WORLD – Energy company TotalEnergies says it would use part of its cash flow for share buybacks worth at least US$800 million, as rising oil and gas prices boosted profit, offsetting the hit from selling out of one of its Venezuelan ventures, reports Reuters.
On 29th July 2021, it announced a collaboration with Amazon, through which it will supply the online retail giant with renewable electricity, and it has been multiplying new investments, including in areas such as electric vehicle charging.
Royal Dutch Shell and Norway’s Equinor also announced share buyback schemes on the same day, sparking a share price rally.
The group said it expected to generate more than $25 billion in cash flow this year, based on current high oil price forecasts and would invest in more new projects and return surplus amounts to shareholders if oil prices remained high.
“The board of directors decided to allocate up to 40% of the additional cash flow generated above US$60 per barrel to share buybacks,” TotalEnergies said in a statement.
Chief Executive Patrick Pouyanne told an analyst call that it would mean share buybacks of US$800 million in 2021.
“And if the average price is going up to $68 (a barrel), for example – we are not far – it could go up to one billion dollars,” he said.
The group said it would also pay a second interim dividend of 0.66 euros per share for 2021, stable from the first quarter.
“The board of directors decided to allocate up to 40% of the additional cash flow generated above US$60 per barrel to share buybacks”TotalEnergies
TotalEnergies’ adjusted net income progressed further in the April to June period, reaching US$3.5 billion, compared to an adjusted net income of US$126 million a year ago at the start of the COVID-19 pandemic.
But the group also disclosed it was impacted by a US$1.38 billion loss on the sale of its 30.3% stake in Petrocedeno, which produces extra-heavy crude oil from Venezuela’s Orinoco Belt and transforms it into light crude oil.
Total said Venezuela’s state-run oil company PDVSA would become Petrocedeno’s 100% owner as Norway’s Equinor also agreed to exit its 9.7% stake.
TotalEnergies, which still has a majority stake in Venezuela’s Yucal Placer gas field among assets in the country, said the Petrocedeno development was not in line with the low carbon intensity projects it wants to focus on as part of any new oil investments.
The company slightly lowered its hydrocarbon production forecast to 2.85 million barrels of oil equivalent per day (Mboe/d) in 2021 due to OPEC+ quotas in the second half of 2021.
It had previously forecast that production would be stable versus the 2020s 2.87 Mboe/d.
It has a plan to reach carbon neutrality by 2050, with staggered targets to 2030.