Sometimes the best trade is the one where the world is on fire and you happen to sell the stuff everyone suddenly needs. That's roughly the story for TotalEnergies SE (TTE) this quarter.
The French energy giant's stock rose in Thursday's premarket trading after the company forecast stronger third-quarter performance in its liquefied natural gas (LNG) and refining businesses. Higher LNG prices, stronger trading activity and rising refining margins are expected to boost results amid ongoing tensions in the Middle East.
The headline number here is the refining margin marker, which TotalEnergies expects to jump to $33.2 per barrel from $8.4 per barrel a year earlier. That's not a typo. Refining margins roughly quadrupled, and the company is positioned to cash in.
LNG Trading and Refining Margins Boost Outlook
TotalEnergies expects a sharp increase in Integrated LNG results as average LNG prices rose 20% quarter over quarter to $12.28 per million British thermal units (MMBtu). Stronger LNG and gas trading also supported performance amid the prolonged Strait of Hormuz conflict and expectations of robust winter demand.
The company expects exceptionally strong downstream results and cash flow. Refining & Chemicals cash flow is projected to rise by $2 billion from the second quarter. A 10% increase in refining throughput helped the company benefit from historically high refining margins in Europe and other markets.
Meanwhile, oil trading remains strong, with performance expected to match the previous two quarters. Marketing & Services is also expected to maintain its solid performance.
Production Growth Set to Beat Guidance
TotalEnergies expects hydrocarbon production of 2.45 million to 2.50 million barrels of oil equivalent per day. The company expects disruptions linked to the Middle East conflict to ease, affecting only about 5% of total production.
Excluding these disruptions, production is expected to grow more than 4% year over year, exceeding the company's annual growth guidance of 3%. Exploration & Production results are expected to benefit from higher output and gas prices. However, lower oil prices could partially offset those gains compared with the second quarter.
Power Business and Cash Flow Outlook
TotalEnergies expects stronger Integrated Power results and cash flow, supported by a full quarter of contributions from TTEP, its joint venture with EPH. The company forecasts Integrated Power cash flow of $750 million to $800 million. TotalEnergies also expects a positive working capital contribution of approximately $3 billion during the quarter.
TotalEnergies Earnings Preview and Analyst Forecasts
TotalEnergies is scheduled to report third-quarter earnings on Oct. 29, 2026. Analysts expect earnings per share of $3.40, up from $1.77 a year earlier. Revenue is projected to reach $69.29 billion, compared with $48.69 billion in the year-ago quarter. The stock trades at a price-to-earnings ratio of 11.2.
TotalEnergies has a consensus Buy rating and an average analyst price forecast of $99.50. On Oct. 13, TD Cowen maintained its Buy rating but lowered its price forecast to $105. JPMorgan downgraded the stock to Neutral on Sept. 23. Meanwhile, Piper Sandler maintained its Neutral rating and raised its price forecast to $93 on Sept. 3.
TTE Price Action: TotalEnergies shares were up 1.52% at $91.00 during premarket trading on Thursday. The stock is approaching its 52-week high of $94.17, according to market data.
