The world’s fifth largest oil group, whose share price has dropped 32 percent in six months amid investor doubts over strategy, said exploration efforts were set to pay off, boosting its portfolio and profitability over the next seven years.

Total told its annual investor day it now expected average production from 2010-15 to rise 3 percent per year, instead of 2 percent as it had earlier predicted. The target is based on an average oil price of $80 a barrel.

If oil prices averaged $100 per barrel, production would rise by 2.5 percent annually, the company said in a presentation released on its website.

Total’s shares were 2.4 percent higher at 31.60 euros by 1033 GMT, adding 1.8 billion euros to its market value. The Stoxx Europe 600 European energy sector index was up 1.1 percent.

Last year the company’s production averaged 2.38 million barrels of oil equivalent per day, leaving it at the end of the year with proven reserves of 10.7 billion barrels of oil, according to the website.

But Total’s repeated missing of its output targets in recent years has hit its shares, with the price down by a third since March, which compares with a 13 percent fall for shares in Royal Dutch Shell and a 19 percent drop in Exxon Mobil.

Other large oil companies have also found it hard to raise production as investment is massive, projects take several years and gaining access to resources is tougher. But Total has been punished by the market more harshly than its rivals as it was seen as the major with the industry’s best growth prospects.

Total has made over $10 billion of acquisitions in the past 18 months, expanding its geographical footprint beyond its historical heartland in Africa to Australia, Canada and Russia.

These buys brought in about 3.4 billion barrels of oil equivalent per day (boepd), Total said.  

Total has also sharply increased investments, from $16 billion in 2010 to a projected $21 billion in 2011 and around $23 billion over the 2012-2014 period, the group said.

On Monday, Total confirmed it would increase its exploration investment spend to $2.1 billion in 2011 from $1.8 billion last year as it seeks to find new reserves — a move which some analysts say is slowly starting to bear fruit. 

In the past two weeks, Total announced a major gas discovery in Azerbaijan’s Absheron block in the Caspian Sea, and a promising oil find in the Zaedyus prospect offshore from French Guiana.

The start of around 25 projects from 2011 to 2015 are set to bring in an extra 600,000 boepd by 2015, while 10 other projects in 2016-2018 should add an extra 500,000 boepd.

This will help the French group more than offset the natural decline in production at its mature oil and gas fields.

Substantially higher spending has raised worries of limited cash flow and dividend hikes in years to come, but on Monday Total pledged to keep a “strict financial discipline” in its investment decisions.

“Ample cash flow (will) finance investment growth and return to shareholders,” Total said in presentation slides. Total also sought to address concern voiced by analysts about the group’s refining and chemicals business. 

Steps to reduce refining activities in Europe, selective investments in higher-growth markets, and a merger of refining and chemicals activities should lift the new division’s profitability by 5 percent in 2015 against the current level, Total said.