PARIS (Reuters) – TotalEnergies should clarify the considerable potential of its oil discoveries in Namibia and send a positive message about its capabilities in terms of share buybacks during its next investor day on September 27, according to analysts polled by Reuters.
While the group has just presented a project of some 200,000 barrels per day off the coast of Suriname, analysts are now awaiting announcements on its exploration campaigns in Namibia, whose reserves could make the country one of the top 15 producers of oil by 2035.
“Namibia could become the largest deep offshore discovery ever made by TotalEnergies, potentially surpassing block 17 in Angola (their last ‘golden’ block),” underlines Bertrand Hodée, head of oil and gas research at Kepler Cheuvreux.
According to his calculations, the southwest African country could represent 1.6 billion barrels of recoverable oil resources and a value of $4.1 billion to the French oil company.
Kim Fustier, head of European oil and gas research at HSBC, believes the group should provide guidance on appraisal well flow rates but perhaps not, at this stage, commit to a concept of development or production estimates.
The TotalEnergies investor day, organized in New York, will also give the group the opportunity to clarify how it plans to apply its distribution policy.
TotalEnergies announced a year ago that it intended to allocate “through cycles” 35% to 40% of its cash flow (operating cash flow or CFFO) to shareholders, a target which analysts estimate it should be confirmed.
But it also plans to exceed the threshold of 40% for 2023, taking into account the proceeds from the sale of its assets in the tar sands in Canada and the price of a barrel, which has rebounded in recent weeks due to fears of a persistent imbalance between supply and demand.
MORE EXPECTED VISIBILITY ON LNG AND RENEWABLES
TotalEnergies has in particular implemented a share buyback program of $2 billion per quarter.
“The longer oil prices remain at current levels, the more TotalEnergies’ debt ratio will fall and, presumably, the more the group will be able to maintain the current level of $2 billion,” Kim Fustier said.
“I think a distribution level above 40% is also valid for next year,” she added.
TotalEnergies should also provide more visibility on its growth in liquefied natural gas (LNG) and that of its oil production, with potentially indications for longer-term deadlines than that of 2027, communicated last year.
According to Giacomo Romeo, analyst at Jefferies, LNG production and sales forecasts – excluding Russia, which the group excluded from the presentation of its strategy a year ago – should be revised upwards to take into account in particular the recent agreement concluded with the American developer NextDecade.
In terms of renewable energies, the group will have to provide additional proof of its ability to grow profitably against a backdrop of renewed interest in hydrocarbons, for questions of security of supply, in the context of the war in Ukraine .
(Reporting by Benjamin Mallet, with Forrest Crellin; edited by Blandine Hénault)
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