(Bloomberg) – TotalEnergies SE is increasingly making noise about moving its stock listing to New York, adding to chatter around European giants potentially being attracted by U.S. investors’ greater enthusiasm for oil and gas companies.
The French energy giant is considering the switch “in part because ESG policies in Europe have more weight,” Chief Executive Officer Patrick Pouyanne told a French senate hearing on climate-change goals Monday. “We are losing European shareholders,” while U.S. investors are buying the stock, he said.
The company will “seriously” study such a step and present its findings to the board in September, Pouyanne told analysts last week, expanding on an idea he first disclosed in an interview with Bloomberg Opinion earlier this month.
His comments are sure to cause discomfort around Europe’s major bourses. Speculation is already buzzing about the future of Shell Plc’s presence on the London exchange, while signs this week of investor resistance to Glencore Plc’s proposed coal spinoff might reignite talk of a U.S. listing.
“Europe’s virtuous attitude when it comes to ESG norms, free trade or say on pay may have been naive at times in front of trading partners that put economic interests above all,” said Eric Meyer, head of RBC Capital Markets in France.
A third of European mutual funds exclude oil and gas, compared with a negligible number of their U.S. peers with that view, Deutsche Bank AG analysts wrote in a March note, citing Morningstar Direct data.
The divergence over environmental, social and governance measurements shows up in valuations, with TotalEnergies’ stock priced at eight times earnings expected a year from now, against 12 times for U.S. giant Exxon Mobil Corp.
And considerations over ESG are not the only factor for European resources companies weighing their options, said RBC Capital’s Meyer.
“When there is a notable valuation gap between Wall Street and Europe, temptation is high to follow the money,” he said. “This is particularly true for the oil and gas industry, which is way more part of the fabric of the U.S. economy, more populated and better followed by investors.”
A representative for Euronext Paris, where Total is listed, declined to comment.
Lead image (Credit: Reuters)
