Total, a major energy player, has cut its organic capex by more than $3 billion (20%), reducing 2020 net investments to less than $15 billion.
These savings are mainly in the form of short-cycle flexible capex, which can be arbitrated contractually over a very short time period, said Patrick Pouyanné, Chairman & CEO of Total.
He addressed the group’s employees to mobilise them in the face of the challenges ahead. He recalled the resilience that the group’s teams demonstrated during the 2015-16 oil crisis as well as the two pillars of the group’s strategy which are the organic pre-dividend breakeven of less than $25/b and the low gearing to face this high volatility.
In a context of oil prices on the order of $30 per barrel, he announced an action plan to be implemented immediately. It also includes:
* Organic Capex cuts of more than $3 billion, ie. more than 20%, reducing 2020 net investments to less than $15 billion. These savings are mainly in the form of short-cycle flexible Capex, which can be arbitrated contractually over a very short time period.
* $800 million of savings in 2020 on operating costs compared to 2019, instead of the $300 million previously announced;
* Suspension of the buyback programme – the company announced a $2 billion buyback for 2020 in a $60/b environment; it bought back $550 million in the first two months.
Total produces and markets fuels, natural gas and low-carbon electricity. It has around 100,000 employees and is active in more than 130 countries.-TradeArabia News Service