TotalEnergies Increases 1Q Earnings, Exits Canadian Oil Sands

Despite declining oil and gas prices in early 2023, TotalEnergies announced on Thursday that it posted a 12% increase in first-quarter 2023 net profit to $5.6 billion, while announcing the sale of its Canadian oil sands assets.

Last year, from January to March, the French giant published a net result of 4.9 billion dollars, taking into account a significant provision, as a result of a 4.1 billion dollar depreciation of its Russian assets. This year, its adjusted quarterly net profit (excluding non-recurring items) of $6.5 billion was down 27% from $8.97 billion last year.

Along with its quarterly results, the group announced Thursday the sale of its Canadian oil sands business to SunCor Energy for $4.1 billion as part of a strategy to reduce its carbon footprint. This sale, which concerns all the shares of the French group’s Canadian subsidiary, TotalEnergies EP Canada Ltd, should be finalized “before the end of the third quarter of 2023,” the group said.

The oil sands in western Canada are a vast deposit of crude oil of which Canada is the world’s largest producer. They are composed of sand, water, clay and a type of oil called bitumen, which is too heavy and thick to flow freely, resembling molasses, explains the Canadian Association of Petroleum Producers (CAPP) website.

This exploitation is criticized by environmental NGOs for its effect on the climate: the processes that transform the oil sands into fuel release three to five times more greenhouse gases than conventional oil, according to Friends of the Earth in a fact sheet devoted to the subject, according to which this activity “leads to pollution, destruction of forests and disruption of wildlife.

Since an assessment in June 2022, the Canadian oil sands were described as “stranded assets” by the French oil company, a term that refers to “stranded” or “stranded” assets that have lost their value. In 2022, the French major recorded the largest profit in its history, 20.5 billion dollars, surfing on the surge in gas and oil prices in the wake of the war in Ukraine, which had revived calls to tax “super-profits” more and to stop the exploitation of hydrocarbons.

After having largely crossed the symbolic bar of 102 dollars in 2022, the barrel of Brent, reference of the black gold, underwent a tumble since the first months of 2023: it was Thursday below 80 dollars.

New share buyback

As a result of the fall in prices, the group’s quarterly turnover is down compared to the same period last year, at 62.6 billion dollars (-8.7%). Analysts surveyed by Factset and Bloomberg were expecting net income of around $6 billion and revenue of between $58.2 and $58.6 billion. Shortly before 12:00, the share was down 1.44% to 57.56 euros, in a Paris stock market slightly up (+0.44%).

In a note, analysts at Oddo BHF nonetheless hailed results “perfectly in line with expectations” and welcomed a “welcome divestment from Canadian assets”. The British NGO Global Witness has denounced the “huge profits” made by the group, “while millions of people are struggling (…) with high energy bills and rising inflation.

The group responded by reminding its electricity customers in France who have made energy savings this winter: “one million French people have reduced their consumption by an average of 15% and will therefore receive a bonus of an average of 90 euros (in addition to their reduction thanks to the electricity saved). “Buoyed” by its strong financial results, the group also “confirmed the 7.25% increase in the first interim dividend” for 2023, to 0.74 euros per share, “as well as the repurchase of up to two billion dollars of shares in the second quarter of 2023.”