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    TTE
    Earnings call· Sep 2025(Q3 FY25)

    TotalEnergies SE TTE

    Oct 30, 2025 Source

    Executive summary

    TotalEnergies Q3 FY25 — Strong Production Growth and Downstream Recovery Drive Cash Flow

    TotalEnergies delivered robust Q3 FY25 results, driven by strong hydrocarbon production growth from new high-margin projects and a significant recovery in downstream refining margins. The company demonstrated capital discipline with reduced net investments and a positive working capital release, leading to improved gearing. Management remains committed to its 2-pillar strategy, focusing on accretive cash flow generation and shareholder returns, while navigating a complex regulatory and commodity price environment.

    Highlights

    5

    • Cash flow increased by 4% year-on-year despite a >$10/barrel drop in oil prices.

    • Hydrocarbon production grew by over 4% year-on-year in Q3, making it the highest growth quarter this year.

    • New high-margin barrels contributed $400 million in additional cash flow year-on-year.

    • Downstream cash flow was up almost $500 million, efficiently capturing high refining margins.

    • First interim dividend increased by close to 8% in Euro and over 10% in Dollars compared to 2024.

    Concerns

    5

    • Oil pricing dropped by more than $10 per barrel year-on-year, impacting overall revenue.

    • Adjusted net operating income for Integrated LNG was down 18% quarter-over-quarter due to planned turnarounds at Ichthys LNG.

    • French fiscal creativity and political instability are weighing on the company's share price.

    • The LNG market is becoming more competitive with lower volatility and spreads, impacting trading profits.

    • EU CS3D rules pose a disproportionate penalty risk of up to 5% of worldwide turnover, potentially impacting LNG supply.

    Guidance & targets

    17
    CategoryTargetConfidence
    Upstream production growth
    3% per year
    high materiality
    High
    Share buyback authorization
    Up to $1.5 billion
    medium materiality
    High
    2025 payout ratio
    around 56%
    medium materiality
    High
    Upstream production growth
    more than 4% year-on-year
    high materiality
    High
    Net investments
    decrease quarter-over-quarter
    medium materiality
    High
    Disposal proceeds
    $2 billion
    medium materiality
    High
    Gearing
    15% to 16%
    high materiality
    High
    Average LNG selling price
    around $8.5 per MMBtu
    medium materiality
    High
    Refining utilization
    80% to 84%
    medium materiality
    High
    Full year 2025 net investment
    $17 billion to $17.5 billion
    high materiality
    High
    Upstream production growth
    at least 3%
    high materiality
    High
    Brent oil price assumption
    $65
    high materiality
    Medium
    Share buyback policy (2026)
    $0.75 billion to $1.5 billion
    medium materiality
    High
    Share buyback policy (2026)
    $2 billion
    medium materiality
    High
    Refining utilization
    84% to 86%
    medium materiality
    Medium
    Reinvestment rate
    50%
    high materiality
    High
    Exploration budget
    $800 million to $1 billion
    medium materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Hydrocarbons
    Exceeded expectations in Q3, highest growth quarter so far this year. Anticipated to continue with more than 4% YoY growth in Q4, benefiting from Ichthys LNG restart.
    Production growth: more than 4% YoY
    		—more than 4%——
    Exploration and Production (E&P)
    Generated strong adjusted net income and cash flow, outpacing production growth. Project portfolio delivering new low-cost, low-emission production. Achieved first oil at Begonia and CLOV 3 offshore Angola, sanctioned Ratawi oil field Phase 2 in Iraq. Divested Vaca Muerta blocks and Ekofisk satellite fields. New license awards in Nigeria, Congo, and Liberia.
    Adjusted net income: $2.2 billion (up 10% QoQ)Cash flow: $4 billion (up 6% QoQ)Upstream CFFO per barrel: roughly 2x base portfolio
    		——around 4% (production)$2.2 billion (adjusted net income)
    Integrated LNG
    Sales were flat, with third-party purchases offsetting lower equity production. Adjusted net operating income decreased due to planned turnarounds at Ichthys LNG. Advanced strategy with FID on Rio Grande LNG Train 4 and acquisition of shale gas assets in Anadarko Basin.
    LNG sales: 10.4 million tons (flat QoQ)Cash flow: $1.1 billion (in line QoQ)Adjusted net operating income: $0.9 billion (down 18% QoQ)Ichthys LNG turnaround impact: 50,000 boe/d
    		——flat (sales)$0.9 billion (adjusted net operating income)
    Integrated Power
    Increased net power generation from flexible capacity in Europe. Cash flow from operations in line with annual guidance. Executed farm-downs of renewable portfolios in North America (1.4 GW) and France (270 MW) for a combined cash impact of $1.5 billion.
    Net power generation: 12.6 terawatt hour (up 9% QoQ)Cash flow from operations: $0.6 billion (up 9% QoQ)Cash flow split: production assets (equal), sales activity (equal)
    		——9%—
    Downstream
    Efficiently captured high refining margins in Europe, contributing to resilient financials. Strong asset availability supported performance. Free cash flow significantly exceeded net investment.
    Adjusted net operating income: $1.1 billion (up more than 30% QoQ)Cash flow: $1.7 billion (up 11% QoQ)Free cash flow: exceeded net investment by over $2.5 billion
    		———$1.1 billion (adjusted net operating income)
    Refining
    Margin marker strengthened due to diesel supply chain tension. Utilization was at the high end of guidance (80-85%), reflecting efficient operations and planned turnarounds at Port Arthur and HTC.
    European Refining Margin Marker: $63 per ton (up close to 80% QoQ)Utilization: 84%
    		————

