TotalEnergies 3Q24 Results | Climate Transition Analysis
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3Q24 results highlight the dual narrative in TotalEnergies’ strategy: building a peer-leading renewables and power business in both scale and profitability, while also securing the top position in upstream and LNG growth ambition.
Our view
Despite a 4% drop from 3Q23, the Integrated Power segment remained profitable, with adjusted net operating income of $485m. The company’s gross renewables pipeline reached 89.6 GW, up 11% from 3Q23, making it ~70% larger than BP’s (53 GW) and nearly double Shell’s (45 GW).
At the same time, TotalEnergies reported multiple upstream start-ups in 3Q24, adding a combined gross peak production capacity of ~275 kboe/d and securing 2.55 Mtpa in long-term LNG sales contracts starting FY27. Following its 2024 Strategy & Outlook day, TotalEnergies now holds the most ambitious oil and gas growth target among peers, raising its goal from 13% to 20% by FY30, while continuing to lead in LNG sales growth (+50% from FY23-30).
Priority questions ahead of 2025:
1) Quantification of levers to achieve net carbon intensity (NCI) targets:
Can TotalEnergies ensure its aggressive LNG growth won’t lock in long-term fossil fuel dependence? With plans to grow LNG sales by 50% by FY30, the most among Euromajors, LNG is framed as a decarbonisation lever, but its potential is limited to the near-term. Clarity is needed on how these investments align with long-term decarbonisation.
2) Increases in low-carbon investment: Will TotalEnergies commit to quarterly reporting for its Low-carbon molecules business?
Regular disclosures are required to track progress toward TotalEnergies’ target of allocating 33% of group capex to Low-carbon energies.
Key findings
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3Q results indicate TotalEnergies is on track to hit both group and Integrated Power capex targets. Group capex was up 13% on 3Q23 to $5.76bn, driven by a 12% increase in Exploration & Production to $2.3bn, and a 16% increase in Integrated Power to $2.2bn. The company confirmed capex guidance of $17-18bn for FY24, including $5bn in Integrated Power. This implies 4Q24 group capex of $3-4bn, and Integrated Power capex of ~$600m.
Production was 2.41 Mboe/d, down 3% from 3Q23 unplanned shutdowns in Ichthys LNG and security-related disruptions in Libya. For 4Q, the company guided towards production between 2.4 and 2.45 Mboe/d, implying 2.43 Mboe/d for FY24.
Adjusted net operating income was down 4% on 2Q23, driven by an 81% decline in the Refining & Chemicals to $241m. The company reported lower refining margins, particularly in Europe.
The company confirmed its $8bn buyback target for FY24, with $2bn announced for 4Q24.
Operational scope 1 and 2 emissions grew 3.5% from 3Q23 to 8.8 MtCO2e due to increased gas-fired power plant activity in the US and Europe, with gas generation up 26% from 3Q23 to 4.4 TWh. The company has reported 24.7 MtCO2e for FY24 YTD, down 7% from the previous year.
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3Q24 results saw significant developments in its upstream portfolio. This comes after TotalEnergies claimed the top spot among its European peers in oil and gas production growth in its 2024 Strategy & Outlook day earlier this month, highlighting the ongoing limitations in its transition strategy.
TotalEnergies reported multiple start-ups in 3Q24, adding a combined gross peak production capacity of ~275 kboe/d, equivalent to ~11% of FY23 production. Key contributions included 180 kboe/d in Brazil, 75 kboe/d in the Gulf of Mexico, and ~21 kboe/d in Argentina. The company also announced FID on the 220 kb/d GranMorgu oil project in Suriname in early October.
The company continued its LNG sales portfolio expansion, securing 2.55 Mtpa of long-term contracts commencing from FY27 with deals in Turkey (1.1 Mtpa, 10 years), South Korea (0.2 Mtpa, 7 years), and a 5-year extension in China through FY34 (1.25 Mtpa). This follows last quarter’s significant additions of 3 Mtpa, including contracts with Marsa LNG, Ruwais, and two Indian partners, slated for later in the decade.
In its Strategy & Outlook day earlier this month, TotalEnergies revised its oil and gas growth outlook from 2-3% CAGR for FY23-28 (~2.8 Mboe/d) to 3% CAGR for FY24-30 (~3 Mboe/d), translating to 20% growth over FY23-30 (up from 13%). This positions it ahead of Eni’s 15% growth forecast and is set to be driven by six major FIDs in FY24, covering projects in Brazil (2x), Suriname, Angola, Oman, and Nigeria.
TotalEnergies leads European peers in both upstream production growth (+20% from FY23-30) and LNG sales growth (+50%).
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3Q24 results highlight the dual narrative in TotalEnergies’ strategy: building a peer-leading renewables and power business in both scale and profitability, while also securing the top position in upstream and LNG growth ambition.
Adjusted net operating income was $485m, down 4% from 3Q23 but representing 10% of total earnings (up from 7%). The gross renewables pipeline reached 89.6 GW, up 11% from 3Q23, with the company aiming for 100 GW of operational capacity by FY30.
Renewable power capacity stood at 24 GW in 3Q24, marking a 20% increase from 3Q23 and surpassing the combined capacity of Shell, BP, Equinor, and Eni (~10 GW). Despite strong progress, TotalEnergies will need to add 4 GW in 4Q24 to meet its 28 GW FY24 target.
Integrated power net capex rose 16% from 3Q23 to $2.2bn, accounting for 39% of group capex for the quarter, backed by $1.6bn in acquisitions. Key developments added ~5 GW of gross peak renewables capacity, including a 1.2 GW solar farm launch in Texas, new 1 GW solar investments through its Adani JV in India, acquisition of a 50% stake in RWE’s German offshore wind projects (2 GW), and a hydroelectric project acquisition in Africa (~0.8 GW).
Integrated Power ROACE slipped below 10%, down to 9.5% (from 10.8%). On the call, the company said it expects a rebound, supported by planned sell-downs of equity stakes in renewables during 4Q24. The company is targeting >12% by FY28-30, aiming to achieve this through its focus on deregulated markets like the US, EU, Brazil, and India, and leveraging its “integrated model” that combines renewables with flexible gas generation assets.
