TotalEnergies SE Earnings - Q1 2025 Analysis
Positives
- E&P reported strong and growing results with adjusted net operating income of $2.5 billion and a cash flow of $4.3 billion in Q1, up 6% and 9% QoQ, respectively.
- TotalEnergies continued its strong track record of attractive shareholder distribution with $2 billion of buybacks executing during Q1 and a 7.6% YoY increase in the first interim dividend of 2025 to €0.85 per share, up 20% versus pre-COVID level.
- TotalEnergies achieved adjusted net operating income of $1.3 billion, up 6% YoY and down 10% QoQ in line with the evolution of the average LNG price.
- TotalEnergies delivered robust YoY production growth of nearly 4% in oil and gas and 18% in electricity, representing a unique TotalEnergies production growth of close to 5%.
- The company achieved a 4% growth in Q1 and reiterates full-year 2025 production growth guidance of more than 3% compared to 2024.
Q&A Highlights - Q1 2025
Analyst asked about the company's approach to sustaining its 40% payout, share buyback, and capital program in light of the recent debt move.
Patrick Pouyanné, CEO of TotalEnergies, explained that the company is committed to maintaining its 40% payout of cash flow for buyback, which is a strong guidance. He noted that the company has a clear and strong guidance to maintain a $2 billion buyback per quarter in reasonable market conditions. However, the board considered the current market conditions to be reasonable and decided to continue with the buyback program. Pouyanné emphasized that the company's fundamentals are strong, and it delivered strong cash flow, and that the board is not overreacting to the current market conditions. He also noted that the company has a normalized gearing target of 12-13% over the year and that it is on track to achieve this target.
Analyst asked about the company's net capital guidance and how it would respond to changes in the macro environment.
Patrick Pouyanné, CEO of TotalEnergies, explained that the company has a plan and some flexibility, but it is not considering a spending reduction on its net capital guidance at this time. He noted that the company is comfortable with its guidance and that it is monitoring the impact of the tariff on the supply chain of renewables projects and batteries projects in the US. He also noted that the company is not in a hurry to invest in projects that would be impacted by the tariff and that it is taking a value-based approach to its investments.
Analyst asked about the timeline and next steps of TotalEnergies' agreement with Egypt and Cyprus to export gas.
Patrick Pouyanné, CEO of TotalEnergies, explained that the agreement was signed in January in Cairo and that the company is supportive of the project. He noted that the main focus was to ensure that the gas could be exported, and that the scheme now allows for gas to be brought from Cyprus to existing facilities through Zohr, an LNG plant in Egypt. The company is confident that the project will be able to deliver LNG through an existing plant in Damietta. The next step is for ENI, the operator, to go to the FID by 2026, and technical work and paperwork development plan are underway. TotalEnergies is supportive of the project and is confident that it will be able to deliver gas by 2029, which will help to feed the company's growth.
Analyst asked about the new rule in the US government that allows for multi-zones to be tested, and if it presents an opportunity for TotalEnergies.
Patrick Pouyanné stated that the new rule is a good one, and that it aligns with TotalEnergies' goal of taking exploration in the US Gulf of Mexico as a priority. The company is discussing with other operators to take on exploration again, and the new rule could help to increase production and reserves, as well as lower the core. TotalEnergies is happy with its previous successes in the Gulf of Mexico, such as the Anchor and Ballymore projects, and is confident that exploring again in the region will be beneficial.
