TotalEnergies Profit Jumps More Than Expected as Prices Soar
(Bloomberg) -- TotalEnergies SE’s third-quarter profit rose by more than expected, making the French oil and gas producer the latest beneficiary of high energy prices.
While an energy supply crunch is wreaking havoc on Europe’s economy, it’s lifting the earnings of major producers to multiyear highs. Norway’s Equinor ASA reported a tenfold jump in profit on Wednesday, kicking off what is expected to be a stellar set of earnings from the industry.
TotalEnergies’ adjusted net income rose to $4.77 billion in the three months ended Sept. 30, a fivefold increase from $848 million a year earlier, the company based in Paris said in a statement on Thursday. That exceeded the average analyst estimate of $4.32 billion.
“The global economic recovery, notably in Asia, drove all energy prices sharply higher in the third quarter,” TotalEnergies Chief Executive Officer Patrick Pouyanne said in the statement. The company benefited in particular from its position as a world leader in liquefied natural gas, he said.
An unprecedented energy crisis has become one of the hottest issues in the European Union, with households facing double-digit increases in electricity and gas bills. Energy ministers from the bloc have clashed over how to cushion consumers and companies, with political and legal constraints leaving little room for immediate action except for tax cuts and subsidies.
Barring an exceptionally mild winter, the low inventory level for gas and expected sustained demand are likely to keep prices for the fuel in Europe and Asia at high levels until the second quarter of 2022, TotalEnergies said.
The company sees its average selling price for liquefied natural gas rising above $12 per million British thermal units in the fourth quarter, up from $9.1 in the third.
The group’s gas, renewables and power division posted record-high profit and cash flow in the third quarter thanks to the increase in LNG prices and the “strong performance” of the gas and power trading activities.
Despite record prices for some of the commodities they sell, major oil and gas producers are keeping a tight lid on investments in new fields as investors prioritize cash returns over growth. The companies are also under pressure from governments and activists to increase expenditure on renewables at the expense of fossil fuels to limit global warming.
TotalEnergies’ capital expenditure will remain unchanged from 2020 at $13 billion this year including $3 billion on renewable energy and electricity. The company maintained its plan to buy back $1.5 billion of shares in the fourth quarter.
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