TotalEnergies SE posted a surge in second-quarter profits, joining others in its sector that have benefited from higher energy prices, although its shares fell as its stock buyback plans disappointed some analysts and investors.

Adjusted net income nearly trebled from a year ago to $9.8 billion, as the company cashed in on a rise in energy prices driven by Russia's invasion of Ukraine.

TotalEnergies’ shares fell by more than 3%—in contrast to rival Shell Plc whose shares rose after it reported a leap in profits.

Analysts and investors said TotalEnergies’ plans for more share buybacks of up to $2 billion in the third quarter looked conservative.

“TotalEnergies leaves the buyback unchanged at $2 billion in Q3 despite improving cash flow generation. We expected a 50% increase quarter-on-quarter to $3 billion, which we saw as fairly consensual,” Jefferies analyst Giacomo Romeo said.

ClairInvest fund manager Ion-Marc Valahu, who sold his TotalEnergies’ shares in June after a rally in the stock, said the second quarter figures were not enough to encourage him to buy back into the stock.

“Blowout numbers on all segments as expected given the energy situation. I have sold my position in June given the huge run-up in the stock over the last year. We will come back to the stocks after a period of consolidation,” Valahu said.

Risk of Supertax?

A rapid recovery in demand, following the end of pandemic lockdowns, and the surge in energy prices as energy exporter Russia's invasion of Ukraine disrupted markets, have boosted profits for many of the world's top oil companies.

Shell on July 28 also reported a second-quarter profit of $11.5 billion, smashing a previous record hit just three months earlier, lifted by a tripling of refining profits and strong gas trading.

Exxon Mobil Corp. earlier this month had also said it could post its strongest quarter yet, with profit potentially surpassing $16 billion, almost twice its first-quarter earnings.

However, Valahu and other fund managers said that meant there was still a risk that the French government may eventually impose a windfall tax on TotalEnergies. Britain, home to Shell and BP Plc, imposed a 25% windfall tax in May.

“The market may also be worried by the risk that the government may impose later this year a tax on companies with especially large profits,” Apicil Asset Management fund manager Gregoire Laverne, who holds TotalEnergies’ shares, said.

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