As at 14 May 2026

Executive Summary

Key highlights

In this report, we review the 1Q26 results released in April 2026:

Financial results at a glance:

• Revenue and earnings: Revenue from sales increased by 3% from $47.9 billion reported in 1Q25 to $49.5 billion, and by 8% QoQ (4Q25: $45.9bn). Revenue was higher mainly due to stronger downstream and refining sales, improved marketing activity, and higher LNG trading contributions.

• Costs and profitability: Purchases declined by 11% from $30.9 billion in 1Q25 to $27.3bn, supporting margins, while other operating expenses grew by 15% from $7.6 billion to $8.7 billion YoY. Depreciation rose from $3.0 billion to $3.2 billion, with higher taxes of $3.8 billion (1Q25: $2.7 billion) partially offsetting gains.

• Segment performance: Adjusted net operating income increased from $4.8 billion to $6.3 billion, representing growth of 31%, driven by exploration and production (+5%) and integrated LNG (+2%), while refining and chemicals rebounded sharply with a 431% increase. The smaller contributing sectors, integrated power and marketing and services, remained stable.

• Consolidated net income rose by 51% from $3.9 billion in 1Q25 to $5.9 billion, and by 103% QoQ (4Q25: $2.9 billion). EPS increased by 59% from $1.69 to $2.68, reflecting improved operating performance.

• Cash flow from operations improved by 31% to $3.4 billion, despite the impact of a $7.0 billion (YoY net effect of $2.8 billion) working capital outflow. Capital expenditure remained disciplined at $5.2 billion.

• Balance sheet and capital allocation: Equity increased by 4% to $125.2 billion YoY, supported by strong earnings generation. Shareholder returns continued through dividends and buybacks, supported by strong earnings.

• TotalEnergies reported operating cash flow of $3.4 billion, heavily impacted by a $7.0 billion working capital outflow, while underlying cash generation remained strong at $10.4 billion (1Q25: $6.8 billion), excluding working capital. Dividends declared during the period rose modestly by 5.9% to €0.90 per share.

Analyst thesis

Our recommendation is based on:

• TotalEnergies operates across integrated gas (LNG), exploration and production, refining and chemicals, and integrated power, providing diversified revenue streams across the energy value chain. The portfolio blends commodity-linked upstream operations with more stable downstream and contracted power income, while growing LNG and electricity exposure enhances resilience and supports earnings across varying environments.

• The group’s strategic focus on LNG and integrated power positions it well within the evolving energy landscape. A globally diversified LNG portfolio, combined with trading capabilities and long-term contracts, supports margin optimisation and cash flow visibility, while disciplined expansion in renewables and electricity provides a complementary, lower-volatility earnings base over time.

• TotalEnergies delivers strong cash generation and capital discipline, supported by competitive operating costs and a high-quality asset base. This underpins consistent shareholder returns through dividends and buybacks, while maintaining balance sheet strength and funding capacity for both hydrocarbon and low-carbon investments.

• Solid fundamentals, but valuation constrains upside: While the company benefits from a balanced portfolio and differentiated LNG exposure, the stock appears fairly valued. Uncertainty around the future oil price trajectory and ongoing geopolitical tensions create a balanced risk-reward profile, with much of the quality and strategic positioning already reflected in the share price, supporting a hold stance.