TotalEnergies Lifts Production Target, Sticks With Shareholder Return Policy — Update

By Christian Moess Laursen

TotalEnergies slightly raised its target for annual oil and gas production, and stuck to its shareholder return policy at a time when most European majors look likely to pull back on their lofty buyback pledges.

The French energy major said Wednesday in a strategy update that it plans to grow its oil-and-gas production by around 3% annually between 2024 and 2030, driven mostly by its output of liquefied natural gas, through a low-cost, low-emission upstream portfolio.

This year, the oil and gas producer has launched six major projects, which are set to drive growth through the decade, it said. The most recent, a $10-billion investment in an offshore field in Suriname, got the go-ahead on Tuesday.

TotalEnergies previously planned to grow its oil-and-gas production by 2% to 3% a year.

The recent fall in oil prices due to mounting demand concerns has raised doubts that European oil majors can sustain their shareholder-return promises, according to analysts. However, TotalEnergies, alongside Shell and Norway's Equinor, has been highlighted by some as an exception to this.

TotalEnergies, Europe's second-largest integrated oil company by market value, backed its guidance, as it plans to pay out $8 billion in share buybacks in 2024 and continue a rate of $2 billion a quarter next year.

RBC Capital Markets analysts said in a note ahead of Wednesday's update that any confirmation on maintaining distributions in a lower price scenario would be seen as a positive by the market.

TotalEnergies said its guidance is on the assumption of reasonable market conditions, which Jefferies analysts saw as a slight disappointment for investors who were hoping for a full commitment to $8 billion in buybacks next year, the analysts said in a note.

In addition to the production target, it outlined a goal for overall energy output, which includes electricity and bioenergy alongside hydrocarbons, of 4% growth a year through the decade, while at the same time drastically lowering its emissions from its operations, it said.

It said it aims to reduce by 40% emissions under its operational control in 2030 versus 2015 and by 80% on methane in 2030 against 2020.

This would cut the average carbon content on its energy sales by 25% in 2030 versus 2015, it said.

TotalEnergies kept its net investment target of $16 billion to $18 billion a year during 2025-30, and said this would allow it to grow its underlying free cash flow by at least $10 billion by 2030 from this year's result. Last year, it generated $17.82 billion in underlying free cash flow.

Write to Christian Moess Laursen at christian.moess@wsj.com

(END) Dow Jones Newswires

October 02, 2024 10:20 ET (14:20 GMT)

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