Why Is TotalEnergies Stock Falling Thursday?

TotalEnergies SE (NYSE: TTE ) stock was trading lower in Thursday’s premarket session as investors assessed the company’s second-quarter trading update.

The company’s second-quarter trading update highlighted mixed trends.

Higher oil prices are expected to lift upstream cash flow, but weaker LNG trading results and production disruptions in the Middle East weighed on investor sentiment.

TotalEnergies Expects Stronger Q2 Cash Flow The French energy major on Thursday said it expects second-quarter hydrocarbon production to reach nearly 2.4 million barrels of oil equivalent per day, while higher oil prices and stronger downstream operations are set to lift cash flow despite ongoing disruptions from the Middle East conflict.

Production Growth Remains On Track The company said second-quarter production should reflect organic growth in line with its 4% quarterly guidance.

The company estimated the impact from the Middle East conflict at about 210,000 barrels of oil equivalent per day, an improvement from the 360,000 barrels of oil equivalent per day reduction projected last quarter.

The recovery was supported by increased offshore production in the United Arab Emirates and the restart of operations in other countries across the region during June.

However, TotalEnergies said a significant portion of that production could not be lifted before the end of the quarter and will be recognized in Exploration & Production results using end-June crude prices below $70 per barrel.

Cash Flow Set To Improve The company expects Exploration & Production cash flow to increase by about $1 billion from the first quarter, supported by a $17.9-per-barrel sequential increase in average liquids prices.

Exploration & Production earnings are also expected to improve, although accounting effects tied to unlifted production will partially offset the benefit.

Integrated LNG results are expected to decline significantly because of weaker gas trading performance in a flat-to-lower European market.

In contrast, Integrated Power cash flow should rise sharply following the April 29 closing of the EPH transaction.

Downstream Margins Strengthen TotalEnergies said downstream earnings and cash flow should improve significantly from the first quarter as refining and petrochemical margins strengthened and oil trading remained robust.

Marketing & Services is also expected to benefit from normal seasonal demand.

The company expects working capital to decline by $1 billion to $1.5 billion during the quarter, while the gearing ratio should improve by about two percentage points as quarterly net investments remain aligned with its full-year target of $15 billion.

Earnings And Analyst Outlook TotalEnergies is scheduled to report second-quarter results on July 23.

Wall Street expects earnings of $2.75 per share, up from $1.57 a year earlier.

Analysts project revenue of $51.90 billion, compared with $49.63 billion in the prior-year period.

The stock trades at about 11.9 times earnings.

Analysts have a consensus Hold rating with an average price forecast of $83.

Recent analyst actions include: CICC initiated coverage with an Outperform rating on June 23.

Scotiabank maintained a Sector Perform rating and raised its price forecast to $97 on April 22.

Piper Sandler maintained a Neutral rating and increased its price forecast to $92 on March 12.

TotalEnergies Price Action TTE Price Action: TotalEnergies shares were down 2.04% at $78.71 during premarket trading on Thursday, according to Pro data.

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