The Board of Directors of TotalEnergies SE, meeting on October 26, 2022 under the chairmanship of CEO Patrick Pouyanné approved the Company’s financial statements for the third quarter of 2022. On this occasion, Patrick Pouyanné said:
“In a context marked by an average Brent price of 100 $/b and an increase in gas prices exacerbated by Russia’s military aggression in Ukraine, TotalEnergies leveraged its integrated model, particularly LNG, to generate results in line with previous quarters. In the third quarter 2022, the Company posted adjusted net income of $9.9 billion and IFRS net income of $6.6 billion after taking into account a new impairment of $3.1 billion related to Russia. Cash flow was $11.7 billion, and the Company strengthened its balance sheet with a gearing ratio of 4%. Return on equity was more than 30% over the past 12 months.
The iGRP (integrated Gas, Renewables & Power) segment reported record adjusted net operating income of $3.6 billion this quarter, up $1.1 billion from the second quarter, and cash flow of $2.7 billion, driven by an average LNG selling price up more than 50% compared to the previous quarter and by the strong performance of its trading activities. The Company continued to implement its growth strategy by taking a stake in the North Field South LNG project in Qatar. In Electricity & Renewables, TotalEnergies completed the acquisition of 50% of the Clearway Energy Group in the United States and announced a significant acquisition in Brazil.
Exploration & Production posted adjusted net operating income of $4.2 billion and cash flow of $6.4 billion, despite a decrease in production this quarter, mainly due to unplanned shutdowns at Kashagan. TotalEnergies started production at the Ikike field in Nigeria, launched the Begonia project in Angola and the Fenix project in Argentina, and announced a significant gas discovery in Cyprus. Downstream benefited from strong distillate margins, generating an outstanding adjusted net operating income of $2.4 billion and a cash flow of $2.9 billion.
In this favorable environment, taking into account income and production taxes of $26 billion worldwide, the Company is implementing a balanced value-sharing policy with an exceptional one-month-salary bonus in 2022 to all its employees(3) worldwide and, as announced on September 28, its shareholder return policy targeting 35-40% cash flow payout beginning in 2022.
The Board of Directors therefore decided to distribute a third interim dividend for the 2022 financial year in the amount of €0.69/share, equal to the first and second 2022 interim dividends and an increase of 5% from the interim and the final dividends paid for the 2021 financial year, and set the ex-dividend and payment dates for the interim special dividend of €1/share in December 2022. »
1. Highlights(4)
Social and environmental responsibility
• TotalEnergies’ contributed to the energy transition dialogue in view of COP27 with the publication of the “TotalEnergies Energy Outlook 2022”
• Fuel price reduction program until year-end for TotalEnergies’ service stations in France: 20 c/l discount extended until November 15 and then 10 c/l discount until December 31, 2022
Electricity & Renewables
• Acquired an interest in the development of more than 12 GW of onshore solar and wind projects in Brazil
• Offshore wind:
• Start-up of Seagreen, Scotland’s largest offshore wind farm
• Solar:
• Start-up of the 800 MW Al Kharsaah solar power plant in Qatar
• Reached the objective of 500 MW of distributed solar generation capacity worldwide
LNG
• Acquired a 9.375% stake in the 16 Mt/y North Field South LNG project in Qatar
• Launched the FEED for the Papua LNG project’s upstream production facilities, in Papua New Guinea
Upstream
• Started production at the Ikike field in Nigeria
• Launched developments in Angola of the Begonia oil field, the Quiluma and Maboqueiro gas fields, as well as a first solar project with a capacity of 35 MW
• Launched the Fenix offshore gas project in Argentina
• Significant offshore gas discovery at Cronos-1 well, located on Block 6 in Cyprus
• Exploration & production sharing agreement signed for Block 11 in Oman
• Sold 18% stake in the onshore Sarsang oil field in Iraq
• Sold 49% interest in the Termokarstovoye gas field in Russia to Novatek
Downstream and new molecules
• Agreement with SARIA to develop SAF production on the Grandpuits platform in France
• Sold 50% of fuel distribution business in Egypt to ADNOC
Decarbonization
• Awarded a CO2 sequestration license in Australia, in partnership with INPEX and Woodside
• First cross-border commercial agreement for CO2 transport and storage on the Northern Lights project in Norway
• Memorandum of understanding with Holcim for a pilot project to decarbonize a cement plant in Belgium
• Created with the Technical University of Denmark a research center of excellence in decarbonized energies
3. Key figures of environment, greenhouse gas emissions and production
The average LNG selling price was up 54% in the third quarter compared to the previous quarter, benefiting on a lagged basis from the increase in oil and gas price indexes on long-term contracts as well as high spot gas prices.
The evolution of Scope 1+2 emissions from the operated facilities resulted from the high-capacity utilization of CCGTs and refineries in Europe, including the restart of the Donges refinery in France.