    Operational metrics

    32
    Cash flow
    up 4%YoY
    Q3 FY25

    Despite oil pricing dropping by more than $10 per barrel year-on-year.

    Adjusted net income
    held steadyYoY
    Q3 FY25

    Despite oil pricing dropping by more than $10 per barrel year-on-year.

    New project barrels
    170,000vs 2024
    first 9 months 2025

    These new barrels have an average cash flow margin roughly twice higher than the base portfolio.

    Additional cash flow from new barrels
    $400 millionYoY
    Q3 FY25

    Contributed to absorb the equivalent of $6 per barrel decrease in Brent.

    Cash flow tailwind
    absorbed $6 per barrel
    Q3 FY25

    Equivalent of decrease in Brent in terms of cash flow, absorbed by new high-margin barrels.

    Downstream cash flow
    up almost $500 million
    Q3 FY25

    Contributed to the company's resiliency due to recovery in refining margins.

    Net investments
    decreased by $3.5 billionQoQ
    Q3 FY25

    Reflects capital discipline.

    Working capital release
    $1.3 billion
    Q3 FY25

    A reversal of the seasonal working capital.

    Gearing
    close to 17%vs next to 18%
    Q3 FY25

    Improved from prior period.

    Shareholder returns
    $4.5 billion
    Q3 FY25

    Covered by cash flow including working capital variation, exceeding net investment.

    First interim dividend increase
    close to 8%vs 2024
    Q3 FY25

    Board of Directors decision.

    First interim dividend increase
    more than 10%vs 2024
    Q3 FY25

    Board of Directors decision.

    Annual cash flow
    $27.5 billion and $28 billion
    FY25

    Expected, supported by better refining margins.

    Brent average price
    $69vs $68/barrel in Q2 FY25
    Q3 FY25

    Up 2% QoQ, but down more than $10/barrel compared to Q3 FY24.

    ETF average price
    $11.3vs $11.9/MMBtu in Q2 FY25, down 5%
    Q3 FY25

    Average price.

    LNG average price
    $8.9vs $9.1/MMBtu in Q2 FY25, down 2%
    Q3 FY25

    Average price.

    European refining margin
    $63vs $35/ton in Q2 FY25, up close to 80%
    Q3 FY25

    Significantly improved.

    Adjusted net income
    up 11%QoQ
    Q3 FY25

    Thanks to continued positive impact of new upstream barrels and strong downstream results.

    Return on equity
    14.2%
    12 months ending Sep 30

    Overall profitability remains strong.

    ROACE
    close to 12.5%
    12 months ending Sep 30

    Overall profitability remains strong.

    Ichthys LNG turnaround impact
    50,000
    Q3 FY25

    Impacted production for the quarter.

    Forward European gas prices
    around $11
    Q1 FY25 and Winter FY25-FY26

    Sustained due to anticipated winter demand.

    Integrated Power cash flow split
    equally
    Q3 FY25

    Each contributed equally this quarter.

    Renewable portfolio sale cash impact
    $1.5 billion
    Q3 FY25

    Combined cash impact from farm-downs, contributing to free cash flow tailwind in Q4.

    Refining utilization
    84%
    Q3 FY25

    Towards the high end of the guidance range of 80% to 85%.

    Net investments
    $3.1 billion
    Q3 FY25

    Meaningfully decreased.

    Gearing
    17.3%
    end of Q3 FY25

    Expected to decrease further by year-end.

    French tax proposal (historical)
    —
    historical

    A 3% extra tax on dividend was previously canceled by the European Union and French Constitutional Group.

    AI/digitalization program investment
    EUR 300 million
    multi-year

    Investment in data platforms and software deployment to accelerate AI use.

