TotalEnergies (NYSE:TTE) reported sharply higher second-quarter 2026 cash flow and adjusted earnings, as Chairman and CEO Patrick Pouyanné said the company benefited from elevated oil prices, strong refining margins and robust performance across most of its integrated businesses despite operational disruptions tied to renewed conflict in the Middle East.
On the company’s results call, Pouyanné said the operating backdrop remained “extremely volatile,” with the Strait of Hormuz becoming an intermittent battleground and creating uncertainty for production, shipping and market pricing. He said safety of TotalEnergies’ teams remains the company’s “utmost priority.”
Higher Commodity Prices and Refining Margins Lift Results
Sbraire said Brent averaged $104 per barrel in the second quarter, compared with $81 per barrel in the first quarter. The company’s average liquid price increased by $18 per barrel, with the impact partly reduced by wider differentials and a lifting schedule weighted toward the end of the quarter as crude prices softened in June.
European refining margins increased by $13.50 per barrel on average during the quarter. Pouyanné said both upstream and downstream oil businesses performed strongly at the same time, an outcome he described as “not so frequent,” because one segment often benefits at the expense of the other.
Refining and Chemicals adjusted net operating income rose by $200 million quarter over quarter to $1.8 billion, with cash flow reaching $2 billion. Pouyanné said refiners adjusted operations to prioritize diesel and jet fuel production, capturing stronger distillate margins and contributing to security of supply in France and Europe.
Marketing and Services delivered what Sbraire described as its best results in at least 10 years. Adjusted net operating income rose 21% year over year to $500 million, and cash flow was close to $850 million, up 19% year over year. Pouyanné cited European seasonality and higher unit margins, particularly in lubricants.
Middle East Conflict Weighs on Production and Liftings
TotalEnergies said its upstream production growth remained strong excluding the Middle East impact. Sbraire said hydrocarbons production increased more than 4% year over year excluding the conflict, above the company’s 3% annual guidance, helped by project ramp-ups since early 2025 and improved facility availability.
The conflict reduced production by about 210,000 barrels of oil equivalent per day during the quarter, below prior guidance of 360,000 barrels per day, due to production ramp-ups in offshore United Arab Emirates and restarts in other regional countries during June. However, Sbraire said physical liftings were in line with guidance, with an impact of 350,000 barrels of oil equivalent per day.
Pouyanné said production limitations had fallen to about 5% of global production in early July before rising back to 8% to 10% after tensions escalated again. He said future impacts would depend on the development of the conflict and emphasized that offloading crude, not only production, could be affected.
The Exploration and Production segment generated adjusted net operating income of $3.2 billion, up 25% quarter over quarter, and cash flow of $5.8 billion, up 27%. Sbraire said operating expenses remained below $5 per barrel of oil equivalent.
LNG Trading Underperforms, Integrated Power Advances
Integrated LNG results were weaker than the previous quarter, with LNG production down 10% quarter over quarter mainly because of production shut-ins in Qatar related to the Middle East conflict. Pouyanné said gas trading results were “not good” in the second quarter after strong first-quarter outperformance, as traders had positioned for a more supportive European gas market that did not materialize.
He said European inventories were low and Middle East supply disruptions had suggested a bullish setup, but prices declined through the quarter. Pouyanné added that gas prices had become volatile again in early July and said trading results were improving.
Sbraire said TotalEnergies expects its average LNG selling price to be above $11.50 per MMBtu in the third quarter, reflecting recent oil and gas price movements and lag effects in LNG pricing formulas. He also highlighted the startup of the Energia Costa Azul LNG plant on Mexico’s Pacific Coast, where TotalEnergies loaded its first cargo for Asian markets.
Integrated Power generated one of its strongest quarters, with cash flow from operations above $700 million. Net power generation rose 28% year over year to 14.8 terawatt-hours, supported by renewable generation growth and increased output from flexible gas-fired capacity following the completion of the EPH transaction at the end of April.
Sbraire said TotalEnergies remains on track to produce more than 60 terawatt-hours of power in 2026. He said production assets, including renewables and gas-fired power plants, contributed 60% of Integrated Power cash flow, while sales and trading activities contributed 40%.
Debt Reduction, Dividend Increase and Buybacks
TotalEnergies reduced net debt by $3.3 billion during the quarter, bringing gearing down to 13.1%, an improvement of more than two percentage points. Working capital decreased by $1.2 billion, largely reversing a first-quarter build-up.
Pouyanné said the company confirmed a 5.9% increase in its interim quarterly dividend to €0.90 per share. TotalEnergies also increased buybacks to $1.5 billion in the second quarter, and the board authorized another $1.5 billion for the third quarter.
Net investments were $3.4 billion in the quarter, including $1.2 billion of net disposals. Sbraire said this supports the company’s full-year 2026 net investment guidance of $15 billion.
Asked by Morgan Stanley analyst Martijn Rats about the company’s payout guidance of more than 40%, Pouyanné said the target is considered on a yearly basis, while noting that cash flow for the second half remains difficult to forecast. He said the company would likely exceed its earlier cash flow guidance based on $80 oil, $7 refining margins and other assumptions.
Project Updates and Strategic Priorities
In Namibia, Pouyanné said TotalEnergies had received official approval from Namibia’s Ministry of Energy for the transaction with Galp related to Mopane and was finalizing closing. He said discussions on a final investment decision for Venus were progressing, with a joint target between the government and consortium to sanction the project by the end of July, subject to final agreements.
On Uganda, Pouyanné said crude production is expected to start before year-end, with plateau production expected by mid-2027. In Suriname, he said the project remains on track for first-half 2028 startup and is about 40% advanced.
Pouyanné also discussed future Middle East infrastructure needs, saying TotalEnergies is evaluating pipeline projects that would help diversify export routes and reduce reliance on the Strait of Hormuz. He said the company continues to view the Middle East as investable, subject to appropriate risk and reward, while emphasizing the importance of portfolio diversification.
TotalEnergies said it will hold its Capital Markets Day in New York on Sept. 28, where management expects to provide further updates on strategy and longer-term growth plans.
About TotalEnergies (NYSE:TTE)
TotalEnergies SE (NYSE: TTE) is a French multinational integrated energy company engaged across the full energy value chain. Founded in 1924 as Compagnie Française des Pétroles, the company grew through a series of mergers and expansions—most notably with Petrofina and Elf Aquitaine around the turn of the millennium—and rebranded to TotalEnergies in 2021 to reflect a broader focus on multiple energy sources. It is organized to operate across upstream and downstream activities while pursuing a transition toward lower-carbon energy solutions.
In upstream, TotalEnergies explores for and produces crude oil and natural gas globally.
