production fell quarter on quarter, to 1.27mn barrels per day, while gas was also down slightly at 1.47mn boepd.
Royal Bank of Canada’s Biraj Borkhataria described the company’s result as neutral, speculating Total was “perhaps saving the fireworks for its September” capital markets day.
Total’s “results came in a touch above consensus expectations, with weaker upstream earnings offset by strong refining”, the RBC analyst said. The company “came in below our expectations across net income and cash flow”.
Pouyanné said the downstream had seen “exceptionally high refining margins on distillates and gasoline”. Given this, the company set out a fuel price cut for its French customers.
The variable cost margin for European refining reached $145.7 per tonne up from $46.3 quarter on quarter. On a year on year basis it was even higher, up 14.3 times, from $10.2 per tonne.
Total increased refinery throughput by 47% over the first quarter, among higher demand in Europe and the US. It restarted the Donges refinery, in France, and the Leuna refinery, in Germany.
However, total fuel sales were roughly flat. A recovery in aviation demand offset a decline in sales to commercial and industrial customers.
Owing to the company’s strong performance, Total cut net debt to $12.97bn, down from $17bn at the end of the first quarter. Net debt to capital ratio fell to 9.8%, from 12.5%.
Updated at 9:54 am with RBC comment.