A Total Energies sign at a gas station in Genech, northern France, on Oct. 5, 2022.SAMEER AL-DOUMY/AFP/Getty Images
French oil major TotalEnergies TTE-N third-quarter profit hit a three-year low of $4.1-billion on Thursday, slightly missing expectations as refining margins and upstream outages dragged down earnings.
Adjusted net income was down 37 per cent from a year earlier and 12.7 per cent lower from the previous quarter’s $4.7-billion. The result just missed analyst expectations of $4.2-billion.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) fell 23.6 per cent year-on-year to $10-billion.
Earlier this month, TotalEnergies warned its financial results would take a hit as its margin for converting crude oil into refined fuels declined 65 per cent.
Global refining margins have dropped sharply in recent months in the face of weaker economies and the start-up of several new refineries in Asia and Africa, while oil prices fell 17 per cent in the quarter – the largest quarterly decline in a year – on worries about the global oil demand outlook.
The company’s shares were down 2.8 per cent at 1402GMT.
“Some small European refineries which were supposed to shut down were maintained as the industry stopped to capture good margins,” said Pouyanne. China’s private refiners, known as ‘teapots’, are also adding to supplies.
“I think the hard times are set to come back, there are too many small refineries in Europe and everyone has to do their part,” he added.
Pouyanne said Total was too small to cut production but would examine its six European refineries and convert the weakest into biorefineries producing renewable fuels.
Total has already converted its La Mede site in southern France into a biorefinery, while the under-conversion Grandpuits, near Paris, will be operational next summer.
TotalEnergies took a $1.1-billion impairment related to the August bankruptcy filing of U.S. subsidiary SunPower, and its exit of several South African offshore blocks.
Quarterly hydrocarbon production of 2.4 million barrels of oil-equivalent per day was at the low end of guidance given at half year due to security-related disruptions in Libya and an outage at the Ichthys LNG plant in Australia.
The company confirmed $2-billion in share buybacks for the fourth quarter and decided a third interim dividend of 0.79 euros per share for 2024.
