Spanish oil company Repsol (REP.MC) has announced plans to distribute up to 10 billion euros (£8.6 billion) to its shareholders in dividends and buybacks by 2027 as part of its shift towards renewable energy and biofuels.
This move has propelled its shares upwards.
Despite a significant drop in profits from the peak levels seen in 2022 following the surge in oil and gas prices due to Russia’s invasion of Ukraine, Repsol is following suit with other major oil companies in offering substantial returns to its shareholders.
Repsol, with a market value of 16.7 billion euros as of Wednesday, has committed to buying back shares worth up to 5.4 billion euros and distributing 4.6 billion euros in cash dividends over the next six years.
The company has also increased its dividend payout from the 2023 results by nearly 30%, amounting to 0.90 euros per share.
Following this announcement, its shares saw a rise of 5.1% to 14.38 euros at 08.19 GMT.
Repsol’s strategy involves diversifying from its traditional oil and gas operations into renewables and biofuels while still acknowledging the significance of fossil fuels in the energy mix.
CEO Josu Jon Imaz stated, “We are convinced that this approach, in which decarbonisation is an attractive opportunity to create value, grow and be profitable, is the most appropriate one for us.”
The company plans to invest a net amount ranging between 16 billion and 19 billion euros by 2027, with over 35% allocated to low carbon projects, particularly focusing on biofuels and renewables in the Iberian peninsula and the United States.
Its renewable energy capacity is set to increase more than three-fold to 9 to 10 gigawatts by 2027 from the current 2.8 GW.
Additionally, Repsol intends to prepare its oil exploration and production business for a potential listing in 2026 or 2027.
Despite a decline in adjusted profit for the fourth quarter, which stood at 1.20 billion euros compared to 2.04 billion euros the previous year, the results exceeded average forecasts.
Repsol also plans to cancel 40 million shares by the end of July, worth 547 million euros based on Wednesday’s closing price.