Oil & Gas

French oil major TotalEnergies reported a 15% decline in its fourth-quarter earnings for 2024, citing lower oil prices and weak fuel demand as key challenges. The company posted an adjusted net income of $4.4 billion, down from $5.2 billion in the same period the previous year. However, this figure slightly exceeded analysts' expectations of $4.2 billion, according to a Visible Alpha consensus. Despite the downturn, TotalEnergies benefited from higher electricity sales and liquefied natural gas (LNG) trading, which helped mitigate some of the losses.

The decline in earnings aligns with broader industry struggles, as Western oil majors face reduced economic activity and increased competition from new refineries in Africa and Asia. This has significantly impacted refining margins, making it less profitable to convert crude oil into fuel products. In the fourth quarter, TotalEnergies’ European refining margin fell to $25.90 per metric ton—half of what it was in late 2023. Additionally, crude oil prices were nearly $10 per barrel lower compared to the previous year, further squeezing profits for oil companies.

Despite these challenges, TotalEnergies managed to close the year on a stronger note, thanks to its LNG division. Market volatility allowed the company’s traders to capitalize on price fluctuations, boosting earnings in this sector by 35% to $1.4 billion. The company remains optimistic about early 2025, expecting higher gas prices, increased upstream production, and stronger power sales to drive improved performance in the coming months.

In response to the financial downturn, TotalEnergies has announced measures to maintain shareholder confidence. The company raised its 2024 dividend by 7% to 3.22 euros per share and confirmed a share buyback program of $2 billion per quarter for 2025. While the energy sector faces ongoing challenges, TotalEnergies’ diversified portfolio and focus on LNG provide a cushion against volatile oil markets.