(BFM Stock Exchange) – The oil group announced on Wednesday evening a lowering of the amounts of share buybacks which it operates each quarter. An ad that has the merit of providing visibility to shareholders, allowing investors to project themselves on the fundamentals.

Totalnergies surprised the market on Wednesday evening. A few days before an investor day in high challenges, next Monday, Major Petroleum delivered a series of announcements that were expected for next week.

The group has notably confirmed to target an average annual production of energy (oil, gas, electricity) up 4% per year by 2030.

The group’s board of directors of the group has also approved the transformation project in New York of its ADR – of action deposits that allow American investors to speculate on foreign groups – in ordinary shares. The company has been working on this project since spring 2024.

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A decreased cadence

The most protruding announcement, however, remains the drop in cadence on share buybacks. For several years, the Defense Company has acquired for around $ 2 billion in its own titles per quarter, or 8 billion dollars per year.

Totalnergies decided to pass a penknife. The company said on Wednesday evening that this pace would increase to $ 1.5 billion in the fourth quarter of 2025, therefore bringing the total to 7.5 billion out of 2025.

For 2026, the company chaired and managed by Patrick Pouyanné anticipates securities redemptions between 750 million and 1.5 billion euros per quarter, therefore from 3 billion to $ 6 billion over the whole year. These indications are based on certain hypotheses, namely a Brent price, the international benchmark for oil prices, ranging from $ 60 to $ 75 per barrel and a euro around 1.20 dollars.

Currently the Brent evolves around 68 dollars per barrel. The euro registers on its side around 1.17 dollars.

Adapt to the drop in market prices

Recall that the return to the shareholder (dividends and share buybacks) remains a significant attractiveness criterion for oil groups to the market. To give another example, the American Exxonmobil intends to acquire for $ 20 billion from his own titles this year.

Totalnergies justified its decision by evoking the need to adapt to “the evolution of hydrocarbon prices, refining and petrochemicals and the dollar-European exchange rate”.

Since the beginning of the year, oil prices have been at low levels, due to economic uncertainty and production increases from several OPEC+ member countries (the organization of oil exporting countries and their allies).

The Brent struggles to exceed $ 70 a barrel (its course has evolved between 58 dollars and $ 79.5).

Patrick Pouyanné had explained in July that the company was “comfortable” at the idea of ​​buying $ 2 billion in a quarter, if the Brent was over $ 70 a barrel and that the group’s debt ratio (the net debt reported to the whole passive) remained under 15%.

At the end of last June this ratio amounted to 18%, the company specifying that the figure fell to 15% by excluding certain temporary impacts including seasonal effects on working capital requirement.

Bank of America, for its part, estimated that Totalenergies needed a Brent at 80 dollars a barrel to finance “organic”, that is to say without going into debt, its investments, payment of its dividend and share buybacks of $ 2 billion per quarter.

The market does not shit too much

More broadly, several analysts had warned that due to the recent increase in his debt ratio and his least generation of cash, Totalenergies was likely to reduce the boards on share buybacks.

For example, in a note published on Tuesday, UBS considered that the oil group had to update its policy in terms of share buybacks in view of “the growing gap between the cash generation and the return to the shareholder”.

The Swiss bank thus expected Totalenergies to lower its share buybacks to $ 7.5 billion for 2025 (which will therefore be the case) and $ 6 billion in 2026.

So much so that the market had, in the opinion of analysts, already anticipated a stroke of planing on the share buybacks.

“We believe that the recent weakness of the title already reflects a potential reduction in action buybacks, and we plan that Totalenergies will pass at an annual acquisition of $ 4 billion in the fourth quarter,” said Royal Bank of Canada.

This Thursday, the market does not really take a shade of totalergia ads. The action of the resident of CAC 40 fell by just 0.11% around 4 p.m., a variation lower than that of the Parisian index (-0.5%).

The withdrawal is all the more limited as in parallel of the group’s announcements, the German bank Berenberg lowered its advice on the title to “keep” against “buy”, which can also weigh on the course. The establishment cites, to justify its decision, the investments necessary to finance the group’s growth projects and which reduce the cash likely to be donated to the shareholders.

More clarity

Ultimately, totaling announcements on its share buybacks have the advantage of raising uncertainty for its shareholders and allowing the market to project themselves on other subjects.

Royal Bank of Canada estimates this decision before Monday’s investor day “should make it possible to identify this road subject and further focus on the growth of the available cash flow and strategic orientation”. The Canadian Bank has a “outperformance” advice on action.

UBS considers that in the short term the market can be disappointed with the group’s announcements. The consensus (the average forecast of analysts) visible alpha anticipated share buybacks of $ 5.1 billion for 2026 when the total indications of totaling a figure of $ 4.5 billion, in the middle of the range, notes the Swiss bank.

But UBS adds that this decision has virtues in the longer term. These more precise guidelines on the part of the company “bring a more sustainable framework and useful visibility for next year”, considers the bank.

Bank of America even greets a “welcome-feature welcome to share buybacks” with limited changes on the underlying prospects of cash flow “. The American bank appreciates the greatest clarity brought by the group on its return to the shareholder policy.

A discount ready to absorb?

Bank of America is also calculating that the group’s new indications involve a total return in terms of return to the shareholder from 9% to 11% (a yield of 7% for the dividend and 4% to 2% for share buybacks), which remains high compared to the average of the sector in Europe (9%).

Oddo BHF, for its part, even believes that all of Wednesday evening’s total announcements are “positive”.

“The title offers the best production growth in the sector with the best roace (the return to average employee capital, an indicator of profitability of equity) and excellent resilience in the event of a drop in oil prices,” said the broker.

Oddo BHF also appreciates the decision of Totalenergies to transform its ADR into ordinary stocks on the New York Stock Exchange, Wall Street being renowned to better value oil and parapetrol groups than European markets.

“This will facilitate access to American investors in the group’s titles and will improve their liquidity,” said the broker. “At the same time, this can facilitate a re-using (an appreciation of the multiple scholarship holders, note) of the title” then “that the action of totalnergies is treated today with a strong discount compared to its American peers” with a multiple of cash flow of 4.5 against 8 for American companies, adds the design office.

Note that analysts expect Totalenergies to decrease a decrease in annual investment expenses (“CAPEX”) on Monday. Currently, these “CAPEX” are planned between 16 billion and $ 18 billion a year. Oddo BHF thinks that the top of the range could be reduced to $ 17 billion, with a reduction in the sail in renewables. Royal Bank of Canada is on the same forecast while UBS sees them rather around $ 16 billion in 2026 and 2027.