TotalEnergies Raises Buyback, Dividend as War Lifts Profit

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TotalEnergies Raises Buyback, Dividend as War Lifts Profit.

companies :: 2hrs ago :: source - bloomberg

By Francois de Beaupuy

(Bloomberg) -- TotalEnergies SE boosted share buybacks and dividends after first-quarter profit rebounded on the back of soaring oil and gas prices, and a strong trading performance.

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The French energy giant plans to repurchase as much as $1.5 billion of stock in the second quarter, it said Wednesday. That’s at the upper end of guidance and compares with the $750 million targeted in the first three months of the year.

While companies such as TotalEnergies have been forced to halt oil and gas production around the Persian Gulf since the outbreak of war at the end of February, they’re benefiting from steep gains in prices for crude and fuels. UK peer BP Plc on Tuesday reported sharply higher earnings amid the market turmoil.

As the war intensified in March, Total’s trading arm embarked on one of the biggest-ever buying sprees of Middle Eastern oil, which traders said added to the upward pressure on prices.

TotalEnergies’ liquefied natural gas trading activity captured market volatility, and its crude oil and petroleum products trading activities “also achieved a very strong performance in March, Chief Executive Officer Patrick Pouyanne said in a statement.

Total raised its quarterly dividend to €0.90 ($1.05) a share from €0.85. The company reported a first-quarter adjusted net income of $5.39 billion, up 29% from a year earlier. That beat the $4.98 billion average analyst estimate.

TotalEnergies is able to boost investor payouts thanks to “strong cash flow generation in the first quarter and supported by the ability of the company to maintain a strong balance sheet,” Pouyanne said.

The shares of the company were trading 0.8% higher at €78.91 at 9:31 a.m. in Paris, taking this year’s gain to 42%.

Back in February, Total said it would buy back $3 billion to $6 billion of its shares this year with oil at $60 to $70 a barrel. Brent crude has since surged above $100. Italian competitor Eni SpA also raised its buyback target last week.

Higher payouts to shareholders may spark increased scrutiny from political leaders in France, who are under pressure to shield motorists and businesses from surging fuel costs.

Mideast Disruption

Total’s oil and gas production was little changed in the period as new projects and production ramp ups in countries such as in Brazil and Libya helped offset the impact of the war on its Middle East operations. At the end of April, production shutdown in Qatar, Iraq and offshore in the United Arab Emirates represents around 15% of the company’s output.

Excluding the impact of the conflict, output rose by about 4% year on year, Total said. The company reiterated a plan for net investment of $15 billion in 2026, while saying its evaluating options to accelerate “short cycle investments” to benefit from high hydrocarbon prices.

Key energy assets across the Persian Gulf have been halted because of Iranian strikes. The Satorp refinery in Saudi Arabia, a joint venture with Saudi Aramco, was shut after suffering damage in an attack on April 8, while some units were subsequently restarted.

Due to the capacity reduction of Satorp and the planned turnaround of two months of its French refinery in Donges, the use rate of its refinery should be between 80% and 85% in the second quarter. That’s down from above 90% in the first three months of the year.

The company’s electricity business, which posted a cash flow from operations of €574 million in the first quarter, just finalized the acquisition of a stake in European power assets. The deal paid with new Total shares, will contribute to the company’s goal to generate positive free cash flow from its power business from 2027 as it continues to build renewable projects, Pouyanne reiterated Wednesday.

Total’s gearing — the ratio of net debt to equity — climbed to 15.5% at the end of the quarter, excluding leases, from 14.7% at the end of last year.

(Updates with comments on the company’s trading, refining and power businesses from the fourth paragraph.)