TotalEnergies SE (TTE) Q3 2022 Earnings Call Transcript

TotalEnergies SE (NYSE:TTE) Q3 2022 Earnings Conference Call October 27, 2022 7:30 AM ET

Company Participants

Jean-Pierre Sbraire - Chief Financial Officer

Conference Call Participants

Irene Himona - Societe Generale

Michele Della Vigna - Goldman Sachs

Martijn Rats - Morgan Stanley

Christopher Kuplent - Bank of America

Oswald Clint - Bernstein

Lydia Rainforth - Barclays

Bertrand Hodée - Kepler

Alastair Syme - Citi

Lucas Herrmann - Exane

Biraj Borkhataria - RBC

Paul Cheng - Scotiabank

Amy Wong - Credit Suisse

Henri Patricot - UBS

Kim Fustier - HSBC

Operator

Ladies and gentlemen, welcome to the Third Quarter 2022 Results Conference Call. [Operator Instructions]

I now hand over to Jean-Pierre Sbraire, CFO, who will lead you through this call. Sir, please go ahead.

Jean-Pierre Sbraire

Thank you. Hello, everyone. Jean-Pierre speaking. We reported solid third quarter results that continue to demonstrate TotalEnergies' ability to effectively leverage the very strong and volatile environment. This success allows us to further strengthen the balance sheet and to share the benefits with our employees and with our shareholders.

The third quarter environment was marked by volatility at a very high level. Brands remain strong, averaging more than $100 per barrel in the fourth quarter and reversed the decline late in the quarter after OPEC+ announced a $2 million per barrel copper reduction in early October, which demonstrates that OPEC wants to remain in control despite the risk of lower world economic growth.

European gas prices were pushed to the roof by increasing geopolitical tensions and the risk of not enough supply during winter period, even if this risk is limited as gas storage in Europe are full. As a consequence, NBP nearly doubled in the third quarter to more than $42 per MBtu. A strong driver for the results is our average LNG price, of course. It was lifted by the spike in natural gas prices and reached a record $21.5 per MBtu in the third quarter, an increase of more than 50% quarter-to-quarter. We capture the full benefits of this LNG price, thanks to our integrated strategy.

European refining margins, NCV, despite an increase in energy costs reached $100 per tonne in the third quarter, still among the highest we have ever seen, but down for their record-setting second quarter levels, close to $150 per tonne. In this context, the company generated third quarter adjusted net income of $9.9 billion or $3.83 per share in the third quarter, in line with the previous quarter. These strong results were achieved despite the increase in taxes. I will tell you more on the UK tax in a minute, and the decrease in production and oil prices, but mitigated by higher integrated LNG results.