TotalEnergies SE Earnings - Q4 2025 Analysis & Highlights
TotalEnergies reported strong 2025 results with record profitability and cash generation, while outlining a resilient 2026 strategy focused on accretive growth in oil and gas, significant expansion of integrated power operations, and disciplined capital allocation amid a moderating commodity price environment.
Key Financial Results
Net adjusted income reached $15.6 billion in 2025, demonstrating best-in-class profitability with a return on equity of 13.6% and ROACE of 12.6%.
Cash flow from operations totaled $28 billion in 2025, with upstream contributing the largest share through production growth and accretive new projects.
Net income under IFRS accounting was $13.1 billion for 2025 after accounting for non-recurring adjustments.
Total shareholder returns reached $15.6 billion, comprising dividends and share buybacks representing approximately 55% payout ratio of generated cash flow.
Energy production grew 5% in 2025, combining 4% growth in oil and gas with nearly 20% growth in electricity net production reaching approximately 50 terawatt hours.
Business Segment Results
Exploration & Production generated accretive cash flow growth of 10% despite only 4% production growth, with new projects delivering over $30 per barrel CFFO compared to $19 per barrel baseline, creating $700 million in additional cash flow.
Integrated LNG posted $4.7 billion CFFO in 2025, only 4% below 2024 levels, offsetting low volatility and narrowing spreads between Asian and European markets through 10% production and sales growth.
Integrated Power more than doubled production and multiplied CFFO and net operating income by 3-4 times between 2021 and 2025, overachieving targets by nearly 10% with 20% net power production growth.
Refining & Chemicals generated $6.2 billion cash flow in 2025, with downstream demonstrating resilience through better utilization rates in the second half and capturing favorable margins.
Marketing & Services contributed $2.4 billion in cash flow during 2025, growing steadily with focus on lubricants and non-fuel revenues.
Capital Allocation
Total capital expenditures reached $17.1 billion in 2025, with approximately one-third devoted to new oil and gas projects and $3.5 billion allocated to low-carbon energy, primarily Integrated Power.
Organic capital expenditures totaled $16.8 billion, with $3.9 billion in acquisitions offset by $3.6 billion in divestments, maintaining balanced portfolio management.
Dividend payments included €0.81 per share in 2025, with the board deciding to return to traditional dividend management practices with a final dividend equal to three quarterly dividends.
Share buyback program executed $7.5 billion in 2025, with guidance of $3 billion to $6 billion for 2026 depending on oil price environment.
Net debt maintained at 14.7% gearing at year-end 2025, with target to sustain 15% gearing in 2026 despite potential working capital volatility.
Industry Trends and Dynamics
Global oil demand continues growing at less than 1% annually with no peak demand visible in the near term, supporting continued investment in production capacity.
LNG market experiencing transition with 35 million tons of additional capacity expected in 2026, moving from 435 million tons in 2025 toward 600 million tons by 2029-2030.
European LNG demand increased from 65 million tons in 2022 to 115 million tons in 2025, with EU ban on Russian gas from 2027 expected to drive additional 35 million ton annual demand increase.
Data center demand for electricity creating new market opportunities, with TotalEnergies signing 6 terawatt hour per year PPAs and 4 gigawatt of projects backed by data center demand in 2025-2026.
Oil services and drilling consolidation creating potential cost inflation, though management observed stabilization in tender offers for Namibia projects at current $70 per barrel price levels.
Competitive Landscape
TotalEnergies maintains best-in-class upstream production costs at $5 per barrel, providing clear competitive advantage in lower price environments.
Company achieved best-in-class ROACE for four consecutive years, demonstrating ability to lead energy transition while delivering top profitability.
Total shareholder return of 28% in 2025 was best among peers, with share price appreciation of 20% plus dividend contributions.
Proved reserves life index of 12 years provides significant differentiation versus Chevron, Shell, and BP, with 120% reserve replacement rate in 2025 and 140-150% replacement rates in prior years.
Namibia transaction with Galp positioned TotalEnergies as anchor operator in Orange Basin, leveraging 10 FPSOs already operated across Africa with one additional under construction.
Macroeconomic Environment
Oil price planning assumption of $60 per barrel for 2026, down from $69 per barrel in 2025, reflecting cautious outlook despite current prices around $71-72 per barrel.
Gas price assumption declining from $12 per million BTU in 2025 to $10 per million BTU in 2026, representing transition year with gradual price impact expected through 2027.
Russian oil sanctions creating market impact with 3-4 million barrels per day of Russian exports facing reduced buyer demand, particularly from Indian refiners reducing purchases from March-April 2026.
