French oil major Total’s Q1 profits lifted by record production

Total produced 2.703 million barrels of oil equivalent per day in the first quarter, driven by ramp-ups and new acquisitions, up more than 5 percent compared to the same period in 2017. (Reuters)
Updated 26 April 2018
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French oil major Total’s Q1 profits lifted by record production

  • Net adjusted profit came in at $2.9 billion, beating analysts’ forecast of $2.77 billion in the quarter
  • Total expects to exceed its 6 percent production target for 2018

PARIS: Record output and high oil prices helped French oil and gas major Total report a consensus-beating rise in net adjusted profit during the first three months of the year, with Total adding it would surpass its production target for 2018.
Total’s earnings echoed a similarly robust set of results from Royal Dutch Shell which also posted higher Q1 profits on Thursday.
Total produced 2.703 million barrels of oil equivalent per day (boe/d) in the first quarter, driven by ramp-ups and new acquisitions, up more than 5 percent compared to the same period in 2017, and above analysts’ estimates of 2.663 million boe/d.
It said the ramp-up of production from new projects such as Yamal LNG in Russia and Moho Nord in Congo, along with newly acquired assets, including Maersk Oil and Al-Shaheen in Qatar, had enabled it to reach record production during the quarter.
It marked Total’s highest output ever recorded in a quarter, surpassing a previous record of 2.66 million boe/d in 2003.
Net adjusted profit came in at $2.9 billion, beating analysts’ forecast of $2.77 billion in the quarter.
“Oil prices continued to rebound in the first quarter 2018,” said Total’s Chief Executive Officer Patrick Pouyanne in a statement.
“Brent rose to an average of $67 per barrel, supported by strong demand, OPEC-non-OPEC compliance and geopolitical tensions,” he also said.
“Cash flow after organic investments increased to $2.8 billion, up by more than 50 percent from a year ago, thanks to good operational performance and continued spending discipline,” added Pouyanne.
Total said it expected to exceed its 6 percent production target for 2018 thanks to the start-ups and ramp-ups of new projects, such as Kashagan in Kazakhstan, Kaombo in Angola and Ichthys in Australia, later in the year.
It said this would support its target of 5 percent per year on average output growth between 2016 and 2022, even though Total noted that the global environment remained volatile with persistent uncertainty around the evolution of global supply.
Total also said it would continue to exercise discipline on its cost base.
It maintained 2018 investments at $15-$17 billion, with an operating expense target of $5.5 per barrel of oil equivalent. It said cost reduction plans were ongoing, with an objective of over $4 billion in 2018.
Total said it will raise first quarter interim dividend by 3.2 percent, while Scrip shares issued in January for the second 2017 interim dividend were bought back to prevent dilution.
“In addition, the group bought back a further $300 million of shares to return to shareholders part of the benefit realized from higher oil prices,” Pouyanne said.
The company said in February that it planned to buy back up to $5 billion of stock over 2018-2020 to share the benefits of higher oil prices with investors.


France’s Total has officially left Iran: oil minister

Updated 20 August 2018
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France’s Total has officially left Iran: oil minister

  • Total said it would be impossible to remain in Iran unless it received a specific waiver from Washington, which was not granted
  • Total would have been highly vulnerable to US penalties for remaining in Iran
TEHRAN: French energy giant Total has officially quit its multi-billion-dollar gas project in Iran, Oil Minister Bijan Namdar Zanganeh said on Monday, following the reimposition of US sanctions.
“Total has officially left the agreement for the development of phase 11 of South Pars (gas field). It has been more than two months that it announced that it would leave the contract,” he told parliament’s news agency ICANA.
Zanganeh also appeared before parliament to underline the dire state of Iran’s oil and gas facilities, which he said were “worn out” and in need of renovation that Iran could not afford.
The United States said in May that it was abandoning the 2015 nuclear deal and reimposing sanctions on Iran in two phases in August and November.
The second phase will target Iran’s oil industry.
The other parties to the nuclear deal — Britain, France, Germany, China and Russia — have vowed to stay in the accord but their companies risk huge penalties if they keep doing business in Iran.
Total had already said it would be impossible to remain in Iran unless it received a specific waiver from Washington, which was not granted.
Total signed up in July 2017 for the $4.8 billion project to develop the field off Iran’s southern coast, as the lead partner alongside the China National Petroleum Corporation (CNPC) and Iran’s Petropars.
It was due to make an initial $1 billion investment, but the company said in May that it had spent less than €40 million on the project to date, as uncertainty over US actions mounted.
Total would have been highly vulnerable to US penalties for remaining in Iran.
The company has $10 billion of capital employed in its US assets, and US banks are involved in 90 percent of its financing operations, Total said in May.
It remains unclear whether CNPC will take over Total’s stake in the project.
Iran remains wary of relying on Chinese firms after bad experiences in the past. A previous contract for CNPC to develop the field at South Pars was suspended in 2011 after it failed to make progress.
The urgent need for investment to upgrade Iran’s dilapidated energy infrastructure was a key motivator behind its decision to join the 2015 nuclear deal.
Zanganeh appeared in parliament on Monday to answer questions on safety concerns following a number of recent fires at refineries.
“A big part of the oil industry has been worn out and the necessary renovation has not taken place,” he told parliament, according to the official IRNA news agency.
He said there were 10 cases per day of tubes perforating in Iran’s southern facilities, and that some refineries were as much as 80 years old, “whereas the useful life of an industrial unit is 30 years.”
“We have no resources for renovating them,” he added.