    Iraq project cycle
    8 years
    2021-2029

    From initial engagement to production, indicating a long development cycle.

    Wells drilled per year
    20-25
    annual

    Considered a good number for an IOC like TotalEnergies to find nice wells.

    Refining utilization
    82%
    Q4 FY25

    Mid-average of the Q4 guidance range, taking into account turnarounds.

    Industry KPIs

    5
    MetricValueDetails
    Realized price differential$69 / $11.3 / $8.9USD/barrel / USD/MMBtu / USD/MMBtu
    Sanctioned expansion backlog—
    Basin level production volume170,000 bpd / more than 4% / at least 3%bpd / % / %
    Cost of supply unit cash cost$19-$20 / $30-$40 / <$30USD/barrel / USD/barrel / USD/barrel
    FCF shareholder distributions$4.5 billion / 56%USD / %

    Orderbook & backlog

    1
    Share buyback authorizationUp to $1.5 billionQ3 FY25

    For Q4 2025

    Deals & partnerships

    8
    Continental ResourcesAcquisition of interest in shale gas assets

    Acquired interest in shale gas assets in the Anadarko Basin in the U.S., enhancing resilience in LNG and gas-to-power strategy.

    VariousDivestment of international blocks

    Divested 2 international blocks in Vaca Muerta in Argentina, closed in Q3 FY25, as part of portfolio high-grading.

    VariousDivestment of satellite fields

    Divested 3 satellite fields in Ekofisk in Norway, expected to close in Q4 FY25, due to strict investment criteria.

    VariousNew license awards

    Announced new license awards in Nigeria, Republic of the Congo, and Liberia, reloading the exploration hopper.

    VariousFarm-down of renewable assets

    Signed agreement for the sale of 50% of a 1.4 GW renewable portfolio in North America and closed the sale of 50% of a 270 MW renewable portfolio in France. TotalEnergies retains 50% stake and will operate.

    Emerson (Inmation)Partnership for global data platform

    Engaged in a large program with Emerson (Inmation) to connect physical data from platforms and refineries to a large database, taking 2.5-3 years to deploy.

    CognitePartnership for E&P digitalization

    Engaged in a very large worldwide program with Cognite to deploy its software, accelerating the use of AI in the E&P segment.

    SPDC JVDivestment of SPDC JV in Nigeria

    Previous attempt to close was unsuccessful due to conditions precedent. Advanced discussions with two new buyers, expected to close next year.

    Capital programs

    4
    Ratawi oil field Phase 2 redevelopmentsanctioned

    Part of the GGIP project, with all phases now launched. First oil for Phase 1 expected early 2026.

    Rio Grande LNG Train 4FID taken

    Final Investment Decision taken for this project in South Texas, growing U.S. presence.

    Mozambique LNG projectremobilizing$20 billion - $20.5 billion
    Spent to date: $4.5 billion

    Force majeure lifted. Budget includes $4.5 billion already spent. Detailed engineering and procurement completed, now in construction mode for 2029 delivery.

    Digitalization and AI deploymentunderwayEUR 300 million
    Start: 2025

    Benefit: Enhanced operational efficiency, additional revenues

    Worldwide investment in data platforms (with Emerson/Inmation) and E&P digitalization software (with Cognite) to accelerate AI use and scale up capabilities.

    Risks & headwinds

    6
    Oil pricing volatilityQ3 FY25

    Brent dropped by more than $10 per barrel year-on-year

    Mitigation: Accretive production growth from new high-margin barrels and downstream recovery helped absorb the impact.

    French fiscal creativity and political instabilityNear-term (next 30 days)

    Potential for new taxes, including on share buybacks

    Mitigation: Management believes proposals are unconstitutional and will not pass; highlights TotalEnergies' global cash flow base (90-95% outside France) as a mitigating factor.

    Russian sanctions impact on physical marketsOngoing, Q4 FY25

    Rerouting of volumes, increased costs, refining margins around $75-$100/ton

    Mitigation: TotalEnergies ceased trading Russian oil in late 2022; downstream assets are positioned to capture higher refining margins resulting from market disruptions.

    Increased competitiveness in LNG tradingOngoing

    Lower volatility and spreads compared to exceptional years (2021-2023)

    Mitigation: Focus on asset-based trading and growth of volume from assets to generate additional profits; leveraging medium and long-term contracts with Asia.

    EU Corporate Sustainability Due Diligence Directive (CS3D)Future (post-clarification)

    Penalty up to 5% of worldwide turnover for non-compliance

    Mitigation: Awaiting clarification on the scope of the new regulation; lawyers are assessing. Management believes the penalty risk is disproportionate and could deter LNG supply from key regions like the U.S. and Qatar.

