TLDR
- TotalEnergies (TTE) rose ~3% in premarket trading after flagging a strong Q1 earnings outlook
- Higher oil and gas prices expected to add $2â$2.5 billion to working capital in Q1
- The Iran/Middle East conflict cut ~100,000 bpd of production, about 15% of total output
- LNG results expected well above Q4, driven by 10% production growth and strong trading
- European refining margins hit $11.40 per ton, up 192% year-over-year; full results due April 29
TotalEnergies (TTE) said Thursday it expects a strong rise in first-quarter earnings, driven by higher energy prices and active LNG trading, even as the ongoing Middle East conflict knocked out a chunk of its production.
The French energy major’s U.S.-listed stock climbed around 3% in premarket trading following the update.
The company said Q1 output is expected to hold roughly flat at around 2.55 million barrels of oil equivalent per day compared to the prior quarter.
The Iran war has forced TotalEnergies to curtail or halt operations in Qatar, Iraq, and offshore UAE. A refinery complex in Saudi Arabia was also recently closed after sustaining damage. In total, the conflict is cutting around 100,000 barrels per day from output â roughly 15% of total production.
New project startups in Libya and Brazil are helping pick up some of the slack.
Earnings Boost From Prices and Trading
Despite the production hit, TotalEnergies said higher hydrocarbon prices are expected to add an estimated $2 billion to $2.5 billion to working capital for the quarter.
LNG results are set to come in well above Q4 levels. The company cited 10% production growth and strong trading activity, with market volatility working in its favor.
European refining margins during Q1 came in at $11.40 per ton â up 192% from $3.90 a year earlier, and above what analysts had expected. Refinery utilization ran above 90%.
Integrated Power results are expected at around $500 million, roughly flat year-over-year. Marketing and Services is also tracking in line with the same period last year.
What Analysts Are Saying
Jefferies analyst Mark Wilson called the update a “small positive,” pointing out that TotalEnergies appears to be handling working capital pressures better than some of its peers, including Shell and BP.
Wilson flagged potential for a roughly 10% beat to Q1 consensus net income of âŹ4.8 billion. He identified LNG trading as the main upside driver.
TotalEnergies is scheduled to report full first-quarter results on April 29.
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