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TotalEnergies (TTE) Raises Natural Gas Production in the US

TotalEnergies TTE announced that it has entered into an agreement with Lewis Energy Group to purchase the latter’s 20% interest in Dorado leases in Eagle Ford shale. These Dorado leases are being operated by EOG Resources Inc. EOG with 80% interest. This acquisition will expand TTE’s natural gas production volumes in Texas and further boost its position in the United States Liquefied natural gas (LNG) value chain.

The Dorado field will allow TotalEnergies to increase its net U.S. natural gas production by 50 million cubic feet a day (Mcf/d) in 2024, with the potential for an additional 50 Mcf/d by 2028. The company’s net U.S. natural gas output reached nearly 340 Mcf/d in 2023. In 2023, its total natural gas production volumes from the Americas were 941 Mcf/d.

Focus on LNG Exports

This acquisition is in sync with TotalEnergies’ strategy to expand its LNG portfolio globally. TTE is the largest exporter of LNG in the United States, with an export capacity of over 10 million tons (Mt) in 2023, courtesy of its 16.6% stake in the Cameron LNG plant in Louisiana and several long-term purchasing agreements.

Management has plans to expand its LNG export volumes from the United States. It expects its LNG export capacity will reach 15 Mt/y by 2030 following the start-up of the first phase of the Rio Grande LNG project in Texas, presently under construction.

The company strengthened its position in Europe in 2023 with the commissioning of two floating regasification terminals. In addition, the extension of its partnership with Oman LNG by 10 years and with Qalhat LNG by five years will further strengthen its global LNG portfolio.

Demand for LNG to Rise Globally

Per the International Energy Agency ("IEA"), LNG, the primary contributor to international gas trade, is likely to increase 21% between 2019 and 2025. Per IEA, emerging Asia markets remain the driving force behind the expansion of LNG imports, followed by the countries of Europe.

Rising demand for LNG will boost the prospects of oil and gas majors like Shell plc SHEL and Chevron Corporation CVX, as both play a vital role in the supply of LNG worldwide. Both these companies are committed to ensuring that the world has access to a reliable and affordable source of energy as it transitions to a cleaner future.

SHEL and CVX’s long-term (three-to-five years) earnings growth rate is pegged at 4% and 5%, respectively. The Zacks Consensus Estimate for SHEL and CVX’s 2024 earnings per share reflects an increase of 2.9% and 0.7%, respectively, in the past 60 days.

Price Performance

In the past six months, shares of TotalEnergies have gained 12% compared with the industry’s 17.3% growth.

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Zacks Rank

TotalEnergies currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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