TotalEnergies SE: Fourth Quarter 2023: Main Indicators
- TotalEnergies SE released detailed financial information for the fourth quarter of 2023, providing insights into the company's performance and key indicators.
- The company's hydrocarbon production is expected to be around 2.45 Mboe/d, with integrated LNG results reflecting positive price and production volume evolution.
- The downstream results are impacted by the decrease in refining margins and weak chemicals demand in Europe, along with lower refining utilization rates due to turnarounds and gradual restarts at various refineries.
- The company also provided sensitivities for 2023, estimating the impact of changes in the average liquids price, European gas price, and variable cost margin for European refining on adjusted net operating income and cash flow from operations.
- None.
Insights
The estimated financial information and key elements impacting TotalEnergies' fourth quarter aggregates suggest several points of interest for investors and market stakeholders. The reported average prices for liquids and gas, along with the variable cost margin for European refining, provide insight into the company's revenue and profitability. A critical factor is the hydrocarbon production estimate of 2.45 million barrels of oil equivalent per day, which indicates operational performance and efficiency.
Furthermore, the increase in the effective tax rate for the Exploration & Production segment due to Canadian oil sands assets disposals may affect net income. The integrated LNG results are expected to be positive, reflecting favorable price and volume trends, which could signal robust performance in this segment. However, the downstream results are tempered by decreased refining margins and weak chemical demand in Europe, indicating potential challenges in these market segments.
The sensitivities provided offer a quantifiable measure of how changes in currency exchange rates, average liquids prices, European gas prices and variable cost margins could impact the company's adjusted net operating income and cash flow from operations. These metrics are vital for financial modeling and risk assessment.
From a market perspective, TotalEnergies' performance indicators such as the average LNG price and European refining variable cost margin (VCM) reflect broader energy market trends and pricing dynamics. The decrease in VCM from the previous quarter suggests a potential softening in the European refining sector, which could be indicative of wider market pressures such as reduced demand or increased competition.
The weak chemicals demand in Europe could be attributed to macroeconomic factors affecting industrial production and consumer behavior. This trend may have implications beyond TotalEnergies, potentially signaling a downturn in the chemical industry sector. Additionally, the impact of refining utilization rates due to turnarounds and restarts of facilities like Satorp, Antwerp and Port Arthur refineries highlights the importance of operational efficiency and its influence on market supply dynamics.
Examining the energy economics behind TotalEnergies' update, the fluctuations in Brent crude oil prices over the quarters have direct implications on the company's revenue streams from oil sales. The average gas and LNG prices, while lower than the previous year, are still significant as they impact the profitability of TotalEnergies' gas segment. The company's ability to navigate these price changes while maintaining production levels is crucial for its financial health.
The expected increase in the effective tax rate following asset disposals is a strategic consideration that affects the company's net income and possibly its investment attractiveness. The integrated power results exceeding $500 million and the benefit from dividends distribution from equity affiliates are positive indicators of the company's diversified portfolio and its resilience against sector-specific risks.
TotalEnergies SE (Paris:TTE) (LSE:TTE) (NYSE:TTE):
The main indicators, estimated financial information and key elements impacting TotalEnergies’ fourth quarter 2023 aggregates are shown below:
Main indicators |
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4Q23 |
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3Q23 |
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2Q23 |
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1Q23 |
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4Q22 |
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€/$ |
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1.08 |
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1.09 |
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1.09 |
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1.07 |
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1.02 |
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Brent |
($/b) |
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84.3 |
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86.7 |
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78.1 |
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81.2 |
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88.8 |
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Average liquids price * (1) |
($/b) |
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80.2 |
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78.9 |
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72.0 |
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73.4 |
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80.6 |
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Average gas price * (1) |
($/Mbtu) |
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6.17 |
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5.47 |
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5.98 |
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8.89 |
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12.74 |
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Average LNG price ** (1) |
($/Mbtu) |
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10.28 |
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9.56 |
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9.84 |
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13.27 |
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14.83 |
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Variable Cost Margin, European refining *** |
($/t) |
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50.1 |
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95.1 |
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42.7 |
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87.8 |
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73.6 |
* Sales in $ / Sales in volume for consolidated affiliates.
