3Q 2024 Results | Climate Transition Insights
This report comprises general statements of factual information and not financial advice. Read our Important Notice.
This report assesses the Oil and Gas majors’ 2Q 2024 results and progress on transition, highlighting key engagement questions for 2025.
Companies assessed: BP, Shell, Eni, TotalEnergies, Equinor, Woodside and Santos.
Our view
3Q24 results clearly show a growing gap between the emissions targets and actions of Majors. Despite FY25 targets rapidly approaching, companies are reprioritising shareholder distributions and oil and gas production over long-term investment.
Combined with Shell’s successful overruling of a legal order to reduce their emissions by 45% by 2030, current trends raise concern about the likelihood that companies will maintain and meet their emissions targets. Going forward, the execution of strategy, specifically low-carbon investment, must take centre stage.
Download the note for a summary of 9-month key transition performance metrics.
Investors engaging with oil and gas should consider these engagement questions ahead of 2025:
01 Will majors quantify levers to achieve net carbon intensity (NCI) targets?
This includes levers such as offsets, CCS, and divestments. From FY19-23, major’s NCI reduced by only ~4%, with FY30 low-carbon ambitions insufficient to deliver the emission reduction, leaving up to a 15% gap.
In 3Q24, majors further diverged from targets, with all Euro-majors either removing FY30 production guidance or raising oil and gas production ambitions. Combined with scalebacks in hydrogen ambitions in 3Q24, and biofuel setbacks in 2Q24, the accessibility of low-carbon levers to meet NCI targets are becoming increasingly limited.
02 How can majors increase low-carbon investment?
Low-carbon investment in 3Q24 was $4.2bn, a 25% increase on 3Q23. 3Q24 however saw a sector-wide prioritisation of distributions over capex, highlighting a risk to the momentum in low-carbon investment.
To meet NCI targets, majors must invest an additional $134bn ($19bn p.a.) above current investment targets.
Key findings
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3Q24 results reinforced the shift back to oil and gas for the sector, with production up 1% year-on-year. TotalEnergies raised its FY30 growth target to 20%, and BP abandoned planned cuts, aiming to sustain current output into the 2040s.
Earlier in the year, Eni increased its FY30 growth forecast to 15% from FY23, Equinor adjusted its outlook to 5% growth between FY23-FY26. Shell removed its 1-2% p.a. reduction target last year, though future growth remains unspecified.
In Australia, Santos refined its production guidance to 30% by FY27. Woodside hasn’t set production targets but has prioritised growing its portfolio, underpinned by major projects.
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3Q24 results showed continued preference for shareholder distributions, with Euromajors increasing the quarter’s distributions 22% year-on-year to $21bn.
Capex cuts from Equinor, Shell and Woodside, and indications of potential downgrades across the remaining oil and gas majors highlight a preference for shareholder distributions over investment.
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3Q24 results revealed setbacks in hydrogen. BP cut planned capacity by 28%, focusing on 5-10 key projects and cancelling 18 others. Shell abandoned plans for a low-carbon hydrogen plant in Norway, Equinor abandoned blue hydrogen ambitions in Europe, and Woodside canceled H2Tas alongside continued delays with H2Ok.
However, TotalEnergies continues to integrate hydrogen into its operations by decarbonising refineries, securing green hydrogen supply deals, and adopting tolling models, signaling a more strategic approach amid sector challenges.
