TotalEnergies expects Q3 hydrocarbon output of 2.4 mil-2.45 mil boe/d

TotalEnergies on July 25 said it expects hydrocarbon production in the third quarter in the range of 2.4 million-2.45 million b/d of oil equivalent, in line with production in the first half of the year.

Hydrocarbon production was 2.441 million boe/d in Q2, down 1% on the quarter, due to higher planned maintenance, notably in the North Sea. H1 production fell 2% on the year to 2.45 million boe/d, the company said in its H1 interim financial report.

TotalEnergies anticipates a boost in hydrocarbon production from the startup of Anchor in the US Gulf of Mexico, expected in Q3. Final commissioning is currently underway, ahead of the major's midyear startup, Chevron and TotalEnergies officials said May 6.

In Europe, the summer months often see reductions in North Sea oil production due to maintenance.

Forties volumes from the North Sea may be reduced by a six-day shut-in of TotalEnergies' Elgin-Franklin complex, scheduled for Aug. 1-6, according to the National Gas Transmission website. Elgin-Franklin is one of the largest contributors to the Forties oil blend, but liquid production can be constrained by shutdowns of the separate infrastructure used to transport gas from the field.

The company expects stable prices in the near future.

"Brent prices remain above $80/b at the start of the third quarter, with the OPEC+ countries having declared in early June 2024 the intention to continue their policy to sustain a stable oil market," it said.

Platts, part of S&P Global Commodity Insights, assessed Dated Brent at $83/b July 24. The benchmark averaged $84.06/b in H1, up 6% on the year.

Refining headwinds

The outlook for the refining segment is bumpy, TotalEnergies said.

"Global refining margins, which have sharply decreased since the end of Q1 2024, remain impacted by low diesel demand in Europe, as well as by the market normalization following the disruption in Russian supply," the company said.

It reported lower refining margins, mainly in Europe -- TotalEnergies' European Refining Margin Marker dropped 37% on the quarter to $44.90/mt -- and in the Middle East. These were partially compensated by an increase in the refinery utilization rate.

There could be more of this, warned Kim Fustier, head of European Oil & Gas Research at HSBC.

"Weak demand in Europe (for diesel, gas and power) is a recurrent theme throughout Total's 2Q earnings and could pressure profits," Fustier said in a research note.

The Platts Northwest Europe Cracking Netback Margin was at $7.01/b July 24. It averaged $9.66/b in H1, down 25% on the year but above the five-year average of $8.34/b.

TotalEnergies' utilization rate was 84.5% in Q2 while refining throughput rose 6% on the quarter, mainly due to lower planned maintenance. The Q3 refining utilization rate is anticipated above 85%, benefiting from the restart of the Donges refinery in France, it said.