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Leading European oil players Shell and Total have a combined buyback program of $8 billion in Q3 after pulling in impressive profits.
Shell and Total Energies have extended their buyback schemes following record-extending profits in the second quarter. According to reports, the two multinational energy and petroleum corporations are buying back a combined $8 billion in shares in the third quarter.
Shell and Total’s buyback extension primarily results from the over 140% rise in crude oil futures over the last 12 months. Two standout causative factors for this development are rapid recovery in demand post-Covid, and energy price surge from Russia’s war in Ukraine. Amid this period, the product averaged around $114 per barrel in the quarter.
Insight into Shell & Total Buyback Programs
Due to a quarterly profit of $11.5 billion, Shell revealed its intentions to buy back $6 billion of its shares by late October. However, the British oil and gas giant did not raise its dividend from its current level of 25 cents a share. This is despite Shell’s projected buyback scheme exceeding its guidance for shareholder returns of up to 30% of cash from operations. Also, Shell’s current 25-cents-a-share rate represents a 4% annual increase following a 60% cut during the covid pandemic.
Meanwhile, Total saw a 9% increase in quarterly profit to $9.8 billion. As a result, the French multinational now projects another $2 billion worth of buybacks in the third quarter. Furthermore, this comes following the buyback of an initial $3 billion worth of shares in the first half of the year.
Total had already announced a 5% yearly increase for its Q1 2022 dividend of 0.69 euros per share. On Thursday, the French oil giant stated that it would retain that level for its second interim dividend of 2022. Commenting on this development, RBC analyst Biraj Borkhataria said:
″(Total) has opted to maintain its buyback flat into (the third quarter), which may be disappointing to some investors given the current macro environment.”
Following the results announcements of both leading oil corporations, Total’s stock dipped 2.1%, while Shell’s shares were up 1.6%. Both had risen 35% and 49%, respectively, in the past twelve months amid a broader upswing in energy prices. This period saw average Q2 2022 all-time highs for prices of benchmark European natural gas and global liquefied natural gas.
Other News from the Global Energy Sector
The announced Shell and Total buyback extensions came in the same week Equinor made a major announcement. The Norwegian petroleum refining giant revealed that it increased its dividend and share buyback guidance for this year by 30%. As a result of this, the total amount of Equinor’s 2022 buyback scheme now sits at a lofty $13 billion.
Amid these developments from the leading oil and gas players, Spanish multinational Repsol also announced an enhanced buyback scheme. According to the Madrid-based energy and petrochemical company, it also raked in soaring profits which doubled in the first half.
In other news, American oil giants Exxon and Chevron and their Italian counterpart Eni will announce results on Friday.