TotalEnergies 1Q24 Results | Climate Transition Analysis
TotalEnergies 1Q24 results showed a strong quarter for its Integrated Power segment, with earnings up 65% and capex accounting for 47% of group net investments.
However, the company’s completion of TexGen, a portfolio three gas-fired power plants in the US, accounted for $635m of net investments alone.
Consequently, at least ~40% of Integrated Power capex was directed at gas.
Our view
1Q24 results saw TotalEnergies continue to build-out its peer leading renewables pipeline and a promising Integrated Power business showing signs of profitability.
However, the company has one of the most aggressive oil and gas growth strategies behind Eni, and the least ambitious emissions targets alongside Equinor compared to peers.
Investors engaging with TotalEnergies should ask for:
Disclosure of the complete scope of emissions from energy product sales, including all physically traded and third-party volumes (in line with BP and Shell).
A move away from reliance on offsets, CCS and divestments to achieve scope 1 & 2 target.
A further breakdown of marketed power sales in its Integrated Power business, including the proportion of power sales from renewables vs fossil fuels, as well as guidance/ambition for the electrification of gas clients.
Quarterly disclosures for its Low-carbon Molecules business, to track progress of its progress against its Low Carbon Energies (Integrated Power + Low-carbon Molecules) capex target of 33% group spend.
Key findings
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Despite a decline in capex, TotalEnergies ramped up spending for its Integrated Power segment.
Group capex was $3.6bn, down 44% from 1Q23.
In contrast, the Integrated power capex was $1.7bn, up 53% from 1Q23, accounting for 47% of group net investments.
However, the company’s completion of TexGen, a portfolio three gas-fired power plants in the US, accounted for $635m alone. Consequently, at least ~40% of Integrated Power capex was directed at gas.
The company still lacks disclosures on Low-carbon Molecules capex, making it challenging to track its progress against its Low Carbon Energies (Integrated Power + Low-carbon Molecules) capex target of 33% group spend. This is despite peers such as Eni establishing a new reporting segment in Q1 for Enilive & Plenitude (Eni’s equivalent to TotalEnergies’ Low-carbon Energies business).
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1Q24 adjusted net income was down 22% from 1Q23 to 5.1bn, and adjusted net operating income declined 20% to $5.6bn. Like other majors, earnings from gas were significantly down, while power showed signs of growth.
The Integrated LNG segment was down 41%, accounting for more than 60% of earnings decline. The company cited weaker commodity prices and sales volumes. At the same time, Integrated Power earnings hit an all-time high, up 65% from 1Q23 to $611m.
Despite the hit to earnings, the company announced 2Q24 buybacks of $2bn.
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The lower earnings in Q1 coincided with lower oil and gas volumes.
LNG sales fell 3% to 10.7 Mt, and total hydrocarbon production fell 2% from 1Q23 to 2.46 Mboe/d.
The company confirmed FY24 production guidance of 2.4-2.5 Mboe/d.
In Integrated Power, net power production grew 14% to 10 TWh. This was driven by a 56% increase in renewable generation to 6 TWh, offsetting a 21% decline in gas power.
Additionally, the company made strong progress building out its renewable capacity in 1Q, but this momentum will need to be maintained.
The company’s gross renewables pipeline grew 19% from 1Q23 to 84 GW, and installed capacity reached 23.5 GW, up 31%.
TotalEnergies is targeting 28 GW by FY24 and 35 GW by FY25, meaning it will need to grow its gross capacity by ~6% each quarter for the next 7 quarters.