3.3 Production*
Hydrocarbon production was 2,669 thousand barrels of oil equivalent per day (kboe/d) in the third quarter of 2022, down 5% year-on-year, comprised of:
• +3% due to the start-up and ramp-up of projects including Clov Phase 2 and Zinia Phase 2 in Angola, Mero 1 in Brazil and Ikike in Nigeria,
• +2% due to the increase in OPEC+ production quotas,
• -3% due to higher planned maintenance, particularly on Ichthys, and unplanned shutdowns on Kashagan,
• -3% portfolio effect, notably related to the end of the operating licenses for Qatargas 1 and Bongkot North in Thailand, as well as the effective withdrawal from Myanmar, partially offset by the entry into the Sepia and Atapu producing fields in Brazil,
• -1% due to security-related production cuts in Libya and Nigeria,
• -1% due to the price effect,
• -2% due to the natural decline of the fields.
Compared to the previous quarter, production was down 2.5%, mainly due to planned maintenance, notably at Ichthys, and unplanned shutdowns at Kashagan, partially offset by the entry into production fields of Sepia and Atapu and the ramp-up of Mero 1 in Brazil.
Analysis of business segments
4.1 Integrated Gas, Renewables & Power (iGRP)
Third quarter 2022 LNG production was down 6% year-on-year, mainly due to the end of the Qatargas 1 operating license, planned maintenance on Ichthys LNG in Australia as well as the decrease in gas supply to NLNG in Nigeria for security reasons. Overall LNG sales were down 10% in the third quarter compared to the previous quarter, mainly due to the outage at Freeport LNG, planned maintenance at Ichthys LNG and a shutdown of production at Idku LNG in Egypt due to insufficient gas supply.
Nevertheless, third quarter 2022 overall LNG sales were up 5% year-on-year, mainly due to the increase in spot purchases to maximize the use of the Company’s regasification capacity in Europe and seize opportunities in a volatile market
Gross installed renewable power generation capacity reached 16.0 GW at the end of the third quarter 2022, up 4.4 GW from the previous quarter, including 3.8 GW related to the acquisition of 50% of Clearway Energy Group in the United States and 160 MW related to the start-up of the Seagreen offshore wind farm in Scotland. Gross power generation capacity in development increased by 12.5 GW quarter-on-quarter, mainly due to the acquisition of 50% of Clearway Energy Group in the United States.
Net electricity generation stood at 8.5 TWh in the third quarter 2022, up 79% year-on-year thanks to higher utilization rates of flexible power plants (CCGT) as well as growth in electricity generation from renewable sources.
EBITDA from the Electricity & Renewables business reached $460 million in the third quarter 2022, up 58% year-on-year due to the growth of the business.
4.1.2 Results
Adjusted net operating income for the iGRP segment was:
• $3,649 million in the third quarter 2022, 2.3 times the same quarter last year, thanks to higher LNG prices, the performance of gas, LNG and electricity trading activities and the growing contribution of Electricity & Renewables,
• $9,255 million over the first nine months of 2022, 2.7 times the same period last year for the same reasons. The iGRP segment’s cash flow was as follows:
• $2,683 million in the third quarter 2022, up 56% year-on-year, thanks to higher LNG prices, the performance of gas, LNG and electricity trading activities and the growing contribution of Electricity & Renewables, despite a lag effect on dividends received from equity affiliates,
• $7,628 million over the first nine months of 2022, 2.1 times the same period last year for the same reasons. Operating cash flow was $4,390 million for the quarter, mainly due the positive impact on working capital requirements of margin call reductions and the seasonality of the gas and electricity supply business.
4.2.2 Results
Adjusted net operating income from Exploration & Production was:
• $4,217 million in the third quarter 2022, up 55% year-on-year, thanks to the sharp rise in oil and gas prices,
• $13,951 million for the first nine months of 2022, double the same period last year for the same reasons.
Cash flow was $6,406 million in the third quarter 2022 compared to $4,943 million a year earlier and increased by 62% to $21,092 million in the first nine months of 2022, benefiting from the sharp increase in oil and gas prices.
Adjusted net operating income and cash flow for the third quarter of 2022 were down $502 million and $977 million respectively compared to the second quarter, mainly due to the impact of Energy Profits Levy in the United Kingdom for $0.6 billion
4.4 Refining & Chemicals
Refinery throughput:
• increased by 31% year-on-year in the third quarter 2022, due to the recovery in demand, particularly in Europe and the United States, the restart of the Donges refinery in France in the second quarter 2022 and the Leuna refinery in Germany which had a major scheduled turnaround in 2021,
• increased by 31% year-on-year for the first nine months, for the same reasons as well as the restart, in 2021, of the distillation unit at the Normandy refinery in France. Monomer production was down 13% in the third quarter 2022, mainly due to lower demand in Asia and unplanned shutdowns at Normandy in France and Antwerp in Belgium.
