Total beats Q4 expectations but oil rout to drive deeper cuts

Updated 11 February 2016

Total beats Q4 expectations but oil rout to drive deeper cuts

PARIS/LONDON: France’s Total beat quarterly earnings expectations powered by high production and refining margins but said it plans fresh spending cuts in response to one of the worst market downturns in a decade.

Plunging crude prices have forced energy companies to cut costs, jobs and spending and delay projects, and Total pledged more this year although jobs are not to be cut.
Total said it plans savings of $2.4 billion, rising to more than $3 billion in 2017, and capital spending of around $19 billion, down more than 15 percent from 2015.
Total will also look to sell $4 billion in assets, although Chief Financial Officer Patrick de La Chevardiere said with oil at $30 per barrel selling upstream assets at a reasonable price could be difficult.
“This is not a garage sale,” he said. “If we cannot obtain a reasonable price, we cannot sell.”
Total last year boosted upstream production with the start of nine projects. Oil and gas output in the fourth quarter rose 5.5 percent to 2.352 million barrels of oil equivalent per day.
It also saw high margins in refining and chemicals and a strong performance in its retail and lubricant businesses.
Total fared better than many peers in the quarter as its extensive downstream business benefited from weak oil prices.
That helped curb a fall in net adjusted income in the last three months of 2015. It fell 26 percent to $2.1 billion but beat forecasts as analysts polled by Reuters had expected a profit of $1.93 billion.
“We are limiting some brownfield works. We are limiting the number of contractors working for us, not of our employees,” de La Chevardiere said.
Total forecast production would grow by 4 percent in 2016 and said it planned five major start-ups.
However, stubbornly low oil prices mean the sector is braced for downgrades by debt rating agencies, Patrick de La Chevardiere said.
“The overall trend for the industry is a negative outlook. Probably most of the industry will be downgraded as they already downgraded Shell,” he said, adding that a downgrade would have a very negligible impact on Total’s business.
Total’s shares were down 1.9 percent at 35.80 euros by 1030 GMT while the European oil and gas sector index was 3.0 percent lower.


Huawei in early talks with US firms to license 5G platform: executive

Updated 19 October 2019

Huawei in early talks with US firms to license 5G platform: executive

  • Currently there are no US 5G providers and European rivals Ericsson and Nokia are generally more expensive
  • Huawei has spent billions to develop its 5G technology since 2009

WASHINGTON: Blacklisted Chinese telecoms equipment giant Huawei is in early-stage talks with some US telecoms companies about licensing its 5G network technology to them, a Huawei executive told Reuters on Friday.
Vincent Pang, senior vice president and board director at the company said some firms had expressed interest in both a long-term deal or a one-off transfer, declining to name or quantify the companies.
“There are some companies talking to us, but it would take a long journey to really finalize everything,” Pang explained on a visit to Washington this week. “They have shown interest,” he added, saying conversations are only a couple of weeks old and not at a detailed level yet.
The US government, fearing Huawei equipment could be used to spy on customers, has led a campaign to convince allies to bar it from their 5G networks. Huawei has repeatedly denied the claim.
Currently there are no US 5G providers and European rivals Ericsson and Nokia are generally more expensive.
In May, Huawei, the world’s largest telecoms equipment provider, was placed on a US blacklist over national security concerns, banning it from buying American-made parts without a special license.
Washington also has brought criminal charges against the company, alleging bank fraud, violations of US sanctions against Iran, and theft of trade secrets, which Huawei denies.
Rules that were due out from the Commerce Department earlier this month are expected to effectively ban the company from the US telecoms supply chain.
The idea of a one-off fee in exchange for access to Huawei’s 5G patents, licenses, code and know-how was first floated by CEO and founder Ren Zhengfei in interviews with the New York Times and the Economist last month. But it was not previously clear whether there was any interest from US companies.
In an interview with Reuters last month, a State Department official expressed skepticism of Ren’s offer.
“It’s just not realistic that carriers would take on this equipment and then manage all of the software and hardware themselves,” the person said. “If there are software bugs that are built in to the initial software, there would be no way to necessarily tell that those are there and they could be activated at any point, even if the software code is turned over to the mobile operators,” the official added.
For his part, Pang declined to predict whether any deal might be signed. However, he warned that the research and development investment required by continuously improving the platform after a single-transfer from Huawei would be very costly for the companies.
Huawei has spent billions to develop its 5G technology since 2009.