TotalEnergies SE Earnings - Q1 2026 Analysis & Highlights
TotalEnergies reported strong Q1 2026 results driven by elevated oil and gas prices following Middle East conflict disruptions, with the company demonstrating the resilience of its integrated business model while managing significant operational challenges in key producing regions.
Key Financial Results
Cash flow from operations reached $8.6 billion in Q1 2026, increasing 20% compared to Q4 2025.
Adjusted net income increased by more than 40% to $5.4 billion in Q1 2026.
Return on equity was 14.4% and ROACE was 12.7% for the quarter.
Brent crude averaged $81 per barrel during Q1 2026 versus nearly $64 per barrel in Q4 2025, up more than 25%.
Average liquid price was up by $12.4 per barrel due to time lag effects, particularly in the Americas.
TTF gas averaged $13.7 per million btu versus $10.3 per million btu in Q1 2025.
Average LNG price stayed at $8.5 per million btu.
European refining margins remained at $11.4 per barrel on average for the quarter with exceptional margins in March.
Business Segment Results
Upstream (E&P) generated adjusted net operating income of $2.6 billion, up more than 40% quarter-to-quarter, fully capturing the increase in average liquid price.
E&P cash flow reached $4.6 billion, up 26% quarter-to-quarter.
Oil and gas production increased by more than 4% year-over-year, exceeding the annual guidance of 3% for 2026.
Average OpEx per barrel of oil equivalent remained below $5 in Q1 2026, maintaining leadership in cost efficiency.
Lapa Southwest in Brazil and Mabruk in Libya each brought an additional production capacity of 25,000 barrel of oil equivalents per day.
LNG production grew significantly by 12% quarter-to-quarter, mainly supported by growth in Australia with Ichthys back to full capacity, the United States, and Malaysia.
First quarter LNG sales reached 12.4 million tonnes supported by strong spot activity.
Integrated LNG adjusted net operating income increased significantly to $1.3 billion and cash flow to $1.8 billion.
Net power production increased year-on-year to 11.7 terawatt-hour, with 20% growth of power generation from renewables.
Integrated Power cash flow from operation was $0.6 billion with no comedowns registered during Q1 2026.
Refining & Chemicals adjusted net operating income went up by nearly $600 million quarter-to-quarter to $1.6 billion, and cash flow reached €1.7 billion.
Refining utilization rate reached 92% in the absence of planned turnarounds.
Capital Allocation
The board increased the first interim dividend by 5.9% to €0.9 per share compared to last year's interim dividend of €0.85.
The board authorized continuation of share buyback program up to the high end of the range of $750 million to $1.5 billion per quarter, targeting $1.5 billion per quarter.
The board reiterated the objective to achieve a cash payout ratio above 40% for the full year 2026.
The board attached great importance to deleveraging the balance sheet, with an objective to achieve gearing in the low-10s by the end of 2026 if crude oil price remained above $100 per barrel.
Net investment amounted to $4.5 billion in Q1 2026 with a neutral balance between acquisition and disposal.
Full year 2026 net investment guidance of $15 billion was reiterated.
The company is evaluating options to accelerate short cycle investments to capture the current hydrocarbon price environment, potentially mobilizing $100 million to $300 million subject to rig capacity.
Gearing landed at 15.5% at the end of Q1 2026.
Middle East Conflict Impact and Operational Disruptions
Production is shut down in Qatar, Iraq, and UAE offshore, representing approximately 15% of total oil and gas production, or 360,000 barrels per day.
The company continues to produce onshore UAE oil production of 210,000 barrels per day and the Dolphin Gas between Qatar and UAE.
The 15% of volumes impacted accounts for only roughly 10% of upstream cash flow at $60 per barrel due to higher taxation in the regions.
An equivalent of $8 per barrel increase in Brent is enough to offset the expected 2026 CFFO from the shift in production.
More than 1,300 people were evacuated safely from countries concerned by the conflict.
The company maintained a team in Iraq of 20 TotalEnergies staff supervising GGIP projects with around 5,000 workers on the ground.
In Saudi Arabia, crews were maintained to supervise the Amiral projects, which mobilize 22,000 workers.
The SATORP refinery site was impacted by strikes on April 7-8, causing damage to three units with no casualties reported.
A partial restart of SATORP occurred on April 14, allowing production at 50% capacity of 230,000 barrels per day, with expectations to increase to more than 300,000 barrels per day by early May.
Macroeconomic Environment
Oil prices surged to around $100-$115 per barrel following the Middle East conflict, with extreme volatility including 8 of the 10 highest volatile days in the last 25 years during March and April.
The closure of the Strait of Hormuz constitutes a major disruption affecting around 20% of worldwide crude oil, refined products, and LNG exports.
Global hydrocarbon inventories are being drawn to balance the market at a pace of 10 million to 13 million barrels of oil per day, with approximately 500 million barrels already consumed from inventories.
