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TotalEnergies profits slip in first quarter on lower gas prices

TotalEnergies shareholders approve N25 dividend per share

French energy giant TotalEnergies reported a 22 percent decline in profits for the first quarter of 2024, hit hard by a slump in natural gas prices. While the company surpassed analyst expectations with adjusted net income of $5.1 billion, this figure fell short of the $6.5 billion earned in the same period last year.

The culprit behind the drop? A mild winter in Europe led to decreased demand for natural gas for heating, causing prices to plummet by 45% compared to the previous year. This significantly impacted TotalEnergies’ bottom line, as the company’s gas business took a major blow.

However, there was a silver lining. A resilient oil market, buoyed by production cuts from OPEC+ and ongoing geopolitical tensions, helped to offset some of the losses from natural gas. Additionally, TotalEnergies’ refining business performed well, partially mitigating the impact of the gas price slide.

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Adjusted EBITDA came in at $11.5 billion for the quarter, a 19% drop from the $14.2 billion seen in the first quarter of 2023. Cash flow from operating activities clocked in at $2.2 billion, a 58% plunge from Q1 2023’s $5.1 billion.

The company also announced that it would be rolling out share repurchase programmes worth around $2 billion this quarter.

Several oil and gas companies have seen declining profits in the last few months, as the bumper earnings made during the Russia-Ukraine war start to pull back. Other companies, such as Shell, have also seen increased pressure to transition faster to renewable energy in Europe, prompting it to consider expanding in the US instead.

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TotalEnergies has also recently announced a waste-to-clean fuels joint venture with Vanguard Renewables, owned by BlackRock. This would be primarily based in the US and would involve converting food biowaste into renewable natural gas (RNG).

Olivier Guerrini, vice president, Biogas at TotalEnergies, said in a press release, “TotalEnergies is pleased to partner with BlackRock and its portfolio company Vanguard Renewables, to accelerate the development of food bio waste processing into renewable natural gas in the United States.

“By expanding into this fast-growing market, our joint venture will create value for both companies while benefiting the food and farming sectors as well as providing a ready-to-use solution to industrial companies willing to decarbonise their energy supply.

“This joint venture is a new step for TotalEnergies in achieving its objective to produce 10 TWh of renewable natural gas by 2030.”