In what’s becoming a familiar development these days, the price of crude oil again floated higher on Monday. That followed President Trump’s flat rejection, over the weekend, of an Iranian proposal to reopen the Strait of Hormuz, the choke point through which a vast amount of the world’s oil is shipped. On Sunday, however, Trump seemed to backtrack, stating in an interview with Axios that American negotiators were expected to engage in talks with the Iranian side.
All else equal, higher prices mean higher revenue and profitability for oil companies, particularly the integrated majors like TotalEnergies (TTE -0.66%). On Sunday, the France-based company wasted no time deciding how to deploy a chunk of those potential gains. Investors weren’t necessarily pleased with this news, however.
Image source: Getty Images.
A major move from an integrated major
In an update rather grandly titled “strategy and outlook presentation 2026,” TotalEnergies said it was adding $1 billion to its fourth-quarter share repurchase program. This brings the total amount to a whopping $2.5 billion (per quarter, remember).
And that was just the first of several (hopefully) share price-boosting measures. The European energy giant added that stock buybacks would be $2 billion to $2.5 billion in the first quarter of next year. The company’s board of directors also set a dividend policy under which its payout would increase by more than 5% each year from now until 2030. It also confirmed its aim to deliver shareholder returns of at least 40% of free cash flow (FCF).
If that sounds expensive, that’s because it is. TotalEnergies is a confident company, though, not least because it has quite a solid idea of how it’ll fund all this. It’s estimating that oil and gas production will grow by 3% annually from 2026 to 2030; overall growth rises to 4% when factoring in the company’s electricity generation business.
That rate is expected to decline afterward, although not significantly. As a global operator, TotalEnergies has plays in numerous parts of the globe, and singled out projects in Africa (Namibia, Nigeria, Libya, and Mozambique) and the Asia-Pacific region (Malaysia and Papua New Guinea) as sources of mid- to long-term growth. That, plus its proven reserves life index, which tops 12 years, should result in a 2% to 3% annual improvement in production from 2030 to 2035.
Are the goals realistic?
Even for an integrated major operating in boom times, those projections and commitments are ambitious. There seems to be a desire on both sides of the current war to end the conflict and reopen the Strait, and if that’s done effectively, oil prices should start drifting down toward pre-war levels.
TotalEnergies’ new shareholder remuneration plans might be more of an effort to set the company apart from rival European majors. BP (BP +0.63%) suspended its share repurchase program in February, while Shell (SHEL +0.72%) cut its quarterly initiative by $500 million to $3 billion before suspending it (although it was eventually resumed). And by promising to keep the dividend growing at that healthy 5% rate, it can boost its current 4.4% dividend yield to top BP’s slightly higher 4.5%. TotalEnergies’ distribution, by the way, already yields significantly more than U.S.-based majors Chevron (CVX +0.94%), (with 3.4%), and ExxonMobil (XOM +1.20%) (2.5%).
Today’s Change
(-0.66%) $-0.60
Current Price
$90.34
Key Data Points
Market Cap
Day’s Range
$90.13 – $91.69
52wk Range
$57.48 – $94.17
Volume
2.1M
Avg Vol
1.6M
Gross Margin
14.24%
Dividend Yield
4.36%
On Monday, TotalEnergies’ share price closed down slightly, while those of the three aforementioned peers cautiously inched higher. That indicates general investor bullishness about big oil, but also a degree of skepticism about TotalEnergies’ vision for its future. Given how cyclical the energy business is (particularly with crude at the moment), the company might be binding itself to promises that are hard to keep if notable downturns occur — as they inevitably do. I’d be cautious with this stock now.
