TotalEnergies Q1 Profit Drops 22% Amid Lower Gas Prices, Beats Estimates

TotalEnergies, the French multi-energy company, reported a 22% drop in its first-quarter 2024 adjusted net income to $5.1 billion. Despite the decline, the results still surpassed analyst estimates, as good refining margins partially offset the steep drop in profits from natural gas.

The company attributed the overall decline to stable oil prices and lower gas prices compared to the previous year.

TotalEnergies' CEO, Patrick Pouyanne, noted that the company's upstream business and renewable growth helped mitigate the impact of the dive in LNG earnings. However, he warned that the higher oil prices that have offset weak natural gas profits could cut into refining margins later this year. The drop in profits was in line with the trend seen across the oil and gas industry, with Exxon Mobil and Chevron also reporting weaker first-quarter results due to a sharp drop in natural gas prices.

The company's oil and gas production averaged 2.46 million barrels of oil equivalent per day in the first quarter, with growth in LNG and new projects offsetting an expected slight drop in the second quarter due to planned maintenance. TotalEnergies announced a 7% increase in its first interim dividend for 2024 to 0.79 euros per share and authorized a $2 billion share buyback program for the second quarter.

Why this matters: TotalEnergies' first-quarter results provide insight into the current state of the global oil and gas industry, highlighting the impact of fluctuating commodity prices on major energy companies. The company's ability to surpass estimates despite the drop in profits demonstrates its resilience and diversified business model.

In a significant move, TotalEnergies is "seriously" considering a primary listing on the New York Stock Exchange, citing a more favorable investor base in the U.S. The company's dividend payout ratio is at a healthy and sustainable level, and it is expected to be able to sustain or increase its dividend.

TotalEnergies has a relatively low P/E ratio compared to the market and its sector, and its PEG ratio suggests it may be undervalued. The consensus among Wall Street analysts is that investors should hold the stock, with a 12-month average price target of $70.75, suggesting a potential downside of 5.1%.

Key Takeaways

• TotalEnergies' Q1 2024 adjusted net income fell 22% to $5.1B, beating estimates.
• Upstream business and renewable growth offset dive in LNG earnings.
• Oil and gas production averaged 2.46M barrels/day, with growth in LNG and new projects.
• TotalEnergies considering primary NYSE listing, dividend increase, and $2B buyback.
• Analysts recommend holding the stock, with a 12-month average price target of $70.75.