TotalEnergies' Q2 Earnings Drop 23.4% Amid Oil Price Decline

TotalEnergies, a prominent French energy company, announced a substantial decrease in its second-quarter earnings, with adjusted net income dropping 23.4% year-over-year to $36 billion, compared to $47 billion in the same period last year. This decline represents a 14% decrease from the first quarter of this year. Despite an increase in upstream production, the company's earnings were significantly impacted by the sharp decline in oil and gas prices. The price of Brent crude oil, a key benchmark, has fallen significantly compared to the same period last year, contributing to the overall reduction in revenue. The company's performance underscores the broader challenges faced by the energy sector amid a global oil and gas winter, where lower prices and reduced demand have put pressure on profitability.

The company's net debt increased by 29% from the previous quarter, reaching $259.3 billion. This increase is attributed to higher acquisition expenses and increased operational cash flow requirements. The decline in oil prices is primarily due to the gradual lifting of production cuts by OPEC+ countries, which began in April. This move has led to a 20% decrease in Brent crude oil prices compared to the same period last year. The impact of lower oil prices is not limited to TotalEnergies; other major oil companies, such as Equinor, have also reported significant declines in their second-quarter earnings.

In recent years, large oil companies have faced a balancing act between investment, shareholder returns, and rising debt. The current global trade tensions and increased production by OPEC+ countries have added to the pressure on oil prices, making it challenging for companies to maintain profitability. British Petroleum and Italian Eni have already reduced their expenditures in response to these challenges. Despite these difficulties, TotalEnergies' refining business has shown signs of recovery, with profits from converting crude oil into fuel increasing by 21% compared to the same period last year. However, the company's refining and chemical business saw a 39% decrease in earnings compared to the previous year.

The company's liquefied natural gas (LNG) segment also faced challenges, with profits decreasing by 9.6% year-over-year and 20% compared to the first quarter of this year. This decline is primarily due to lower prices and reduced volatility, making it difficult for traders to profit from price differences. Despite these challenges, TotalEnergies' integrated power segment performed better than expected, with profits increasing by 14% year-over-year to $5.74 billion. The company reported a 3% increase in oil and gas production and a 20% increase in power generation compared to the same period last year.

TotalEnergies confirmed that it will continue with its $20 billion share buyback program in the third quarter and expects oil and gas production to increase by 3% year-over-year in the next quarter. However, the company revealed that it had only repurchased $17 billion in shares during the three months ending in June. The company's net investment for the full year 2025 is expected to remain within the previously announced range of $170 billion to $175 billion. This announcement reflects the company's commitment to maintaining its financial stability while navigating the challenges posed by the global oil and gas winter.