TotalEnergies Slashes Debt, Cuts Costs, and Adjusts Production in Market Response
French energy giant TotalEnergies has announced a series of strategic moves aimed at reassuring investors and adapting to the current market conditions. The company plans to reduce debt, cut costs, and adjust its production targets.
TotalEnergies started by selling a 50% stake in its North American solar business to KKR for $950 million. This deal allows the company to retain operational control while securing significant funds. Meanwhile, Total plans to cut annual capital spending by $1 billion, a move that will see a reduction of $15-$17 billion in net capex guidance by 2030.
The company also aims to increase oil, gas, and electricity production by 4% annually over the next five years. This growth will be driven by a 30% increase in oil and gas output, while the company scales back its renewables ambitions. Despite this shift, TotalEnergies remains committed to its climate goals, aiming to halve Scope 1 and 2 emissions in the oil and gas sector by 2030 compared to 2015 levels.
TotalEnergies' CEO predicts oil prices will settle between $65 and $70 per barrel, a range that could help stabilize the company's financial situation. However, the market has reacted with skepticism, with TotalEnergies' share price falling by 2% following the announcements. The company's long-term debt has also increased by 11.9% year on year, reflecting the challenges posed by the global oil price decline and higher interest rates.
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