TotalEnergies SE Earnings - Q3 2025 Analysis & Highlights
Key Takeaways
TotalEnergies SE's Q3 2025 earnings call highlighted the company's consistent strategy, strong hydrocarbon production growth, accretive cash flow generation, and capital discipline. Key discussion points included financial performance, business segment results, capital allocation decisions, industry dynamics, growth strategies, and financial outlook, with an emphasis on shareholder returns and balance sheet strength.
Key Financial Results
Q3 2025 cash flow increased by 4% year-on-year despite a drop in oil prices.
Adjusted net income for Q3 2025 held steady.
Hydrocarbon production growth contributed $400 million of additional cash flow year-on-year.
Downstream cash flow was up by almost $500 million.
The company generated excess free cash flow at $69 per barrel.
Return on equity for the 12 months ending September 30 was 14.2%, and ROACE was close to 12.5%.
Adjusted net income for Exploration & Production was $2.2 billion, up 10% quarter-over-quarter.
Cash flow for Exploration & Production was $4 billion, up 6% quarter-over-quarter.
Integrated LNG cash flow was $1.1 billion, in line with the second quarter.
Downstream adjusted net operating income was $1.1 billion, up more than 30% quarter-over-quarter.
Downstream cash flow was $1.7 billion, up 11% quarter-over-quarter.
Business Segment Results
Hydrocarbons production increased by more than 4%, the company's highest growth quarter this year.
Exploration & Production generated strong cash flow growth, with new low-cost, low-emission oil and gas production.
Integrated LNG sales were 10.4 million tons, essentially flat quarter-over-quarter.
Integrated LNG adjusted net operating income was down 18% quarter-over-quarter due to planned turnarounds at Ichthys LNG in Australia.
Net power generation in Integrated Power increased 9% quarter-over-quarter to 12.6 terawatt hours.
Integrated Power cash flow from operations was $0.6 billion, up 9% quarter-over-quarter.
Downstream captured high refining margins in Europe.
Refining utilization was 84%.
Marketing & Services delivered consistent results, prioritizing value over volume.
Capital Allocation
The board decided to increase the first interim dividend by close to 8% in euro and more than 10% in dollars compared to 2024.
The board authorized up to $1.5 billion of share buybacks for the fourth quarter of 2025.
The company expects to maintain a payout ratio of around 56% for 2025.
Net investments decreased to $3.1 billion in the third quarter, including $0.4 billion of divestments net of acquisitions.
Disposals are estimated to total $2 billion in the fourth quarter.
Full-year 2025 net investment guidance is reiterated at $17 billion to $17.5 billion.
Industry Trends and Dynamics
European refining margins significantly improved to $63 per ton.
Forward European gas prices continue to be sustained at around $11 per Mbtu for the fourth quarter of 2025 and winter of 2025/2026 due to anticipated winter demand.
The company anticipates an average LNG selling price of around $8.5 per Mbtu for the fourth quarter of 2025.
The European refining margin market strengthened due to tension on the diesel supply chain in the context of low inventories.
Growth Opportunities and Strategies
Upstream production is anticipated to grow more than 4% year-on-year in the fourth quarter.
The company is growing upstream production by 3% per year for 2025-2030.
The company is growing its US presence with the FID on Rio Grande LNG Train 4 in South Texas.
The company enhanced resilience in its LNG and gas-to-power strategy by acquiring interest in shale gas assets from Continental Resources in the Anadarko basin in the US.
The company is progressing on all E&P projects.
The company achieved first oil at Begonia and CLOV Phase 3 offshore fields in Angola.
The company sanctioned Phase 2 of the redevelopment of the Ratawi oil field in Iraq.
The company continues to reload the hopper to complement existing opportunities.
The company announced new license awards in Nigeria, in Republic of the Congo and in Liberia.
The company signed an agreement for the sale of 50% of the 1.4 gigawatt renewable portfolio in North America and closed the sale of 50% of a 270 megawatts renewable portfolio in France.
Financial Guidance and Outlook
Assuming annual cash flow between $27.5 billion and $28 billion, the 2025 payout ratio is expected to remain around 56%.
Upstream production is anticipated to grow more than 4% year-on-year in the fourth quarter.
Net investments are expected to decrease quarter-over-quarter.
Disposal proceeds of $2 billion are expected.
The company anticipates continuing to strengthen the balance sheet with gearing forecasted to further decline to 15%-16% at year-end.
Hydrocarbon production is expected to grow more than 4% compared to the fourth quarter of 2024.
The company anticipates refining utilization of 80% to 84% in the fourth quarter.
Another positive contribution is anticipated for working capital in the fourth quarter.
The company reiterates full-year 2025 net investment guidance of $17 billion to $17.5 billion.
Based on anticipated net investment and working cap, the company expects gearing to decrease to 15% to 16% at year-end compared to 17.3% at the end of the third quarter.
Other Important Points
The board of directors has approved the road map to transform ADRs into ordinary shares.
Ordinary shares are expected to begin trading on the New York Stock Exchange from December 8.
The company intends to market these ordinary shares on the US market even more actively than today.
The company divested two unconventional blocks in Vaca Muerta in Argentina and three satellite fields on Ekofisk in Norway.
