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French energy group Total lifts dividend outlook

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By Reuters
French energy group Total lifts dividend outlook
FILE PHOTO: A petrol station of French oil giant Total is pictured in Bordeaux, France, September 17, 2019. Picture taken September 17, 2019. REUTERS/Regis Duvignau   -   Copyright  REGIS DUVIGNAU(Reuters)

By Sudip Kar-Gupta

PARIS (Reuters) – French heavyweight oil and gas group Total <TOTF.PA> raised its dividend outlook on Tuesday after issuing a positive forecast for its prospects through 2025, echoing moves by rival energy companies to boost shareholder returns.

Total said it would increase its dividend by 5-6% per year, up from a previous target of 3%, which would result in a third interim dividend of 0.68 euros ($0.75) per share for 2019.

The group said its confidence in its general strategy meant it was now forecasting an increase in its cash flow of more than $5 billion (4 billion pounds) by 2025 in a $60 per barrel oil price environment, or an average increase of about $1 billion per year.

In June, rival Royal Dutch Shell <RDSa.L> also outlined plans to boost shareholder returns after 2020.

Total’s shares initially rose by around 1% but then slipped back to fall 0.6%, tracking a retreat in oil prices which have risen since an attack on Saudi oil facilities earlier this month.

Nevertheless, Clairinvest fund manager Ion-Marc Valahu said Total’s update was a positive one for investors.

“Most oil majors have not raised their capital expenditures in recent years but are still generating lots of cash, and the stock prices of most oil companies have been lagging behind the moves in the price of oil,” said Valahu, who owns Total shares.

Oil prices have been comparatively elevated since the Sept. 14 attack on Saudi Arabia’s largest crude processing facility halved output in the world’s top oil exporter, with benchmark Brent crude <LCOc1> currently near $64 a barrel.

In July, Total said it would sell about $5 billion of assets, mostly from its exploration and production business as it sharpens its focus on low-breakeven projects that can weather any weakness in oil prices.

The company said it would maintain its “strong discipline on investment and cost” in the period through 2025.

(Reporting by Sudip Kar-Gupta; Editing by Kim Coghill, Sherry Jacob-Phillips and Jan Harvey)