PARIS (Reuters) – TotalEnergies announced on Wednesday that it had revised upwards its distribution policy to shareholders in a context of increasing its hydrocarbon production and improving its profitability in electricity.
On the occasion of an investor day updating its outlook, organized in New York, the oil and gas group specified in a press release that it now planned to allocate more than 40% of its cash flow (cash flow from ‘operation or CFFO) to its shareholders beyond 2023, compared to around 44% in 2023.
A year ago, TotalEnergies set itself a target of a range of 35% to 40% “across cycles”. In 2023, its share buybacks alone will amount to $9 billion, implying a level of $3 billion in the fourth quarter compared to $2 billion per quarter so far.
The group aims to increase its hydrocarbon production by 2% to 3% per year over the next five years, “thanks to its rich portfolio of low-cost, low-emission projects”, with liquefied natural gas projects ( LNG) in Qatar, Papua, the United States and Mozambique, as well as oil projects in Brazil, the Gulf of Mexico, Iraq and Uganda.
TotalEnergies will “continue to invest and develop” its oil and gas activities, declared CEO Patrick Pouyanné during a presentation.
“This strategy will enable the company to achieve the highest production growth by the end of the decade,” he added.
Around 4:30 p.m., TotalEnergies shares rose 1.34% to 62.74 euros while the CAC 40 was almost unchanged.
“The increase in the buyback program this year as well as the increase in the medium-term distribution rate appear to be higher than market expectations,” Biraj Borkhataria, head of European energy research at RBC Capital, said in a note. Market.
“PROMISING SUCCESS” IN OIL EXPLORATION
Highlighting its “promising successes” in exploration in Suriname and Namibia, TotalEnergies estimates that its oil and gas activities should generate more than three billion dollars of additional structural cash flow in 2028 compared to 2023 at constant prices.
Overall, its cash flow is expected to grow by more than $10 billion over the period 2021-2028 (excluding Russia).
While it is developing at a sustained pace in renewable energies, raising questions about its profitability in this sector, TotalEnergies has also indicated that it wishes to achieve profitability (ROACE) of around 12% for its sector. “Integrated Power”, compared to 10% in 2023, equivalent to the profitability of its “Oil & Gas” activities at $60 per barrel and therefore “higher than the traditional utility model”.
The group plans to increase its electricity production to more than 100 TWh by 2030 by investing $4 billion per year. With an expected cash flow generation of around $2 billion in 2023 and more than $4 billion in 2028, the sector would become a net cash generator by this time frame.
Over the period 2024-2028, TotalEnergies is targeting annual net investments of between $16 billion and $18 billion to implement its transition to “greener” energy.
“By focusing on fossil fuels, TotalEnergies is once again showing that it is anything but a player in the energy transition,” said Louis-Maxence Delaporte, energy analyst for the NGO Reclaim Finance, in a press release.
(Reporting by Benjamin Mallet and Forrest Crellin; edited by Blandine Hénault)
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