(News Bulletin 247) – The British oil group delivered results above expectations and announced a massive share buyback plan, which catapulted its action in London. In its wake, Totalenergies is making progress in Paris.

After the Americans Chevron and ExxonMobil last week, it is the turn of the European oil majors to reveal their quarterly and annual results. The British BP thus delivered its publication this Tuesday, February 6. The group led by Murray Auchincloss, appointed managing director in his own right just a few weeks ago, has generally exceeded expectations.

Over the last four months of 2023, underlying operating profit stood at $6.13 billion, compared to $9.4 billion a year earlier, as the group had to deal with falling market prices. hydrocarbons.

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The cash machine is spinning

However, the UBS bank emphasizes that this figure exceeded the consensus by 5%, thanks in particular to a better than expected performance in the oil production division. BP’s fourth-quarter underlying net profit of $3 billion also beat consensus by 8%. Consolidated net profit (which therefore includes exceptional items) fell to $371 million, compared to $4.86 billion over the same period of 2022.

Cash generation, very important among the oil majors because it is synonymous with resources for distribution to shareholders, was robust. Operating cash flow stood at $9.4 billion over the last four months of the year, when UBS expected “only” $6.6 billion.

Over the whole of 2023, BP returned to the green, generating a net profit of $15.23 billion compared to a loss of $2.5 billion in 2022. This last figure was then weighed down by heavy accounting writedowns. (24 billion dollars) spent to reflect the group’s exit from the capital of Russian Rosneft, of which BP held 19.75%.

Share buybacks better than expected

Beyond its results, the group has kept its promises in terms of shareholder return, which clearly constitutes the attraction of the major oil majors on the stock market.

BP announced share buybacks totaling $1.75 billion for the entire first quarter of 2024, and $3.5 billion for the entire first half. According to UBS, analysts had expected share repurchases for the first quarter to be just $1.2 billion.

In the medium term, the group also indicated that it expects “under current market conditions”, and subject to maintaining its investment grade rating by the rating agencies, 14 billion dollars until 2025.

“We have real confidence,” CEO Murray Auchincloss said in an interview with Bloomberg on Tuesday. “This confidence in growth has allowed us to provide new guidance on how we view share buybacks,” he added.

It is also a way of reassuring shareholders by showing that the group has not forgotten its shareholders. The previous managing director of BP, Bernard Looney, had to face criticism from investors who judged that the British company was accelerating too quickly in low-carbon energies. According to Bloomberg, the activist fund Bluebell had, in October, written a letter to the chairman of the board of directors of BP to ask to reduce its spending on “clean” energy and intensify its investments in hydrocarbons.

In any case, BP’s announcements are attracting the market this Tuesday, with the oil major’s shares gaining 5.8% on the London Stock Exchange at the start of the afternoon.

Totalenergies’ turn on Wednesday

In its wake, Totalenergies advanced 2.1% on the Paris Stock Exchange, recording the strongest growth in the CAC 40.

The French group will deliver its results for the fourth quarter and for the whole of 2023 on Wednesday morning. According to Royal Bank of Canada, the consensus expects, for the last three months of 2024, a net profit of $6.3 billion and operational cash generation of $9.3 billion.

For the whole of 2023, the Factset consensus cited by Morningstar anticipates net profit of $23.6 billion, compared with adjusted net profit of $36.2 billion in 2022 and consolidated net profit of 20.5 billions of dollars.

“At a time when energy prices are under pressure, investors’ attention will focus on cash generation and its redistribution to shareholders,” the company writes.

“Any risk of a drop in cash flow will make investors fear that Total will not be as generous with shareholders as they hope. At present, the consensus is already cautious, expecting a drop in share buybacks. stocks to $7.5 billion in 2024, compared to $9 billion forecast for all of 2023,” adds Morningstar.

Ahead of these results, Totalenergies – whose benefits are often the subject of vigorous political debates – wanted to detail its contributions and commitments in France. The group notably indicated that it would pay more than 2 billion euros in contributions (taxes, contributions) for the year 2023.