TotalEnergies SE

TotalEnergies reported second-quarter cash flow of $9.8 billion and adjusted net income of $6 billion, both up roughly 15% versus the first quarter. Brent averaged $104 per barrel versus $81 in Q1, TTF averaged $15.6 per MMBtu versus $13.7, average LNG price increased 20% to $10.2 per MMBtu, and European refining margins rose by $13.5 per barrel. E&P adjusted net operating income was $3.2 billion and cash flow was $5.8 billion; Integrated Power cash flow was above $700 million; Refining & Chemicals adjusted net operating income was $1.8 billion and cash flow was $2 billion; Marketing & Services adjusted net operating income was $500 million and cash flow was close to $850 million. Management said full-year cash flow guidance from April of $32 billion would be raised to about $34.5 billion in this environment, with a possible range of $35 billion to $38 billion or $39 billion depending on second-half pricing. Capital spending was $3.4 billion in the quarter, net debt fell by $3.3 billion, working capital released $1.2 billion, and gearing improved to 13.1%.

Patrick Pouyanné struck an upbeat but cautious tone, emphasizing that the quarter showed TotalEnergies can capture strong margins across oil, gas, LNG, refining, and power because of its integrated model. He repeatedly flagged the Middle East conflict as the main operational uncertainty, saying safety remains the priority and that production and lifting constraints could continue to vary. Strategically, he highlighted Namibia, Uganda, Suriname, Cyprus, Abu Dhabi, and integrated power as important growth areas, while stressing capital discipline and testing projects at $50 per barrel.

Jean-Pierre Sbraire focused on the numbers and the drivers behind them: Brent at $104, LNG at $10.2 per MMBtu, TTF at $15.6, and refining margins up $13.5 per barrel supported strong earnings and cash generation. He cited $9.8 billion of cash flow, $6 billion of adjusted net income, ROE of 15.9%, ROACE close to 14%, and upstream production up more than 4% year on year excluding Middle East impact. He also noted net investments of $3.4 billion, net debt down $3.3 billion, working capital down $1.2 billion, gearing at 13.1%, and said the company remains on track for $15 billion of full-year net investment.

Analysts focused on Namibia, payout ratio, LNG sanctions and Russian exposure, Middle East shut-ins, gas trading, the role of hybrids in capital structure, and the company’s M&A posture. Management said Mopane transaction approval in Namibia had been received and closing could happen within a day or two, while Venus FID is targeted for end-July if government discussions finish in time. On Russian LNG, Pouyanné said Arctic LNG 2 rights have been suspended since November 2023, the stake was fully impaired in 2022, and the transfer process should complete soon; on Yamal, he said the legal language of the latest EU sanctions package was still being reviewed before TotalEnergies could assess implications. On capital returns, he said 40% payout is a yearly guidance, not a quarterly one, and buybacks could be adjusted later depending on cash flow and Board discussions.