Q1 2024 Earnings Summary
- Low-cost production advantage: TTE’s oil and gas operations maintain an operating cost of about $4.6 per barrel, ensuring resilient margins as oil prices rise.
- Robust capital discipline and shareholder returns: The company is executing a disciplined share buyback program (approximately $2 billion per quarter) and has increased dividends by nearly 7% year‐on‐year, underscoring strong cash flow generation and commitment to returning value to shareholders.
- Strategic frontier developments: TTE is advancing frontier projects in Namibia with planned FIDs targeting developments around 150,000–180,000 barrels per day, potentially positioning it as a first mover in a promising new resource area.
- LNG Exposure to Sanctions Risk: The company noted that if EU sanctions target assets such as Yamal LNG, they might be forced to declare force majeure on some contracts, which could disrupt LNG offtake and contract revenues.
- Rising Cost Inflation & Project Delays: Several responses highlighted delays or reevaluations in projects (e.g., offshore wind and P&G initiatives) due to rising costs and capex challenges, potentially impacting future production and growth.
- Regulatory and Fiscal Uncertainty: Discussions around potential changes in taxation (e.g., windfall taxes and buyback taxes) and politically driven regulatory adjustments in Europe create uncertainty around cash flows and shareholder returns.
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Buybacks & Acquisitions
Q: Possibility of higher buybacks with rising oil prices?
A: Management maintained the base quarterly buyback at €2 billion and noted that if extra free cash flow materializes, they may increase buybacks. They also highlighted strategic acquisitions such as the SapuraOMV deal to bolster their foothold in key regions, reinforcing disciplined capital allocation. -
US Listing
Q: How soon for a primary US listing?
A: They plan to report to the Board by September regarding a US primary listing, aiming to improve access for US investors and address ADR liquidity issues, while keeping the shareholding base well balanced. -
Integrated Power Cash Flow
Q: Will Q1 cash flow run rate persist year-round?
A: The guidance of $2.5–$3 billion annual cash flow remains intact, with management noting seasonal variations yet expecting a steady run rate over the full year. -
US LNG Integration & Contracts
Q: What share of US LNG offtake and contract terms?
A: They target about 1 Bcfe in US LNG production. While contract slopes remain confidential, the focus is on securing oil-linked LNG contracts that provide pricing stability and hedge production costs in the Eagle Ford region. -
CapEx Discipline in Integrated Power
Q: Will organic CapEx remain constant?
A: Management expects organic CapEx in Integrated Power to settle at around $5 billion for the year—after higher spending early on is balanced by later farm downs—demonstrating steady and disciplined investment practices. -
Namibia FID & Cost Discipline
Q: Can Namibia FID stay within cost targets?
A: They are confident that the FID for Namibia projects will remain within the $18 billion annual investment framework, ensuring that new developments meet profitability and cost discipline benchmarks. -
EU Sanctions & Hydrogen Tender
Q: What is the impact of sanctions and hydrogen response?
A: If EU sanctions affect Yamal LNG, management might invoke force majeure on certain contracts; however, overall, the situation could raise LNG prices favorably. Simultaneously, their hydrogen tender attracted over 50 offers to meet a target of 500,000 tonnes/year, which should cut about 5 million tonnes of CO₂ emissions. -
Project Delays & US Index Eligibility
Q: Which projects face delays and what about a US index inclusion?
A: Projects like P&G were delayed due to cost inflation, while Mozambique remains on track after contractor realignment. Regarding US listing, the focus is solely on achieving a primary listing for better US investor access, not on S&P 500 inclusion. -
Carbon Investment Pace
Q: How has the Talos Low Carbon acquisition affected strategy?
A: The Talos acquisition complements TotalEnergies’ CO₂ storage efforts by providing low-cost storage options in Texas and Louisiana, thereby supporting their broader carbon strategy without altering the overall pace of investment. -
Namibia FID Technical Details
Q: What production metrics are expected in Namibia?
A: Although technical details remain confidential, the first Namibia development is expected to produce between 150,000–180,000 barrels per day with a breakeven cost of under $30 per barrel, aligning with their profitability targets.