Refining margins expected to normalize at approximately $5 per barrel in 2026 after capturing $11 per barrel margins in Q4 2025 when oil prices were lower.
European CO2 pricing system functioning well with balance between quota reduction speed and demand growth, benefiting integrated power operations while requiring careful management of industrial competitiveness.
Growth Opportunities and Strategies
Venus project in Namibia targeting FID by mid-2026 with first oil in 2030, featuring 150 kb/d plateau production at costs below $20 per barrel and 15 kg CO2 per barrel emissions intensity.
Mopane project in Namibia progressing with appraisal campaign in 2026-2027, targeting FID in 2028 with 200+ kb/d production potential and similar cost and emissions profile to Venus.
Namibia exploration portfolio containing approximately 10 billion barrels of prospective resources across multiple prospects beyond Venus and Mopane, establishing foundation for multi-FPSO hub.
EPH acquisition in Europe accelerating gas-to-power integration, expected to close mid-2026 and deliver 15 terawatt hour per year net power production and $750 million annual available cash flow.
Data center business model providing three product types: standard corporate PPAs, clean firm power with baseload profiles, and land access near grid connections, enabling 10% premium pricing versus standard market rates.
AI and digital transformation program deploying data platforms across 40 upstream sites and 16 refining/chemical sites, targeting 1-2% production availability gains through improved process control and reduced equipment breakdowns.
Global competency center in India supporting AI and digital initiatives, targeting 500 engineers by 2027 to accelerate growth programs and leverage competitive labor costs.
Exploration portfolio reloaded with access to new licenses in US, Algeria, Liberia, Congo, Nigeria, Namibia, Malaysia, and Indonesia, maintaining $1 billion annual exploration and appraisal spending.
North Field East in Qatar and Energia Costa Azul in Baja California both planned for Q3 2026 startup, contributing to 6% LNG production growth.
NEO NEXT+ transaction in UK North Sea creating merger with Repsol-operated assets, delivering positive production impact of 10,000 barrels per day and $100 million CapEx synergies.
Financial Guidance and Outlook
2026 free cash flow guidance of more than $26 billion at $60 per barrel and $10 per million BTU, representing resilience despite $10 per barrel price decline from 2025 through accretive growth.
2026 upstream production growth guidance of 3%, translating to 7% cash flow growth through higher CFFO per barrel of new projects, offsetting $10 per barrel price decline.
2026 electricity net production expected to grow 25% to approximately 60 terawatt hours, with Integrated Power cash flow above $3 billion and potential for first free cash flow positive contribution.
2026 LNG sales growth of 6% with production growth partially offset by lower price assumptions, maintaining approximately 44 million tons of sales.
Renewable gross installed capacity guidance of 34-42 gigawatt, representing 8 gigawatt annual growth pace required to achieve 2030 targets.
Methane emissions reduction targeting minus 70% by 2026 with expectation to reach minus 80% sooner than planned, supported by 11,000 permanent monitoring devices deployed.
Scope 1 and 2 greenhouse gas emissions continuing downward trajectory with lifecycle carbon intensity of products declining from minus 19% in 2025 toward minus 25% target by 2030.
2026 capital expenditure guidance of $15 billion, down from $17.1 billion in 2025 due to EPH share issuance, with no reduction in growth ambitions.
Dividend growth of 5.6% per year in euros and 13% in dollars, with board returning to traditional final dividend structure equal to three quarterly dividends.
Gearing target of 15% to be maintained in 2026, with flexibility to reduce net CapEx to $14 billion if oil prices fall below $50 per barrel.
Cash savings program of $12.5 billion through CapEx reduction and OpEx initiatives including $500 million 2026 savings from Integrated Power rationalization, upstream/downstream reorganization, and headquarters streamlining.
Sustainability and Emissions Performance
Methane emissions reduced 65% compared to 2020, exceeding 60% target through deployment of fixed continuous detection and monitoring systems across all sites.
Greenhouse gas emissions from oil and gas operations reduced by 1 million ton in 2025 compared to 2024, with cumulative 38% reduction since baseline.
Energy efficiency improvement program invested $1 billion over 2023-2025, generating $200 million annually in energy and CO2 savings from hundreds of actions across sites.
One fatality recorded in 2025 during Angola offshore operations, with enhanced safety measures implemented for deck operations and supply vessel supervision.
Total recordable injury rate below 0.5 per 1 million man hours, positioning company ahead of peer group in safety performance.
Primary losses of containment reduced 60% since 2020, demonstrating progress on process safety and major risk prevention.
