TotalEnergies: New share buybacks after jump in earnings
TOTALENERGIES: NEW STOCK PURCHASES AFTER EARNINGS JUMP
PARIS (Reuters) – TotalEnergies on Thursday announced a new share buyback program after posting a jump in earnings in the second quarter of 2022, boosted again by sharp rises in hydrocarbon prices amid the war in Ukraine.
The oil major, which is developing sustainably in renewable energy and power, said in a statement that it is targeting up to $2 billion in share buybacks for the third quarter, after $3 billion in the first half of the third quarter.
Its CEO, Patrick Pouyanné, then clarified during a conference call with analysts that the total for the year would reach at least €7 billion. He also said that the group would not cut its dividend even in the event of a recession in 2023.
At around 3:40 p.m., TotalEnergies shares are down around 2.0%, while the CAC 40 is up 0.81%. “Share buybacks remain flat at $2 billion in the third quarter despite improved cash flow generation,” said Giacomo Romeo, an analyst at Jefferies, who forecast a 50% increase in share buybacks.
While TotalEnergies continues to have a presence in Russia, notably through the Yamal LNG and Arctic LNG LNG assets or projects and a 19.4% stake in Novatek, TotalEnergies also had to book a $3.5 billion provision mainly related to is related to the potential impact of international sanctions on the value of its shares in the Russian gas group.
However, the CEO announced to analysts that the annual presentation of TotalEnergies’ strategy to investors in September will no longer include Russia.
“IMAGINE THE FUTURE OF ALL ENERGIES WITHOUT RUSSIA”
“We want you to think about the future of TotalEnergies without Russia (…). There will be an impact on volume, but not really a financial impact on performance, and the return for shareholders will not be affected,” said Patrick Pouyanne explains.
The group also stressed that due to the limited additional production and refining capacity that can be mobilized on a global scale and the disruptions in the markets related to sanctions against Russia and counter-sanctions, “the balance between supply and demand from the energy markets should be changed remain fragile and support prices, especially gas”.
TotalEnergies also highlighted the mobilization of its human and financial resources to “contribute to the diversification of Europe’s gas supply by maximizing the use of its LNG regasification capacity”.
The company expects its average LNG sales price to exceed $15 per million British Thermal Units (Mbtu) in the third quarter, compared to $13.8 in the first half, but recalls that its LNG operations will be impacted by the Non-availability of the American plant in Freeport LNG.
The group also expects stable production in the third quarter and intends to maintain high utilization of its refining activities.
TotalEnergies posted adjusted net income of $9.8 billion in the second quarter (up from $3.5 billion in the second quarter of 2021), while analysts had averaged $9.9 billion, according to Refinitiv data.
Adjusted EBITDA was $18.7 billion (vs. $8.7 billion) and gross cash flow was $13.2 billion (multiplied by two), on steady-state hydrocarbon production of 2.738 million barrels per day (Mb/d).
TotalEnergies also confirmed the 5 percent increase in its 2022 interim dividend, proposing an amount of €0.69 per share for the second quarter, in line with its increase policy unveiled in February, and specifying that its net investments should be around $16 billion year, of which 25% comes from renewable energy and electricity.
(Report by Benjamin Mallet; with Shadia Nasralla in London, edited by Nicolas Delame and Sophie Louet)