Adjusted net operating income for the Refining & Chemicals segment was:
• $1,935 million in the third quarter 2022, compared to $602 million in the third quarter 2021, due to high distillate margins in the context of reduced imports of Russian petroleum products, as well as the performance of crude oil and petroleum products trading activities,
• $5,815 million over the first nine months of 2022, 4.3 times the same period last year, due to high refining margins in Europe and the United States and better utilization rates, as a result of the restart of the Donges refinery in France in the second quarter 2022 as well as the Leuna refinery in Germany which had a major scheduled turnaround in 2021. Cash flow also rose sharply to $2,164 million in the third quarter 2022, 2.3 times higher than in the third quarter 2021, and to $6,560 million in the first nine months of 2022.
In the third quarter 2022, adjusted net operating result and cash flow were down $825 million and $799 million respectively, compared to the second quarter 2022, due to lower gasoline margins in Europe and the United States.
4.5 Marketing & Services
4.5.1 Petroleum product sales
Sales of petroleum products were down 3% year-on-year in the third quarter 2022, reflecting lower demand due to higher prices of petroleum products, particularly in Africa. Sales were stable for the first nine months of 2022 compared to a year ago, as the recovery of aviation and network activities worldwide offset the decline in sales to professional and industrial customers, particularly in
Europe.
Adjusted net operating income for the Marketing & Services segment was $478 million in the third quarter 2022, up 9% year-on-year, and $1,216 million in the first nine months of 2022, up 7% year-on-year, thanks mainly to the recovery of the network and aviation activities. Cash flow was $780 million in the third quarter 2022 and $1,828 million in the first nine months of the year.
TotalEnergies results
5.1 Adjusted net operating income from business segments
Segment adjusted net operating income was:
• $10,279 million in the third quarter 2022, compared to $5,374 million a year earlier, due to higher oil and gas prices, refining margins and the good performance of trading activities,
• $30,237 million over the first nine months of 2022, compared to $12,893 million a year earlier, for the same reasons.
5.2 Adjusted net income (TotalEnergies share) TotalEnergies adjusted net income was $9,863 million in the third quarter 2022 compared to $4,769 million in the third quarter 2021, due to higher oil and gas prices, refining margins and the good performance of trading activities.
Adjusted net income excludes the after-tax inventory effect, non-recurring items and the impact of changes in fair value(18).
The net income adjustment items(19) represented -$3,237 million in the third quarter 2022, notably due to a new impairment of -$3.1 billion related to Russia and to an inventory effect of -$0.8 billion, partially offset by the capital gain on the partial sale of SunPower shares and the impact of revaluing the shares held and consolidated under the equity method for $1.4 billion.
TotalEnergies’ effective tax rate was 44.1% in the third quarter 2022, compared to 39.4% in the second quarter 2022 and 39.6% in the third quarter 2021, mainly due to the increase in the Exploration & Production tax rate, notably as a result of the Energy Profits Levy in the United Kingdom.
5.3 Adjusted earnings per share
Adjusted diluted net earnings per share were:
• $3.83 in the third quarter 2022, calculated based on 2,560 million weighted-average diluted shares, compared to $1.76 a year earlier,
• $10.96 over the first nine months of 2022, calculated based on 2,589 million weighted-average diluted shares, compared to $4.14 a year earlier.
As of September 30, 2022, the number of fully-diluted shares was 2,543 million. As part of its shareholder return policy, as announced in July 2022, TotalEnergies repurchased 38.9 million shares for cancellation in the third quarter 2022 for $2 billion. Share buybacks amounted to $5 billion in the first nine months of 2022.
5.4 Acquisitions – asset sales
Acquisitions were:
• $1,716 million in the third quarter 2022, mainly related to the acquisition of 50% of Clearway Energy Group for $1,619 million,
• $5,580 million over the first nine months of 2022 including the above item as well as payments related to the award of the Atapu and Sepia Production Sharing Contracts and the bonus related to the New York Bight offshore wind concession in the United States.
Asset sales were:
• $129 million in the third quarter 2022, mainly for the sale of the 18% interest in the Sarsang field in Iraq,
• $995 million over the first nine months of 2022, including the above item as well as the partial sale of the Landivisiau power generation plant in France, the sale by SunPower of its Enphase shares and a payment related to the sale of interests in the CA1 offshore block in Brunei
Net cash flow
TotalEnergies’ net cash flow(20) was:
• $7,033 million in the third quarter 2022 compared to $6,205 million a year earlier, reflecting the $3.7
billion increase in cash flow and the $2.8 billion increase in net investments to $4,703 million in the third quarter 2022,
• $24,094 million in the first nine months of 2022 compared to $10,756 million a year earlier, reflecting the $16.8 billion increase in cash flow and the $3.5 billion increase in net investments to $12,501 million in the first nine months of 2022. Cash flow from operations was $17,848 million in the third quarter, compared to cash flow of $11,736 million, reflecting the positive impact of a $6.7 billion decrease in working capital requirement, mainly due to:
• price effect on inventories related to the decrease in oil and petroleum products average prices
• increase in tax liabilities related to rising gas prices and the Energy Profits Levy in the United Kingdom,
• reduction in margin calls,
• seasonality of the gas and electricity supply activity.
5.6 Profitability
Return on equity was 31.4% for the twelve months ended September 30, 2022.
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Source: TotalEnergies