(News Bulletin 247) – The oil and gas group, apart from its net profit, saw its first quarter results be penalized by the drop in hydrocarbon prices. TotalEnergies has also entered into an agreement with Suncor Energy to sell its oil sands assets in Canada.

TotalEnergies continues to publish robust results, despite the drop in hydrocarbon prices. And changes tack on the future of its oil sands activities in Canada.

The oil and gas group had indeed split TotalEnergies EP Canada, which manages this activity, via an IPO of this company on the Toronto market.

But the French company has received several unsolicited offers to sell the whole of this company. TotalEnergies has chosen to retain that of the Canadian company Suncor Energy, which represents a total of 5.5 billion Canadian dollars, or 4.1 billion US dollars. Additional payments of up to US$450 million are also provided for in the agreement.

An easier option

“This amount is in line with the valuations of between C$5 billion and C$6 billion envisaged for the company’s initial listing as part of the proposed spin-off by TotalEnergies’ financial advisors,” the company said in a statement. .

The group therefore preferred to go through this sale rather than the IPO, judging the first option “easier”. This transaction, which should be finalized in the third quarter, will allow TotalEnergies to increase the return to its shareholders.

“Given the future proceeds of this sale, the Board of Directors has decided to allocate in 2023 at least 40% of the cash flow (CFFO) generated in 2023 by the Company to shareholders (at the highest of the range of 35 -40% announced in 2022), either by buying back shares or by distributing an exceptional dividend. The Board of Directors will make its decision at the closing of the operation, following a dialogue with its shareholders”, explains TotalEnergies.

Fall in hydrocarbon prices

The company announced the move as its first quarter accounts held up well against falling oil and gas prices. Over the first three months of the year, the oil group saw its net profit increase by 12% to 5.56 billion dollars.

However, this progression must be nuanced. In the first quarter of 2022, TotalEnergies’ net income of $4.9 billion was weighed down by provisions of more than $4 billion related to Russia.

More highlighted by the company because less penalized by exceptional items, the adjusted net income of TotalEnergies amounted to 6.5 billion dollars, down 27% over one year. Reported per share, this indicator stood at 2.61 dollars. Cash generation fell 19% to $9.8 billion.

“TotalEnergies once again demonstrates its ability to generate very good results (…) in an environment that is set back on oil and gas,” said CEO Patrick Pouyanné, quoted in the press release.

The price of oil (measured by Brent) fell 21% over the quarter, with an average price of 81.2 dollars per barrel, far from 102.2 dollars for the same period of 2022. Those of gas fell. by 28%.

On the strength of this first quarter deemed satisfactory by the company, TotalEnergies will continue its share buybacks, with 2 billion dollars planned for the second quarter.

These announcements are for the time being welcomed without enthusiasm by the market, the TotalEnergies share falling by 1.2% at the start of the session.

“Overall, we consider this to be a decent series of results, the surprise coming from the sale of the oil sands,” judge Royal Bank of Canada. The Canadian bank appreciates on this last point “a clean exit” from these activities.