Written by: Forrest Crellin and Benjamin Mallet

French energy group TotalEnergies announced positive exploration results from Namibia on Wednesday at an investor day and said it would increase dividends to shareholders as it raised oil and gas production.

The group said that it expected to distribute about 44% of its cash flow to shareholders in 2023 and set a target of more than 40% beyond 2023. 

Shareholder distributions of 44% of operating cash flow in 2023 and over 40% post-2023 are above some of its European peers including Shell, which just increased its payouts to 30%-40% of operating cash flow.

The company will “continue to invest, continue to grow” its oil and gas operations, TotalEnergies CEO Patrick Pouyanne said.

“This strategy will also offer the company the highest production growth by the end of the decade with a focus on energy market growth.”

It will increase its fossil fuel output by 2% to 3% per year over the next five years.

TotalEnergies shares were up 1.3% at €62.73 on Wednesday.

Calling it “a potential new golden bloc”, it said the positive flow test from an exploration well in Namibia had to be confirmed by another upcoming flow test, and further appraisal wells and prospects would be drilled.

Analysts had said they were particularly keen to hear more about the recent exploration activity offshore Namibia, which has no oil and gas output now but could become one of the top 15 oil producers by 2035.

The group had previously flagged it could increase its payout to shareholders to more than 40% of cash flow from a previous 35%-40% range. It made a profit of $36.2bn in 2022.

TotalEnergies has rewarded investors with quarterly share buybacks of $2bn since the third quarter of last year, and that is expected to continue.

It said on Wednesday that share buybacks should reach $9bn in 2023, adding that it hoped for cash flow to be $10bn higher in 2028 compared with 2021.

TotalEnergies said it would develop a top-tier pipeline of LNG projects, including in Qatar and Mozambique, saying it hoped to start LNG production in Mozambique in 2028.

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