(BFM Bourse) – On the occasion of a day dedicated to investors, the company announced that it intended to increase its share buybacks this year to $9 billion, which exceeds analysts’ expectations. Beyond 2023, the distribution ratio is now expected to be around 40% of cash generation.
There are many points that the market was monitoring ahead of the day dedicated to TotalEnergies investors this Wednesday: evolution of oil production, amount of investments, prospects for liquefied natural gas (LNG)…
However, there is another crucial aspect for the markets: the return to the shareholder, which clearly constitutes the attraction of the sector of the large oil majors, an industry which is also not necessarily always appreciated by investors sensitive to ESG (environmental, social) themes. , governance, extra-financial criteria).
TotalEnergies did not disappoint. The company led by Patrick Pouyanné announced that it would redistribute to its shareholders $1.5 billion of the proceeds from the sale of its assets in Canada to Suncor Energy (the total of which amounts to $4.1 billion).
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Share buybacks of $9 billion in 2023
This will fuel the total amount of share repurchases for 2023 which will amount to $9 billion (including those already carried out in past quarters).
Royal Bank of Canada points out that until now the pace of share buybacks has been around $2 billion per quarter, and that the consensus was for a total amount for 2023 of $7.8 billion. The announcement therefore comes as a surprise.
The total amount of cash returned (i.e. share buybacks and dividends) to shareholders this year should therefore reach 44% of cash generation from operations, according to TotalEnergies.
For the future, TotalEnergies anticipates a ratio of 40% “across economic cycles”, against, according to Royal Bank of Canada, a rate of 35% to 40% in the medium term, in its previous indications.
Thus, the group “raises the bar” on distribution to shareholders, appreciates the Canadian bank. “Both the increase in the repurchase program this year and the increase in the medium-term payout ratio appear to exceed market expectations,” she adds.
A confirmed level of investment
Regarding other announcements, TotalEnergies indicated that it expects its hydrocarbon production to increase by 2% to 3% per year over the next five years, to reach between 2.7 million and 2.9 million barrels of oil equivalent per day. , with much of this growth expected to come from LNG, with projects in Papua and Mozambique. Hydrocarbons would thus bring in 3 billion additional cash flow between 2023 and 2028, according to its forecasts.
The company put its investments (capex) at between $16 billion and $18 billion per year over the 2024-2028 period, in line with its previous forecast of $14 billion to $18 billion “across cycles”. This confirmation is considered welcome by Royal Bank of Canada.
All of its announcements gave a boost to TotalEnergies shares, which rose 1.4% around 5 p.m., while the stock was close to balance before the group communicated its outlook around 3 p.m.
Julien Marion – ©2023 BFM Bourse
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