TotalEnergies to hike dividend and oil production, de-risk gas to 2030
PARIS, Oct 2 (Reuters) - French oil major TotalEnergies told investors on Wednesday it would focus on low-cost upstream production and signing oil-linked gas contracts to operate profitably and reward shareholders through 2030 as prices fall.
CEO Patrick Pouyanne announced a 5% increase in dividends per share for 2025 and $2 billion in buybacks per quarter, saying the company could borrow to sustain that rate if needed thanks to its low debt-to-equity ratio and high credit rating.
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"Our dividend breakeven is under $50 per barrel ... and we can sustain buybacks under $70 per barrel," Pouyanne said.
Brent crude dropped below $70 per barrel last month from above $90 in April, prompting some analysts to cut share price forecasts on oil and gas producers and worry the firms may have to slow dividend payouts and share buybacks.
TotalEnergies said it was targeting upstream production costs of $5 per barrel this year, and has approved several major projects in Angola, Brazil and Suriname that also would deliver oil and gas at low cost in coming years.
Pouyanne added the company would be able to navigate the global glut of liquefied natural gas set to hit beginning in 2027.
"It is clear we will face a supply wave of LNG by 2027-2030," Pouyanne said. "It will be 50 million tons of new supply per year, which is 10% of the market more each year."
Stephane Michel, the company's president of gas, renewables and power, admitted that "we could be in a situation where we have more supply than sales", as Total's portfolio of American LNG bought at the U.S. Henry Hub benchmark price grows.
Total was looking to balance that risk by selling LNG long-term on contracts linked to oil prices.
"We are working on closing the difference between supply and sales — for 2030 we will on one side buy Henry Hub, and only sell Brent," Michel said.
The company hiked its oil and gas production target to 3% annual growth to 2030 from 2-3% growth to 2028.
Its total energy production is now forecast to increase 4% annually, with $10 billion more in free cash flow by 2030.
TotalEnergies' 24 gigawatt renewable portfolio - larger than those of BP, Shell, Equinor and Eni combined - is currently set to jump 45% to 35 GW by next year, with a goal of 70% of the company's electricity in 2030 coming from renewable sources.
The company said it expected to return 45% of its cash flow to shareholders this year.
(Reporting by America Hernandez in Paris; Editing by Kirsten Donovan, Mark Potter and Jan Harvey)