Even if the conflict ends in May, the market would exit with very low inventories, with an estimated 1 billion barrel consumption from inventories.
European gas prices established at around $15 per million btu.
European gas storage was at the lowest point of the last five years at around 25% at the end of winter season.
QatarEnergy is expected to wait for stabilization of the Strait of Hormuz before restarting liquefaction plants, which cannot be easily turned on and off.
There is very limited spare capacity of production outside the Gulf.
At least $80 per barrel is expected for 2026 across all scenarios, with prices expected to remain at high levels even if the war ends quickly.
Industry Trends and Dynamics
The 2026 surplus scenario anticipated by markets at the beginning of the year is behind us, with global hydrocarbon inventories being materially drawn.
The crisis is pushing governments globally to prioritize domestic energy production and security of supply.
Electrification is emerging as a global answer to energy security and affordability concerns.
Countries are looking to develop domestic production through coal, biofuels, renewables, and nuclear energy.
Malaysia and Indonesia are raising their biodiesel content.
The US domestic gas market remains stable with Henry Hub at $3 per unit due to oversupply and overcapacity.
The French electricity market shows no impact from the crisis due to overcapacities of nuclear and renewables.
There is strong appetite from Asian buyers for Papua LNG due to geographical diversification benefits.
Competitive Landscape
TotalEnergies' integrated business model across oil, gas, LNG, electricity, and trading allows the company to capture margins and prices along the value chains.
The company's diversified portfolio of LNG production in 11 different countries allows flexibility to ensure security of supply for all customers without declaring force majeure.
TotalEnergies did not declare force majeure on its LNG contracts despite receiving force majeure from QatarEnergy, absorbing the 1.5 million tonnes per year impact within its diversified portfolio.
A competitor with greater exposure to Qatar LNG (approximately 6-7 million tonnes) declared force majeure, compared to TotalEnergies' limited exposure of 1.5 million tonnes.
The company's strong operational performance and ability to capture market volatility in trading activities during Q1 2026 demonstrated competitive advantages.
Growth Opportunities and Strategies
The decision to restart Mozambique LNG construction in January provides diversification for the LNG portfolio by 2029.
Mozambique LNG project has restarted with more than 6,000 people on site and is 42% complete as of end of March.
The objective for Mozambique LNG is to produce first LNG by 2029 from the first train.
Papua LNG is targeted for sanction before year-end, with FID expected in the second half of the year.
Papua LNG CapEx is estimated at around $14.5 billion, improved from the previous $18 billion estimate.
The company plans to market approximately 1 million tonnes of Papua LNG in the long term while keeping 1.54 million to 2 million tonnes for its own portfolio.
Namibia is being developed as a new anchor country with Venus targeted for sanction by end of July 2026.
Mopane in Namibia is planned for appraisal drilling in 2026-2027 with sanction targeted by 2028.
Ratawi Phase 1 in Iraq was planned for Q2 startup with 5,000 people working on the ground, though export constraints from the conflict are limiting immediate production.
A 300-megawatt solar plant in Ratawi was started up just before the conflict, supplying solar electrons to the Basra area since end of February.
Tilenga in Uganda is targeted for production startup at end of Q4 2026.
EACOP pipeline is expected to be completed by September or October with potential for Kingfisher oil to flow first.
The company is developing 2 to 3 gigawatts of battery storage capacity in Germany and farmed down 50% to Allianz with good profitability.
The company received $928 million from the US government for renewable energy investments, with TotalEnergies' share being $550 million.
The company is exiting small offshore wind projects in Denmark and has concluded that offshore wind is not investable in the US due to long permitting cycles and high subsea cable costs.
The company is focusing offshore wind development on markets with limited onshore renewable capacity such as UK, Germany, and France.
Financial Guidance and Outlook
The company anticipates an average LNG selling price of around $10 per million btu for Q2 2026.
Production shut down in the Middle East is expected to represent around 15% of total production in Q2 2026.
Refining utilization is anticipated in the range of 80% to 85% in Q2 2026, accounting for two months of scheduled maintenance at Donges and SATORP capacity reduction.
Hydrocarbon production, excluding Middle East impact, is expected to grow around 4% in Q2 2026 compared to Q2 2025.
At $80 per barrel, $15 per million Btu, and $7 for refining margin, without Middle East production, cash flow would be around $32 billion.
The company expects to maintain strong momentum with hydrocarbon production in the second quarter.
The company confirmed full year 2026 net investment guidance of $15 billion.
Investment should trend downwards in Q2 2026.
The Integrated Power business should benefit from the EPH deal with more than $500 million contribution to available cash flow in 2026.
The company expects to see the impact of March oil prices clearly in Q2 2026 due to LNG pricing formula lags.
If crude oil prices remain higher, the $10 per million btu LNG guidance for Q2 could be positively impacted.
