Big Oil Consistent: TotalEnergies, Eni Post Huge Profit Rises
The second quarter of the year has been a real profit bonanza for Big Oil companies with all members so far reporting record-smashing numbers – TotalEnergies and Eni reported pretty much the same.
It is no spoiler to say that members of Big Oil – ExxonMobil, Chevron, ConocoPhillips, BP, Shell, Total, and Eni – expected to report massive profits for the quarter. So far most of the companies, apart from ConocoPhillips which is yet to announce its results, announced all-time best quarters or in the case of BP a 14-year high.
TotalEnergies joins the all-time high club with profits from the second quarter of 2022 while Eni reported profits doubling year-over-year. It is worth noting that all of the companies except for Eni and BP beat their best quarters from 2008 when the oil price was a record $147 per barrel. BP in this quarter noted a highest ever profit in 14 years, meaning 2Q 2022 did not beat 2008.
Now let’s look at TotalEnergies’ performance this quarter. Adjusted net income rose nearly three-fold from a year ago to $9.8 billion, as the company cashed in on a rise in energy prices driven by the invasion of Ukraine.
TotalEnergies also recorded a new $35 billion impairment charge related mainly to the potential impact of international sanctions on the value of its Novatek stake.
Its Integrated Gas, Renewables, and Power segment posted an adjusted net operating income of $2.6 billion while Exploration & Production posted an adjusted net operating income of $4.7 billion and cash flow of $7.4 billion, despite a decrease in production due to scheduled maintenance and security-related cuts in Nigeria and Libya.
According to the French energy major, Downstream benefited from exceptionally high refining margins on distillates and gasoline and reported an adjusted net income of $3.2 billion. The company’s cash flow was $13.2 billion and free cash flow was $4.5 billion.
TotalEnergies also bought back $2 billion of its shares in the quarter and will do so again in the third quarter. The Board of Directors of the company also approved the distribution of the second dividend in 2022, 5 percent higher year-on year.
As for Eni, the company’s adjusted net profit in the second quarter was $3.88 billion, an improvement of $2.96 billion y-o-y resulting in a strong EBIT of $5.96 billion, up 13 percent quarter-over-quarter and more than doubling year-over-year driven by the favorable commodity price environment, strong refining margins, and the focus on cost management and business operating performance.
E&P delivered $4.96 billion of adjusted EBIT in the second quarter of 2022, up by 11 percent from the prior quarter and more than doubling year-over-year. Production in the quarter was 1.58 million boepd, down 1 percent from last year’s quarter and slightly decreasing from the previous quarter due to primarily force majeure events in Libya, Nigeria, and Kazakhstan.
In the second quarter of 2022, Eni’s adjusted cash flow before working capital at replacement cost was $5.3 billion. In the first half of 2022, it reached $11 billion, more than doubling year-over-year.
With ConocoPhillips’ results just around the corner, we must note that Big Oil companies that have announced their second quarter results – ExxonMobil, Chevron, BP, Shell, TotalEnergies, and Eni – produced a combined profit of over $64 billion.
Outside of Big Oil, things are pretty much the same. For example, Norwegian oil major Equinor reported a net income of $6.76 billion – over three times what the company earned in the second quarter of last year. Another example is Hess which reported a nine-fold increase in second-quarter adjusted profit.
As it stands this will be a quarter for the memory books. Depending on the oil price which might go either way we could see an even better quarter this year, but that remains to be seen.
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