    Legal context for exploration in South AfricaOngoing

    Permanent court challenges and complex permitting for drilling

    Mitigation: Hopes the South African government will take decisions to ease exploration, as the company cannot spend money in a geography with permanent legal hurdles, especially for development.

    What to watch in Q4 FY25

    5

    Gearing reduction

    year-end FY25
    Current17.3%
    Target15%-16%

    Why it matters

    Achieving the gearing target demonstrates balance sheet strength and capital discipline, supporting future shareholder returns and counter-cyclical strategies.

    gearing forecasted further decline to 15%, 16% at year-end.

    Q&A highlights

    6

    Clarification on potential French tax on share buybacks and an indication of 2026 cash flow growth relative to production growth.

    Management dismissed concerns about French tax proposals, stating they are likely unconstitutional and that TotalEnergies' global nature limits exposure. For 2026, they anticipate continued accretive cash flow growth from new production, with more precise figures to be provided in February, reiterating the commitment to $10 billion additional free cash flow over the next five years.

    “I trust that at the end of the day, we will land to a reasonable avenue. And as you all know as well, we -- TotalEnergies does not make a lot of benefit in France, so I would say we'll follow this debate.”

    asked by Lydia Rainforth · answered by Patrick Pouyanné

    3 min read7 chapters

    Detailed Narrative

    01

    Strategic Consistency and Resilience

    TotalEnergies' Q3 FY25 results underscore the effectiveness of its 2-pillar strategy, focusing on strong and secure production growth in Oil & Gas and accretive cash flow generation. Despite a significant drop in oil prices, cash flow increased by 4% year-on-year, and adjusted net income held steady. This resilience is attributed to new high-margin barrels coming online and a recovery in the downstream segment, demonstrating the value proposition of the company's consistent growth model.

    02

    Accretive Production Growth

    Hydrocarbon production growth is a key driver, with new project barrels from Mero Fields, U.S. offshore deepwater, Tura, and Phoenix contributing 170,000 barrels per day during the first nine months of 2025 compared to 2024. These new barrels, with an average cash flow margin roughly twice that of the base portfolio, generated $400 million in additional cash flow. This growth absorbed the equivalent of a $6 per barrel decrease in Brent, validating the disciplined investment framework with strict sanctioning criteria and low breakeven costs.

    03

    Downstream Recovery and Capital Discipline

    The downstream segment played a crucial role in the company's resilience, with cash flow up almost $500 million due to improved refining margins and strong asset availability. The company also demonstrated capital discipline, with net investments decreasing by $3.5 billion quarter-over-quarter and a $1.3 billion working capital release. These factors contributed to a reduction in gearing to close to 17% by quarter-end, with a target of 15-16% by year-end.

    04

    Shareholder Returns and ADR Program

    TotalEnergies continues its commitment to shareholder returns, increasing the first interim dividend by close to 8% in Euro and over 10% in Dollars compared to 2024. The Board authorized up to $1.5 billion in share buybacks for Q4 2025, expecting a 2025 payout ratio of around 56%. The company is also terminating its ADR program, aiming for ordinary shares to trade on the NYSE from December 8, facilitating continuous listing and enhanced market activity.

    05

    LNG Strategy and Project Advancements

    LNG sales remained flat quarter-over-quarter at 10.4 million tons, with cash flow in line with the previous quarter. The company advanced its LNG strategy with the FID on Rio Grande LNG Train 4 and acquired shale gas assets in the Anadarko Basin to enhance resilience. The Mozambique LNG project, with a budget of $20-20.5 billion, is remobilizing for a 2029 delivery, following the lifting of force majeure🌐.

    06

    Digitalization and AI Investment

    TotalEnergies is making a significant investment of approximately $350 million in digitalization and AI over the next 2.5-3 years. This includes partnerships with Emerson (Inmation) to connect physical data to a large database and with Cognite for E&P digitalization. The goal is to scale up AI adoption, enhance operational efficiency, and drive additional revenues by optimizing processes in oil fields and refineries.

    07

    Exploration and Portfolio High-Grading

    The company maintains a consistent annual exploration budget of $800 million to $1 billion, focusing on efficiency and new ideas. Recent license awards in Nigeria, Republic of the Congo, and Liberia demonstrate active portfolio reloading. TotalEnergies continues to high-grade its portfolio through divestments, including blocks in Vaca Muerta and satellite fields in Ekofisk, with the SPDC JV divestment in Nigeria expected to close next year.

    AI-generated summary of the company’s earnings call. Not investment advice.