In its third-quarter trading report, Total highlights higher sales and rising refining profit margins.
TotalEnergies, a French oil company, expects to see an increase in its third-quarter earnings as increased upstream production and improved crude refining margins will offset lower oil prices. The group announced this on Wednesday. In a trading update, it stated that despite a $10 drop in the price of oil per barrel year-on-year the results and cash flows from the business segments would increase in the range of 0-5% due to the accretive growth in hydrocarbon production and the improved results in the downstream. At 0723 GMT, the group's shares had risen 2.3%. Total faces pressure to reduce its debt after $3.5 billion worth of acquisitions were made in the first six months. In July, CEO Patrick Pouyanne announced that he would increase income from asset sales, retail gas and power sales, and improve refining margins. Total's gearing should improve between 0.5 to 1 percentage points from the end of second quarter 2025 when gearing was 17.9%. The average European refining margin was $63.0 a ton during the third quarter. This is a 300% increase from the same time last year. Fuel demand increased due to the driving season, and the European Union banned the import of fuels made with Russian oil.
As a result, the results of downstream will increase by $400 to $600 million per year.
Total's guidance for the year anticipates an increase of 4% in upstream oil and natural gas production to 2.5 million barrels oil equivalents during the third quarter. The Integrated LNG result will be lower due to planned maintenance at two liquefaction unit of the Ichthys LNG facility in Australia. Integrated Power's results will be in line with second quarter $574 million. This would represent an 18% year-on-year increase. Brent crude oil averaged $69.1 per barrel in the quarter July-September, down 14% on the same period the previous year. Analysts predict that the price will fall even further in 2019, prompting Total, and other majors, to reduce share buybacks and cut spending to prepare for lower earnings.
Total's net investment is expected to be approximately $3 billion for the third quarter. This includes around $500 million of divestments, minus acquisitions.
(source: Reuters)