TotalEnergies is to launch a $2bn share buyback and increase interim dividends after higher oil and gas prices delivered its most profitable quarter in 18 years.
Like several rivals, Total has bounced back from losses in 2020 when coronavirus-led lockdowns cut oil demand.
The French oil major said adjusted net income had risen to $6.8bn in the three months to December, a fivefold jump from the same period in 2020, beating average analyst estimates. Cash flow more than doubled to $9.4bn.
The strong quarter pushed adjusted net income for the year to $18.1bn, the highest since 2008.
Total is the latest energy giant to announce bumper profits. European peers BP and Shell reported earnings of $12.8bn and $19.3bn respectively in recent weeks, while US rivals ExxonMobil and Chevron recorded their highest net profits since 2014 when crude last traded above $100 a barrel.
Total said it would keep its quarterly dividend for the October to December period stable at €0.66 per share, but would lift interim dividends 5 per cent this year.
Patrick Pouyanné, chief executive, said the group would examine further share buybacks in the second half of 2022, which could be higher than in the first part of the year depending on oil prices.
Total’s performance was driven by particularly strong returns from its liquefied natural gas trading division, which benefited from surging demand for cargoes of the fuel as natural gas prices in Europe hit record highs in October and December.
“LNG trading inside [the] Integrated Gas [division] was the real source of the strength,” said Oswald Clint, analyst at Bernstein, adding that the business would continue to benefit from high LNG demand in the first quarter of 2022.
Total is increasing its investment in renewable power as it seeks to cut emissions and chart a path through the energy transition.
However, it has also appeared more willing than some rivals to continue to advance new oil projects. This month it approved the development of a $10bn oil project in east Africa that will make landlocked Uganda an oil producer for the first time.
Total said on Thursday it would focus on hydrocarbon investments that were “low cost and low emission”, adding that it was withdrawing from a deepwater project in the Gulf of Mexico because it “had better opportunities to allocate capital”.
The company raised its overall investment budget for 2022 from $14bn to $15bn, after net investments reached $13.3bn in 2021.
At a time when energy companies in the UK have faced calls for a windfall tax on surging profits, Total made a gesture in its home market this week, announcing a discount at the pump for customers living in remote rural areas and lower bills for cash-strapped gas clients.
The group was the largest gas producer in the UK’s North Sea last year, pumping 5.6bn cubic metres, or more than BP, Shell and Eni combined, according to data from Rystad Energy, a consultancy.