** Sales in $ / Sales in volume for consolidated and equity affiliates.
*** This indicator represents the average margin on variable costs realized by TotalEnergies’ European refining business (equal to the difference between the sales of refined products realized by TotalEnergies’ European refining and the crude purchases as well as associated variable costs, divided by refinery throughput in tons).
(1) Does not include oil, gas and LNG trading activities, respectively.
Main elements impacting the quarter aggregates
- Hydrocarbon production is expected around 2.45 Mboe/d (as indicated at the end of October), benefiting from LNG production growth, partially compensating for the Canadian oil sands assets disposals, effective this quarter. Due to these disposals, the effective tax rate of Exploration & Production is expected to increase.
- Integrated LNG results will reflect the positive evolution of prices and production volumes.
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Integrated Power results are expected to be above
$500 million -
Downstream results are impacted by the decrease in refining margins and by weak chemicals demand in
Europe . In addition, the refining utilization rate is lower this quarter, due to turnarounds at Satorp andAntwerp and the gradual restart of the Port Arthur refinery.
2023 Sensitivities*
Change |
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Estimated impact on
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Estimated impact on
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| Dollar | +/- 0.1 $ per € |
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-/+ 0.1 B$ |
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~0 B$ |
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| Average liquids price** | +/- 10 $/b |
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+/- 2.5 B$ |
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+/- 3.0 B$ |
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| European gas price - NBP / TTF | +/- 2 $/Mbtu |
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+/- 0.4 B$ |
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+/- 0.4 B$ |
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| Variable cost margin, European refining (VCM) | +/- 10 $/t |
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+/- 0.4 B$ |
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+/- 0.5 B$ |
* Sensitivities are revised once per year upon publication of the previous year’s fourth quarter results. Sensitivities are estimates based on assumptions about TotalEnergies’ portfolio in 2023. Actual results could vary significantly from estimates based on the application of these sensitivities. The impact of the $-€ sensitivity on adjusted net operating income is essentially attributable to Refining & Chemicals.
** In a 80 $/b Brent environment.
A new market indicator for European refining margin
TotalEnergies will introduce, from 1Q24, a new market indicator for European refining, the “European Refining Margin Marker” to replace the “Variable Cost Margin, European refining”. This indicator will be calculated based on public market prices ($/t) with a formula using a basket of crudes, petroleum product yields and variable costs representative of the European refining system of TotalEnergies, as disclosed here below.
Corresponding 2023 data is provided below to reflect this change.
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4Q23 |
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3Q23 |
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2Q23 |
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1Q23 |
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European Refining Margin Marker (ERM) |
($/t) |
52.6 |
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100.6 |
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40.1 |
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90.7 |
The formula may be reviewed on a yearly basis in case of changes in market conditions, such as global supply and demand balances, CO2 EU ETS evolution and/or TotalEnergies’ European refining portfolio.
| NWE Crude Markers | %weight |
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| High Sulfur (Arab Light, Forties, Johan Sverdrup) |
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| Low Sulfur (WTP, Ekofisk) |
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| NWE Product Markers | %weight |
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| LPG |
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| Naphtha |
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| Gasoline |
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| Distillates |
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| Fuel Oil |
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| Variable costs |
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| Natural Gas (TTF) |
- |
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| CO2 (EU ETS) |
- |
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| Non energy costs | -8.0 €/t |
Disclaimer
The terms “TotalEnergies”, “TotalEnergies company” and “Company” in this document are used to designate TotalEnergies SE and the consolidated entities directly or indirectly controlled by TotalEnergies SE. Likewise, the words “we”, “us” and “our” may also be used to refer to these entities or their employees. The entities in which TotalEnergies SE directly or indirectly owns a shareholding are separate and independent legal entities.
