Total SA posted fourth-quarter earnings that beat analyst estimates as rising oil and gas production, higher gasoline and lubricant sales, and profit from refining helped the French company weather a slump in crude prices. The company deepened cost and investment cuts.
Adjusted net income fell 26 percent from a year earlier to $2.08 billion, the company based outside Paris said in a statement Thursday. That exceeded the average $1.77 billion estimate of nine analysts surveyed by Bloomberg. Total reported a net loss of $1.63 billion after writing down the value of assets in Canada and Nigeria, among other projects.
“Upstream production increased by a record 9.4 percent, driven by the startup of nine projects” in 2015, Chief Executive Officer Patrick Pouyanne said in the statement. “Refining & Chemicals was able to fully benefit from good margins thanks to the high availability of its installations.”
The oil producer joins BP Plc and Royal Dutch Shell Plc in cutting operating costs and investments to protect its dividend as a plunge in prices dents earnings. The company said in September the measures will allow it to fund shareholder payouts in 2017 from the cash it generates pumping, refining and selling oil without the need to take on debt, even with crude at $60 a barrel.
Total kept its quarterly dividend unchanged from the third quarter at 61 euro cents a share and offered investors the option of taking the payout in stock discounted by 10 percent in a bid to conserve cash.
Total reiterated a plan to sell $10 billion of assets in the three years through 2017 including $4 billion this year, having already sold $4 billion last year. The company said it will exceed a target to save $3 billion by 2017 compared with its 2014 cost base.
Total will reduce investment to $19 billion in 2016 from $23 billion last year. In September it planned to invest $20 billion to $21 billion in 2016. For 2017, Total repeated a previous forecast to spend $17 billion to $19 billion.
Oil and gas production, which climbed 9.4 percent to 2.35 million barrels of oil equivalent a day last year, will rise by 4 percent this year with increased output from projects such as the Laggan and Tormore gas and condensate fields in the West of Shetland area, the company said.
Total repeated its target to boost production by 5 percent a year in the 2014 to 2019 period.http://www.bloomberg.com/news/articles/2016-02-11/total-s-quarterly-profit-beats-estimates-on-oil-output-refining
Commenting on the firm’s year-end results, chairman and CEO Patrick Pouyanne said: “Hydrocarbon prices fell sharply in 2015 with Brent decreasing by around 50%. In this context, Total generated adjusted net results of $10.5billion, a decrease of 18% compared to 2014, the best performance among the majors.
“This resilience in a degraded environment demonstrates the effectiveness of the group’s integrated model and the full mobilisation of its teams.”
He said discipline on spending was reinforced in 2015 and the cost reduction allowed the group to save $1.5billion, exceeding the objective of $1.2billion.
Patrick de La Chevardiere, Total’s chief financial officer, said: “For 2015, our initial target for savings was $800million dollars. Then we moved it to $1.2billion, we achieved $1.5billion. There is a lot of fat in our industry.
“We can reduce costs. Contractors can reduce their costs. They can do.”
Total is one of the few companies which has yet to make any redundancies.
De La Chevardiere added: “We wanted to maintain our capacity, our technical skills at a reasonable level.
“We are not hiring any new people at the moment but we would like to maintain our ability to develop new projects in the upstream and in the downstream.
“This is our overall strategy to maintain our capacity.”
When asked if Total had any plans to consolidate like Shell and BG, he said up to 50 potential targets had been presented to him by bankers, but he had rejected them all.
He said: “The worst part of my job is that I meet bankers every day. Every day there is a banker giving me an idea for an acquisition.
“The price of these companies is much higher than what we can justify at let’s say in a $60 per barrel scenario.
He indicated that position would be reviewed if the price was right.
Organic Capex was $23billion a decrease of close to 15% compared to 2014 and upstream production increased by a record 9.4%, driven by the start up of nine projects.
Refining and chemicals was able to fully benefit from good margins due to the high availability of its installations and the marketing and services segment grew strongly with retail networks growing by 6% and lubricants by 3%, according to the firm.
Asset sales of $4billion were signed in line with the $10billion programme planned for 2015-2017.
At the same time, Total was able to prepare its future with a reserve replacement of 107%.
Gearing at year-end decreased to 28% as a result of the group’s financial strategy, designed to maintain a strong balance sheet through the cycle.
Mr Pouyanne said the results confirmed the success of the group’s strategy to further decrease its breakeven and capitalise on its market position.”https://www.energyvoice.com/oilandgas/101394/total-pulls-off-best-financial-performance-of-all-the-majors/