TotalEnergies expects lower earnings in its upstream and LNG divisions for the second quarter amid a drop in oil, natural gas, and LNG prices compared to early this year and the same time last year.
In an update note ahead of the Q2 results due out on July 24, the French supermajor said that its exploration and production earnings are expected to reflect the $7 per barrel decline in oil prices in the second quarter compared to the first quarter.
Brent Crude prices averaged $67.90 per barrel in Q2, down from an average of $75.70 for the first quarter, TotalEnergies said.
TotalEnergies has estimated that every $10 per barrel decline in oil prices would dent the adjusted net operating income by $2.3 billion and reduce cash flow from operations by $2.8 billion.
The average liquids, gas, and LNG prices were also lower between April and June compared to January to March. The European refining margin for TotalEnergies increased in Q2 from Q1, but is still lower than in the second quarter of 2024.
TotalEnergies is not the only supermajor to have warned that the lower oil prices in the second quarter would hurt profits.
Lower oil and gas prices are expected to dent the second-quarter earnings at BP, despite higher output and stronger refining margins.
BP’s realizations in the oil production and operations segment are expected to be $600 million-$800 million lower in the second quarter compared to the first quarter, the supermajor said in a trading statement last week, ahead of publishing full Q2 results on August 5.
The other UK-based supermajor, Shell, expects to have booked “significantly lower” trading and optimization results for the second quarter compared to the prior quarter, while it also slightly reduced the range of its natural gas and LNG production for the April-June period.
U.S. supermajor ExxonMobil has also warned the market that weaker oil and gas prices during the second quarter would affect its financial results, and rather substantially, at that.
By Michael Kern for Oilprice.com
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