TotalEnergies Signals Potential Shift to Smaller Stock Buybacks Post-2025 as Energy Transition Accelerates

TotalEnergies, one of the world's leading energy companies, is signaling a significant shift in its capital allocation strategy, with CEO Patrick Pouyanné indicating a potential move towards smaller stock buyback programs from 2026 onwards. This forward-looking adjustment is deeply intertwined with the company's ambitious energy transition plans and the evolving dynamics of the global energy landscape.

The strategic pivot comes as TotalEnergies ramps up its investments in new energy projects, particularly in renewables and low-carbon businesses, to meet its long-term decarbonization goals.

Pouyanné emphasized the delicate balance the company must strike between delivering attractive shareholder returns and funding the substantial capital expenditure required for a "just and orderly" transition away from fossil fuels. The current robust buyback program, estimated at around $9 billion annually, is under review as the company prepares for increased spending in sustainable energy solutions.

A key factor influencing this strategic re-evaluation is the lingering effect of the European energy levy, often referred to as a "windfall tax." This levy has significantly impacted the capital available for investment and has prompted energy majors to reconsider their financial strategies in the region.

Pouyanné explicitly mentioned that the persistence of such taxes could accelerate the shift towards smaller buybacks, as the company needs to ensure sufficient capital is retained for its transformative projects.

While the prospect of reduced buybacks might seem concerning to some investors, the company's messaging frames it as a necessary step to secure future growth and enhance long-term value.

TotalEnergies aims to maintain a competitive dividend policy while strategically reallocating funds to areas that promise sustainable returns in a greener economy. This proactive approach reflects a commitment to adapting to global climate imperatives while managing financial discipline.

In essence, TotalEnergies is preparing for a future where its investment profile is heavily weighted towards new energies.

The anticipated adjustment in buyback strategy from 2026 underscores a long-term vision: to transform into a broad energy company capable of thriving in a decarbonized world, ensuring both energy security and environmental responsibility. This move is a testament to the ongoing profound changes within the global energy sector, driven by both market forces and regulatory pressures.