The data presented in this document is based on TotalEnergies’ internal preliminary reporting and is not audited. This data is not intended to be a comprehensive summary of all items that will affect TotalEnergies SE’s results or to provide an estimate of the third quarter 2023 results. Actual results may vary. To the extent permitted by law, TotalEnergies SE disclaims all liability from the use of this data.
This document may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, notably with respect to the financial condition, results of operations, business activities and industrial strategy of TotalEnergies. This document may also contain statements regarding the perspectives, objectives, areas of improvement and goals of TotalEnergies, including with respect to climate change and carbon neutrality (net zero emissions). An ambition expresses an outcome desired by TotalEnergies, it being specified that the means to be deployed do not depend solely on TotalEnergies. These forward-looking statements may generally be identified by the use of the future or conditional tense or forward-looking words such as “envisions”, “intends”, “anticipates”, “believes”, “considers”, “plans”, “expects”, “thinks”, “targets”, “aims” or similar terminology. Such forward-looking statements included in this document are based on economic data, estimates and assumptions prepared in a given economic, competitive and regulatory environment and considered to be reasonable by TotalEnergies as of the date of this document.
These forward-looking statements are not historical data and should not be interpreted as assurances that the perspectives, objectives or goals announced will be achieved. They may prove to be inaccurate in the future, and may evolve or be modified with a significant difference between the actual results and those initially estimated, due to the uncertainties notably related to the economic, financial, competitive and regulatory environment, or due to the occurrence of risk factors, such as, notably, the price fluctuations in crude oil and natural gas, the evolution of the demand and price of petroleum products, the changes in production results and reserves estimates, the ability to achieve cost reductions and operating efficiencies without unduly disrupting business operations, changes in laws and regulations including those related to the environment and climate, currency fluctuations, as well as economic and political developments, changes in market conditions, loss of market share and changes in consumer preferences, or pandemics such as the COVID-19 pandemic. Additionally, certain financial information is based on estimates particularly in the assessment of the recoverable value of assets and potential impairments of assets relating thereto.
Neither TotalEnergies SE nor any of its subsidiaries assumes any obligation to update publicly any forward-looking information or statement, objectives or trends contained in this document whether as a result of new information, future events or otherwise. The information on risk factors that could have a significant adverse effect on TotalEnergies’ business, financial condition, including its operating income and cash flow, reputation, outlook or the value of financial instruments issued by TotalEnergies is provided in the most recent version of the Universal Registration Document which is filed by TotalEnergies SE with the French Autorité des Marchés Financiers and the annual report on Form 20-F filed with the United States Securities and Exchange Commission (“SEC”).
Financial information by business segment is reported in accordance with the internal reporting system and shows internal segment information that is used to manage and measure the performance of TotalEnergies. In addition to IFRS measures, certain alternative performance indicators are presented, such as performance indicators excluding certain adjustment items (i.e., special items, inventory valuation effect and effect of changes in fair value): adjusted operating income, adjusted net operating income, adjusted net income). These indicators are meant to facilitate the analysis of the financial performance of TotalEnergies and the comparison of income between periods. They allow investors to track the measures used internally to manage and measure the performance of TotalEnergies. The adjusted results (adjusted operating income, adjusted net operating income, adjusted net income) are defined as replacement cost results, adjusted for special items, excluding the effect of changes in fair value. For further details on the adjustment items, please refer to the last published earnings statement and notes to the consolidated financial statements.
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TotalEnergies SE
Source: TotalEnergies SE
FAQ
What are the main indicators provided by TotalEnergies SE for the fourth quarter of 2023?
What is the expected hydrocarbon production for TotalEnergies SE in the fourth quarter of 2023?
How are downstream results impacted for TotalEnergies SE in the fourth quarter of 2023?
What sensitivities did TotalEnergies SE provide for 2023?
