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TotalEnergies' (TTE) Offshore CLOV Phase 2 Starts Production

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TotalEnergies SE TTE, along with the Angolan National Oil, Gas and Biofuels Agency, announced that it has started production from the CLOV Phase 2 offshore Angola. This project is located nearly 87 miles (140 kilometers) from the Angolan coast in water depths of nearly 3600-4,600 feet. This CLOV Phase 2 project has an estimated reserve of 55 million barrels of oil equivalent (boe).

The CLOV Phase 2 is connected to the existing CLOV FPSO (Floating Production, Storage and Offloading) unit, and production of hydrocarbon from this project will gradually touch 40,000 boe in mid-2022. In May 2021, TotalEnergies started production from the Zinia Phase 2, another area under the same Block 17, and production from this region is also expected to reach 40,000 barrels of oil per day by mid-2022.

The offshore Block 17 is being operated by TotalEnergies with a 38% interest along with Equinor EQNR with 22.16%, ExxonMobil XOM with 19%, BP plc BP with 15.84%, and Sonangol P&P with 5%.

TotalEnergies’ Global Presence

TotalEnergies has one of the best production growth profiles among oil super majors, characterized by an upstream portfolio with above industry-average exposure to faster-growing hydrocarbon producing regions of the world.

TotalEnergies, taking into consideration the OPEC quotas and contribution from start-ups, expects total production for the fourth quarter in the range of 2,850-2,900 thousand barrels of oil equivalent per day (Kboe/d). In third-quarter 2021 TTE produced 2,814 kboe/d, up 4% year over year.

During third-quarter 2021, hydrocarbon production from TotalEnergies’ African assets was 537 Kboe/d, up 0.8% sequentially. This new start-up will further increase hydrocarbon production from TTE’s African assets. This CLOV Phase 2 project is in sync with TotalEnergies’ strategy of focusing upstream investments on low-cost projects.

Improving Global Hydrocarbon Demand

The global slump in demand for hydrocarbons caused by the pandemic outbreak but vaccination drive and better medical knowledge to deal with the virus have changed the uncertain scenario of 2020. Despite the threat from new variants, improving international travel and opening up of economic activities have resulted in an improvement in global oil demand.

Per the U.S. Energy Information Administration (“EIA”) report, 98.9 million b/d of petroleum and liquid fuels were consumed globally during October 2021, reflecting an increase of 4.5 million b/d from October 2020. EIA forecast that global consumption of petroleum and liquid fuels will average 97.5 million b/d throughout 2021, which reflects a 5.1 million b/d increase from 2020. EIA further expects that the global consumption of petroleum and liquid fuels will increase 3.3 million b/d in 2022.

Such a positive movement in the global demand for hydrocarbons is likely to benefit Equinor, ExxonMobil and BP, among others having widespread operations across the globe. The long-term (three to five years) earnings growth of Equinor, ExxonMobil, and BP is currently pegged at 49.6%, 14.1%, and 13.7%, respectively.

The Zacks Consensus Estimate for 2021 earnings of Equinor, ExxonMobil, and BP has moved up 0.3%, 6.5%, and 11.2%, respectively, in the past 60 days.

Price Performance

Year to date, TotalEnergies’ shares have outperformed the industry.

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Zacks Rank

TotalEnergies currently carries 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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