France’s TotalEnergies to buy back shares as profits grow

PARIS, July 29 (Reuters) – France’s TotalEnergies (TTEF.PA) said on Thursday it would use part of its cash flow for share buybacks, as rising oil and gas prices boosted profit and helped offset the hit from selling out of one of its Venezuelan ventures at a loss.

TotalEnergies has been investing heavily in renewable energy and electricity production so it can eventually rely less on oil and gas, mirroring moves by European rivals.

However, the industry has benefited recently from recovering hydrocarbon prices, lifting earnings. Royal Dutch Shell (RDSa.L) also announced bumper profits and a share buyback scheme on Thursday.

TotalEnergies’ adjusted net income progressed further in the April to June period, reaching $3.5 billion thanks to the oil and gas price jump and compared to an adjusted net income of $126 million a year ago at the start of the COVID-19 pandemic.

But the group also disclosed it was impacted by a $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 now become Petrocedeno’s 100% owner as Norway’s Equinor (EQNR.OL) would also 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 group said it expected to generate more than $25 billion in cash flow this year, and would invest in more new projects in areas like renewable power 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 $60 per barrel to share buybacks,” TotalEnergies said in a statement.

It said it would also pay a second interim dividend of 0.66 euros per share for 2021, stable from the first quarter.

Total shares were up 2.5% in early trading.

The company slightly lowered its hydrocarbon production forecast to 2.85 million of 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 2020’s 2.87 Mboe/d.

Reporting by Sarah White, Benjamin Mallet and Sudip Kar-Gupta, Editing by Mark Potter and David Evans

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