TotalEnergies Reports Q4 Income Decline, Warns of Refining Margin Impact on 2024 Results

This decline was attributed to the retreat in oil and gas prices following the spike triggered by Russia's invasion of Ukraine.

TotalEnergies (TTEF.PA) disclosed a significant drop in its adjusted income for the fourth quarter of 2023, surpassing market expectations, while cautioning about the potential impact of weak refining margins on its 2024 performance.

The company’s profits, along with those of other oil majors, experienced a downturn in 2023, declining by approximately one-third from the record highs witnessed in 2022.

This decline was attributed to the retreat in oil and gas prices following the spike triggered by Russia’s invasion of Ukraine.

Shares of TotalEnergies dipped by 3% during midday trading in Paris, although they demonstrated a 2.8% increase over the past six months.

The French conglomerate reported a 31% decrease in net adjusted income to $5.2 billion, compared to $7.6 billion in the same quarter of the previous year, slightly missing analysts’ average forecast of $5.4 billion.

TotalEnergies’ CEO, Patrick Pouyanne, outlined the company’s expectations, anticipating a return of around 10% on its integrated power sector for 2024.

He indicated that a third of the investments earmarked for 2024 would be allocated to new petrol and gas projects.

Regarding specific projects, Pouyanne clarified that the Rio Grande Project in the United States remained unaffected by President Joe Biden’s decision to pause approvals for exports from new LNG projects.

However, uncertainty loomed over future export licenses due to the moratorium on certain U.S. LNG installations.

Additionally, TotalEnergies expressed aspirations to advance its first project in Namibia, with a third of its exploration budget dedicated to projects in the country.

The company also provided updates on its Mozambique project, aiming to reactivate financing with partners and targeting a mid-year return to production, pending the completion of engineering and construction tasks.

In alignment with its peers, TotalEnergies announced plans to return capital to shareholders, intending to increase interim dividends by 6.8% and buy back $2 billion of shares in the first quarter of 2024.

The company proposed a dividend of 3.01 euros per share for 2023, up 7.1% from the previous year.

TotalEnergies recorded quarterly adjusted core earnings (EBITDA) of $11.7 billion, down 27% year-on-year, alongside a decrease in production to 2.483 million barrels per day (bpd), down 12% year-on-year.

For the entirety of 2023, adjusted net income fell by 36% to $23.2 billion, reflecting the decline in oil prices from the highs observed in 2022 during the onset of the Ukraine crisis.

Looking ahead, the company anticipates net investments of $17 billion to $18 billion for 2024, with $5 billion allocated to its integrated power section.