Coronavirus: Total suspends its share buyback program

  •   24/03/2020 - 11h56
  •   DEHOUI Lionel

Total (SA) is a French company with a strong reputation in the oil and gas markets. On the world market, Total ranks 5th among the six largest companies in the sector. In the international ranking, only companies such as: ConocoPhillips, Chevron, BP, Shell and ExxonMobil could do better. It is therefore logical that it should be ranked among the six "super majors". The activities of the Total group cover the sectors of low-carbon energy, power generation, the entire production chain, and the extraction of crude oil and natural gas to create energy. It should be pointed out here that the commercial distribution and refining activities are also carried out by the various departments of the company. Total is by far the leading French company in terms of turnover.

Trade Total shares!
76.4% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.
Coronavirus: Total suspends its share buyback program
Image copyright: Jean Balczesak - Flickr

Total's announcement today

This Monday, the company Total, whose activities extend over more than 130 countries with more than 100,000 employees (25% of whom are in France), made an announcement that is nothing other than the consequence of the current French health situation. It concerns the suspension of its previously announced share buyback program. As a reminder, it should be remembered that the French company was founded in 1924 by businessman Ernest Mercier.

In its early days, it was called "Compagnie française des pétroles" and its head office has been located in the "La Défense" district since the 1980s. The announcement of the suspension of its buyback programme comes in order to allow it to adapt to the context of the plunge in crude oil prices through an immediate action plan. Total states that it will have to consider the return of the barrel price (around $30, half of its value on January 1).

 

Maintaining its investments

In its statement, the Total group made it clear that it will implement an organic Capex savings plan of more than 2.8 billion euros, i.e. a net amount of 3 billion dollars. This measure will be taken in order to ensure that its net investments remain below €14 billion for the current financial year 2020. The 15 billion dollar mark will therefore not be exceeded for the groupâ€?s net investments.

In addition, it is imperative that the group make savings in order to maintain its popularity. For this reason, Total is announcing economic revenues reaching the $800 million mark in 2020. This is, in principle, based on operating costs compared to fiscal year 2019 instead of the $300 million (€280 million) previously announced.

 

Why an immediate adjustment plan?

The previously announced Total Group share buyback program was based on a $60 a barrel price. The amount published for the program was $2 billion or €1.9 billion, which is far from being the case at present. Total has indicated that it has already repurchased $550 million worth of securities during the first 2 months of the year. This corresponds to 512 million euros.