French energy company TotalEnergies saw its quarterly profit soar late last year, boosted by higher oil and gas prices.
The company recently disclosed about net income of US$ 5,8 billion in 4Q 2021 and US$ 16 billion in the full year of 2021 with oil and gas. This compares to a profit of $891 million in Q4 2020 and a loss of more than $7,2 billion in 2020.
TotalEnergies' Exploration and Production business benefited from higher oil and gas prices with adjusted net operating income of $10,4 billion and was a strong contributor to the company's net cash flow of $12,2 billion. That is, in 2021, the company generated a cash flow of US$ 30,7 billion, an increase of US$ 13 billion compared to 2020.
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In line with its strategy to invest in low-cost, low-emissions projects, TotalEnergies has increased its presence in Brazil with entry into the giant Atapu and Sepia fields, launched the Lake Albert Resource Development Project in Uganda, while divesting stakes in mature assets in Angola as well as several unoperated licenses in Gabon and a minority stake in the Greater Laggan area in the UK.
The company maintained capital discipline with net investments of US$13,3 billion, of which 25% in Renewables and Electricity.
TotalEnergies CEO Patrick Pouyanné commented: “In the fourth quarter, oil prices continued to rise, up 9 percent compared to the previous quarter, while gas prices in Europe and Asia, buoyed by increased demand, reached all-time highs above $30/Mbtu and sent energy prices in Europe to record highs.
Oil and gas production was 2.852 thousand barrels of oil equivalent per day (kboe/d) in the fourth quarter of 2021, stable compared to the prior-year quarter. In 2021, hydrocarbon production was 2.819 kboe/d, down 2% from the previous year.
Oil and gas production for LNG increased 6% year-on-year in Q2021 2020 due to the impact of unplanned maintenance on Q2021 2020 production.
Project start-ups to increase production in 2022
Looking ahead, TotalEnergies forecasts oil and gas production growth in 2022 of around 2%, driven by the start-ups of Mero 1 in Brazil and lkike in Nigeria, entry into the Atapu and Sepia production units in Brazil from May 2022 but impacted by sales of mature assets completed in 2021, as well as the exit from Myanmar from July 2022.
Continuing momentum that has been building for several years, TotalEnergies is implementing its integrated growth strategy in LNG, which will generate structural cash flow growth of $1 billion in 2022.
Furthermore, given the evolution of oil and gas prices in recent months and the lagged effect on pricing formulas, TotalEnergies anticipates that its average LNG selling price is expected to remain at a high level of at least US$12/Mbtu in the first half of 2022.
Its cash flow allocation priorities for the year include investing in profitable projects to implement its transformation strategy, tying dividend growth to structural cash flow growth, maintaining a strong balance sheet and long-term debt rating with a minimum “A” level by anchoring leverage below 20%, and allocating a portion of excess cash flow from high oil and gas prices to share buybacks.
