French energy giant TotalEnergies reported a 22% decline in first-quarter earnings, which was slightly better than expected. The company’s adjusted net income for the three months ending March 31 came in at $5.1 billion, above the $5 billion consensus estimate compiled by LSEG.
The strong refining margins partially offset the steep drop in profits from the company’s natural gas business. Spot gas prices in Europe have tumbled 45% over the past year due to milder winter weather and easing supply concerns.
Despite the lower natural gas prices, TotalEnergies CEO Patrick Pouyanne said the company is seeing increased buyer interest from Asia, particularly China and India, for oil-indexed gas contracts as they seek more stability compared to volatile spot prices. Pouyanne expressed hope that the current dip in gas prices will allow TotalEnergies to sign new long-term contracts with Asian buyers.
However, the higher Brent crude prices, currently trading around $90 per barrel, are expected to lead to a decline in the company’s lucrative oil refining margins in the second quarter and beyond. This is due to geopolitical tensions and production cuts by OPEC+ countries.
TotalEnergies’ hydrocarbon production remained roughly stable compared to the previous quarter at 2.46 million barrels of oil equivalent per day (mboed), but is forecast to drop to 2.40-2.45 mboed in the second quarter due to planned maintenance.
The company confirmed its plan to execute $2 billion in share buybacks in the second quarter and maintained its full-year net investment guidance of $17-$18 billion, with $5 billion allocated to its growing Integrated Power business.