Refinery profits soar but struggle against the cold winter of oil and gas prices! Total (TTE.US) Q4 profits fall short of expectations and announces a reduction in stock buyback size.

French energy giant TotalEnergies (TTE.US) announced its fourth quarter results for 2025, which showed that despite the increase in refining margins and the cash flow from the sale of renewable energy assets, it was not enough to offset the negative impact of falling oil and natural gas prices. The data showed that TotalEnergies' adjusted net profit for Q4 was $3.8 billion, a 13% decrease from the same period last year, and below analysts' consensus expectation of $3.9 billion. TotalEnergies increased oil and gas production in the fourth quarter to offset the 15% decline in Brent crude oil prices and 18% decline in liquefied natural gas prices. The company stated that production in the fourth quarter increased by 5%, but the exploration business segment's profit still decreased by 21.6% to $1.8 billion. Meanwhile, refining and petrochemical business profits surged by 215% to $1 billion. TotalEnergies had previously reported a 231% year-on-year increase in refining margins for European refineries in the fourth quarter. The company's CEO, Patrick Pouyann, attributed the increase in refining margins to US sanctions on Russian oil companies Rosneft and Lukoil, as well as the EU's ban on fuel originating from Russian oil. As the pressure from prolonged low oil prices continues, TotalEnergies announced a reduction in the size of its share buyback program. The company announced plans to repurchase $750 million worth of shares in the first quarter of 2026. This amount is lower than the $1.5 billion buyback size in the last three months of 2025, and at the lower end of the guidance range issued at the end of last year. The $750 million buyback is also a significant slowdown from the previous pace of $2 billion per quarter in the first three quarters of last year. The company had previously stated that it plans to repurchase $3-6 billion worth of shares in 2026. However, the quarterly dividend remains unchanged at 0.85 per share. TotalEnergies also stated that its 2026 budget is based on an assumption of $60 per barrel for Brent crude oil and may adjust the buyback plan based on the trend in oil prices for the year. Currently, Brent crude oil is trading close to $69 per barrel. Following disappointing quarterly reports from Shell (SHEL.US) and BP p.l.c. Sponsored ADR (BP.US), TotalEnergies became the third (and last) top European oil and gas producer to announce its results. After BP p.l.c. Sponsored ADR announced a suspension of share buybacks and cancellation of long-term dividend guidance on Tuesday, its stock price plummeted significantly. Although large oil companies are still generating substantial profits, the 18% drop in oil prices last year eroded cash flows, especially for European companies. It is widely predicted that with production increases within and outside the OPEC+ alliance, the market will continue to be oversupplied this year. Recent tensions between the US and Iran have pushed up oil prices, but European energy giants are striving to control rising debt levels, limiting their ability to pay returns to shareholders.