Total Becomes Latest Big Oil Firm to Reward Investors -- Update
By Sarah Kent
LONDON -- Big dividends and share buybacks are making a comeback in the oil industry amid a fragile market recovery.
French oil giant Total SA on Thursday said it would raise its dividend by 10% over the next three years and buy back up to $5 billion-worth of shares in the latest sign of growing confidence in the industry.
Chevron Corp., Statoil ASA, Anadarko Petroleum Corp. and ConocoPhillips have all announced higher investor payouts this year. Those moves followed British oil giant BP PLC's announcement of a new share-buyback program in October. Buying back existing stock generally makes the remaining shares more valuable.
The companies are rewarding shareholders as profits return to the industry after a three-year slump in oil prices.
The crash forced some companies, including Total, to offer investors the option to take their dividend in shares as a way to preserve cash. Other firms, like Conoco and Italian oil titan Eni SpA cut the payouts to weather the downturn.
In the past year, the oil market has clawed back some of its losses. Brent crude, the international benchmark, closed at $65.61 on Wednesday, its lowest level since Dec. 22 but still up over 140% since the market bottomed out in the winter of 2016.
Higher oil prices -- coupled with the industry's painful, yearslong efforts to cut costs -- are now starting to pay off for investors.
Total's announcement Thursday came as the company reported a 86% rise in net profit for the fourth-quarter compared with the prior year. Full-year earnings rose 39%, boosted by rising oil prices and growing production.
The strong financial results infused Total with "the confidence to be bold and give shareholders a real prize today," said analysts at Bernstein. "2018 will be the year of higher than expected cash returns."
Shares in Total rose nearly 2% in early European trading.
The company capped off a set of mixed results for the world's biggest oil companies. Rivals Exxon Mobil Corp. and Chevron both missed profit expectations, sending their share prices down. Royal Dutch Shell PLC's cash flow disappointed, while BP suffered almost $2.7 billion in one-time charges that marred an otherwise healthy set of profits.
Still, Chevron said it would boost its quarterly dividend by 4% and signaled that more cash returns could be on the way if oil prices remain around current levels. Shell has outlined plans to start a $25 billion share-buyback program by the end of the decade.
On Wednesday, Statoil, the Norwegian state oil company, said it would increase its fourth-quarter dividend by 4.5%.
American oil and gas producers Anadarko Petroleum Corp. and ConocoPhillips also announced increases to their quarterly shareholder payouts and raised the size of their share buyback programs. Both companies reduced their dividend during the worst of the oil price crash.
Write to Sarah Kent at email@example.com
(END) Dow Jones Newswires
February 08, 2018 05:23 ET (10:23 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.