TotalEnergies is banking on rising European demand for U.S. liquefied natural gas (LNG) to drive future growth, even as its latest quarterly earnings revealed widespread weakness across most business segments. Speaking to analysts on Wednesday, CEO Patrick Pouyanné said the company’s LNG operations—currently its only growing unit—stand to benefit significantly from deeper transatlantic energy ties.
“Europe’s readiness to increase U.S. LNG purchases will boost our business,” said Pouyanné, following the release of the French energy major’s first-quarter results. TotalEnergies is currently the leading exporter of U.S. LNG and recently inked a 20-year supply deal with NextDecade, further cementing its dominance in the sector.
His remarks follow political pressure from Washington, with former President Donald Trump calling on European nations to boost imports of American oil and gas to sidestep potential tariffs. EU officials have acknowledged that higher volumes of U.S. LNG may be required to maintain trade stability and energy security.
Earnings Miss and Mounting Debt
Despite optimism in its LNG business, TotalEnergies reported an 18% decline in adjusted net profit to $4.2 billion, missing analyst expectations of $4.3 billion, according to a poll by LSEG. The company’s stock fell more than 3% following the announcement, weighed down further by a sharp 42% jump in net debt, which climbed to $20.1 billion—up from $10.9 billion at the end of 2024.
The debt surge was attributed to seasonal increases in working capital, which the company expects to normalize later in the year. Still, some analysts remain cautious. “Even on a pre-working capital, organic basis, free cash flow was $2.5 billion, insufficient to cover both dividends and buybacks,” noted Jefferies analyst Giacomo Romeo.
Defending the company’s continued shareholder payouts, Pouyanné said TotalEnergies would proceed with up to $2 billion in share buybacks in the second quarter, alongside boosted dividends. “The best signal we can send investors is consistency, not short-term reactions,” he added, despite Brent crude slipping below $70 per barrel this month.
Segment Performance: LNG Shines, Refining Slumps
The standout performer in the quarter was the company’s integrated LNG unit, which posted a 6% year-on-year earnings increase, even as other divisions struggled. Income from refining and chemicals plunged 69% amid soft demand and fierce competition from new refineries in Asia and Africa, which have pushed European refining margins down by nearly 60% from a year ago.
Upstream oil and gas production rose 4%, but profits fell 6% on the back of weaker crude prices. Meanwhile, TotalEnergies' renewables and electricity division saw earnings drop 17%, partially due to a postponed 600-megawatt solar project in the U.S., delayed by tariffs on imported Indian solar panels.
The company also reiterated its intention to resume its stalled Mozambique LNG project by mid-2025, noting that equity financing from project partners could replace state-backed export credits if necessary.
Looking Ahead: Diversified Strategy in a Volatile Market
TotalEnergies is navigating a challenging energy landscape with a hybrid strategy—growing both its fossil fuel and renewable portfolios. Unlike peers such as BP and Shell, which have slowed green investments amid lower margins, TotalEnergies continues to expand its renewables business, with several minority stake sales in green projects expected to boost cash flow in the second quarter.
As the global energy market continues to pivot between decarbonization goals and geopolitical constraints, TotalEnergies appears to be positioning LNG as the bridge—both strategically and financially—between its traditional and future-facing operations.