Low oil and gas prices affect TotalEnergies' profits, so the company has cut back on buybacks but maintained its growth plans.
TotalEnergies said on Wednesday that it would halve its share buybacks in the first quarter, but was committed to increasing its oil and gas reserve. Low oil and 'gas prices have negated the soaring profit of the fourth-quarter from refining fuels and proceeds from stake sales for renewable assets.
The French oil giant's adjusted fourth-quarter net income dropped to $3.8 billion from $4.4 billion one year ago. According to a LSEG consensus, analysts had predicted $3.9 billion.
The adjusted net income for the entire year fell 15% to $15.6 Billion, despite an increase of 4% in hydrocarbon production per day to 2,53 million barrels.
To counter the impact of falling oil prices, Total sold more volume. Brent crude will average $68 per barrel by 2025, down nearly $8 from the previous year. Total's first-quarter share buyback will be reduced to $750 millions, following the example of BP and Equinor, who have both completely stopped their buybacks.
"We agreed to begin?at 750 million dollars, the lower tranche in the range of buybacks we guided in Septembre. We can then adjust upwards if the market conditions are favorable," CEO Patrick Pouyanne said to?journalists.
TotalEnergies shares rose 1.95% to 1405 GMT.
The company had been buying back shares at a rate of $2 billion per quarter since mid-2022 when Brent crude oil prices reached a high above $100 per barrel. In the fourth quarter, it repurchased $1.5billion in shares.
Exxon Shell and their rivals have not changed the buyback program.
Bet Bigger on Oil and Gas
Arnaud le Foll, deputy CFO at Total, said that the current oil and natural gas reserves of Total were sufficient to maintain production levels in 2025 for 12 years. This figure is expected to increase through new projects, particularly in Libya and Namibia.
Le Foll stated that "Namibia" is the new golden region for Total.
He said that a final investment decision on the Venus discovery is expected to be made in the middle of 2026. The FID for the larger Mopane find will come in the year 2028. Additional prospects are being explored.
Total increased oil and gas production in the fourth-quarter to compensate for a drop of 15% in Brent crude and an 18% fall in liquefied natural gas prices.
The quarter saw a 5% increase in production, but the income fell by 21,6% to $1.8 Billion.
The earnings for the Refining and Chemicals business increased by?215% to $1 billion. TotalEnergies previously stated that the margins in European refineries increased by?231% during this period. The French company has now taken over the Zeeland Refinery in the Netherlands, which is co-owned by Lukoil. Pouyanne, a journalist, said that this has allowed Total to temporarily boost production of refined fuels while the sanctioned Russian firm seeks to sell their 45% stake. Pouyanne said that the EU's ban on Russian gas imports until 2027 will allow Europe to absorb a growing global LNG supply.
(source: Reuters)
