French energy and LNG giant Total has decided to reduce operating costs and spending to help mitigate the impact of the coronavirus outbreak and oil price downturn.
With this move, Total is joining a growing number of energy companies, such as Shell, doing similar measures to cope with the current situation.
According to a Total statement on Monday, Patrick Pouyanné, Chairman & CEO, addressed the group’s employees on March 19 to “mobilize 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,” the statement said.
In a context of oil prices on the order of $30 per barrel, Pouyanné announced an action plan to be implemented immediately based on three axes.
The company’s plan includes organic capital spending cuts totaling more than $3 billion to less than $15 billion, targeting $800 million in savings on operating costs from 2019 instead of $300 million that had been announced, and suspending its stock buyback program.
The company announced a $2 billion buyback for 2020 in a 60 $ per barrel environment. It bought back $550 million in the first two months of 2020.