(Corrects July 24 story to show disposals referred to in paragraph 9 include assets in Argentina, not Brazil)
By America Hernandez
PARIS (Reuters) -TotalEnergies reported a 23% fall in second-quarter earnings on Thursday, the French oil major's worst performance in four years but in line with expectations, as lower oil and gas prices outweighed a rise in production and power sales.
Adjusted net income fell to $3.6 billion for the three months to June 30, down from $4.7 billion a year earlier and $4.2
billion in the first quarter.
Shares were down 4.1% to 51.17 euros at 1335 GMT.
CEO Patrick Pouyanne told analysts on a call that the company could maintain shareholder returns in a low oil price environment, as several expressed concern about a sharp increase in the company's net debt.
Brent crude prices have fallen 20% from a year ago, reaching $67.9 per barrel in the second quarter of 2025, as members of the Organization of the Petroleum Exporting Countries and allies such as Russia started to unwind output cuts of 2.17 million barrels per day in April.
TotalEnergies' net debt leapt 89% year-on-year to $25.9 billion, pushing gearing - a measure of debt to equity - to 22.6% including leases, as the company made $2 billion of acquisitions and saw its working capital increase - even as it extended a $2 billion share buyback into the third quarter.
"We have a strong balance sheet ... and we are committed to $2 billion in quarterly buybacks at $70 per barrel," Pouyanne said on a call with analysts.
The CEO added that according to the company's definition of normalised gearing, the ratio of debt to equity was 15%.
He said that 15% figure would not increase this year, as the company finalised sales of stakes in renewable assets and disposals of oil and gas assets in Nigeria, Argentina and other areas, expected to bring in some $3.5 billion.
TotalEnergies' integrated power business beat forecasts with a 14% rise in quarterly profit to $574 million, but was unable to offset poorer performance across nearly all other units.
Refining and chemicals earnings fell 39% from a year ago, the company said.
TotalEnergies' margin for refining crude into fuels dropped 21% from a year ago to $35.3 per ton, despite a slow recovery in the first half of 2025 from a collapse last year due to sagging demand and an increase in global competition.
The company said it expected refining margins to rise above $50 per ton in the third quarter due to increased fuel demand during Europe's summer driving season.
Profit from its integrated liquefied natural gas unit was down 9.6% year-on-year and 20% lower than the first quarter of 2025, as lower prices and less volatility meant traders could not profit from price changes.
TotalEnergies also forecast a 3% increase in hydrocarbon output in the third quarter against the same period a year ago.
(Reporting by America Hernandez. Editing by Tomasz Janowski and Mark Potter)
