On Wednesday, Scotiabank reaffirmed its "Sector Perform" rating and an $80.00 price target for TotalEnergies (EPA:TTEF) SE (NYSE:TTE), following the company's release of its second-quarter indicators for 2024. TotalEnergies' performance in liquids and gas realizations showed mixed results, with figures slightly differing from Scotiabank's previous estimates. The realizations were reported at $81.0 per barrel for liquids and $5.05 per mmBtu for gas, compared to the anticipated $82.0 per barrel and $4.91 per mmBtu.
The company's LNG price was also lower than expected, coming in at $9.32 per mmBtu against the forecasted $10 per mmBtu. TotalEnergies is expected to reach the high end of its production guidance range of 2.4-2.45 million barrels of oil equivalent per day (mmboe/d), maintaining a flat quarter-over-quarter production level. The LNG results are projected to align closely with the results from the first quarter of 2024.
The Integrated Power segment of TotalEnergies is anticipated to see a decline in results, dropping to $500 million from $611 million in the first quarter of 2024. This decrease is attributed to seasonal factors. Additionally, the Downstream segment is expected to face a downturn due to a decrease in the European Refining Margin marker, which fell to $44.9 per ton from the previous quarter's $71.7 per ton. However, improved utilization rates and a predicted increase in Marketing results are likely to partially counterbalance the decline.
In light of these indicators, Scotiabank has adjusted its model for TotalEnergies, resulting in a lowered earnings per share (EPS) estimate for the second quarter of 2024, now set at $2.10, down from the previous estimate of $2.23. The bank's analyst highlighted the lack of significant volatility and did not specifically address trading activities in the update.
In other recent news, TotalEnergies has made significant strides in its operations. The company has sold its 10% interest in several oil and gas licenses in Nigeria to Chappal Energies for USD 860 million, as part of its strategy to concentrate on offshore oil and gas operations. Simultaneously, TotalEnergies has divested its West of Shetland assets in the UK to The Prax Group, aligning with the company's strategy to offload mature non-core assets. The company has also expanded its global footprint by acquiring a 60% stake in the offshore Block STP02 in Sao Tome and Principe and purchasing West Burton Energy from EIG for £450 million, enhancing its presence in the UK energy sector.
From a financial perspective, TotalEnergies reported a Q1 2024 cash flow of $1.3 billion and a 16% growth in the adjusted net operating income for the integrated power segment to over $600 million. HSBC has upgraded its price target for TotalEnergies and maintained a Buy rating on the stock, citing a 2% upgrade in the 2024-26 operating cash flow forecasts for the company.
InvestingPro Insights
In the context of the recent performance indicators released by TotalEnergies SE (NYSE:TTE), InvestingPro data provides a comprehensive view of the company's financial health and market position. TotalEnergies is currently trading at a P/E ratio of 7.62, which is considered low relative to its near-term earnings growth potential, according to one of the InvestingPro Tips. This could suggest that the stock is undervalued at its current price of $68.32, especially when factoring in the company's moderate level of debt and its status as a prominent player in the Oil, Gas & Consumable Fuels industry.
InvestingPro also highlights the company's robust dividend track record, having maintained payments for 48 consecutive years, with a current yield of 3.66% and a significant dividend growth of 13.63% over the last twelve months as of Q1 2024. Furthermore, the company's management has been actively buying back shares, signaling confidence in its future prospects.
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