TotalEnergies' profit surged in the third quarter on the back of sky-high oil and gas prices in Europe and Asia, and it predicts that gas prices may not fall until the middle of next year.

The French company's third-quarter adjusted net profit hit $4.8 billion, up from $848 million in the same period of 2020, on revenues of more than $49 billion, an 81% increase on last year.

Chief executive Patrick Pouyanne said the global economic recovery, notably in Asia, drove all energy prices sharply higher due to the interconnection of energy systems.

"Gas prices in Asia and Europe, up by more than 85% from the previous quarter, reached unprecedented levels," he said, "and oil prices gained 7%, continuing their steady year-long rise".

The supermajor said that, barring an exceptionally mild winter, low inventory levels for gas and sustained high demand are likely to keep gas prices in Europe and Asia at high levels until the second quarter of 2022.

TotalEnergies forecast that its oil and gas production would average 2.85 million to 2.9 million barrels of oil equivalent per day in the fourth quarter, compared with 2.81 million boepd in the third quarter.

Given the lag effect on price formulas related to oil prices, it said the average price for liquefied natural gas sales is set to be above $12 per million British thermal units in the fourth quarter, up from $9.10 per MMBtu in the third quarter.

TotalEnergies posted a record net income of $1.6 billion in its integrated gas, renewables & power division, adding that its gross renewable electricity generation capacity has hit almost 10 gigawatts.

In comparison, its E&P business boasted $2.7 billion of adjusted net operating income, a quarterly rise of more than 20%. Consolidated free cash flow stood at $8 billion.

Jefferies analyst Giacomo Romeo said the supermajor's "beat in earnings and consolidated free cash flow... is driven by integrated gas and shows that TotalEnergies was well-positioned to capture the gas macro-dynamics during the quarter".

He noted that "when compared against Shell's earnings... it shows the importance of having a high level of liquefaction plant availability in periods of high price volatility".

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