TotalEnergies to boost investor returns after record profit
(Bloomberg) — TotalEnergies SE promised to increase its dividend and buy back more shares after posting a record fourth-quarter profit.
The results round out a strong run of earnings from Big Oil, with soaring prices for crude and natural gas swelling company coffers from Europe to the U.S. Like its supermajor peers, the French producer is using the recent torrent of cash to boost returns to shareholders while keeping a lid on capital spending.
TotalEnergies promised to increase its 2022 interim dividend by 5%, up from 66 euro cents ($0.75) in the previous four quarters. New share buybacks will distribute the surplus cash flow from high hydrocarbon prices, amounting to $2 billion for the first half of this year.
Shares of the company, which have risen 17% this year, were trading 0.3% lower at 52.22 euros at 11 a.m. in Paris.
“TotalEnergies’ multi-energy model demonstrated its ability to take full advantage of the very favorable environment, particularly in the liquefied natural gas and electricity sectors,” Chief Executive Officer Patrick Pouyanne said in a statement on Thursday.
Cash Surplus
Fourth-quarter adjusted net income rose fivefold from a year earlier to $6.83 billion, according to the statement. That beat the average analyst estimate of $5.93 billion. Cash flow from operations doubled to $11.62 billion.
Gas and electricity prices jumped to records in Europe last year as the global economy emerged from the pandemic, boosting demand while supplies remained constrained. Crude has also soared as the Organization of Petroleum Exporting Countries kept a tight rein on output.
This may continue because the industry has become more reluctant to invest in new projects, Pouyanne told reporters. U.S. shale oil producers are the “real buffer” which could boost output to ease the upward pressure on crude, he said. Depending on the level of oil prices, TotalEnergies may repurchase more of its shares in the second half, Pouyanne said.
Solar Deal
TotalEnergies also announced that it had agreed to buy SunPower Corp.’s commercial and industrial solar business for $250 million. The company’s renewables and electricity business comfortably surpassed its 2021 earnings target due to strong power markets, according to the statement.
The company expects to make net investments of $14 billion to $15 billion this year, a slight increase from $13.3 billion in 2021. Oil and gas production will grow by about 2% in 2022, driven by the startup of projects in Brazil and Nigeria.
TotalEnergies will withdraw from the North Platte deep-water oil and gas project in the Gulf of Mexico, seeing better investment opportunities elsewhere. The French company had been operator of the venture with a 60% interest, with Norway’s Equinor ASA holding the rest.
The development would have required about $2 billion of capital expenditure from TotalEnergies but “it’s not a giant field,” Pouyanne told reporters.
