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.


Oil prices climb as Saudi capacity cushions impact

Updated 20 September 2019

Oil prices climb as Saudi capacity cushions impact

  • Kingdom pledges return to capacity by end of November as Kuwait strengthens security for oil sector

LONDON: Oil prices gained on Thursday, supported by supply risks as the market assesses the fallout from last weekend’s drone attacks on Saudi oil
infrastructure.

Brent crude futures gained $1.78 to $63.80 a barrel, while US West Texas Intermediate crude was up $1.28 at $58.40 a barrel.

The attacks knocked out around half of Saudi Arabia’s crude production and severely limited the country’s spare capacity, a cushion for oil markets in any unplanned outage.

“Global available spare capacity is extremely low at present following the weekend attacks, leaving little room for additional outages, which tends to be price supportive,” UBS oil analyst Giovanni Staunovo said.

Earlier this week Saudi Arabia set out a timeline for a resumption of full operations, saying it had restored supplies to customers at levels prior to the attacks by drawing from its oil inventories.

HIGHLIGHTS

• US to impose more sanctions on Iran.

• Cushing stocks at lowest since October, 2018.

• Global excess capacity at low level.

The Kingdom said it would restore its lost production by the end of this month, and bring its output capacity back to 12 million barrels per day by the end of November.

“These plans suggest Saudi Arabia will have no spare capacity for at least the next two and a half months,” consultancy Energy Aspects said.

Saudi Arabia, the world’s leading oil exporter, has said the crippling attack on its oil sites was “unquestionably sponsored” by Iran.

US President Donald Trump said there were many options short of war with Iran and added that he had ordered the US Treasury to “substantially increase sanctions” on Tehran. Iran has denied involvement in the strikes.

Iran warned President Trump against being dragged into all-out war in the Middle East.

US Secretary of State Mike Pompeo has described the weekend strike as an act of war and has been discussing possible retaliation with Saudi Arabia and other Gulf allies.

Kuwait’s oil sector has raised its security to the highest level as a precaution, a Kuwaiti official said.

Separately, weekly data from the Energy Information Administration on US oil inventories provided a mixed snapshot.

Stockpiles of crude in the US the world’s largest oil producer, rose by 1.1 million barrels last week against analysts’ expectations for a drop of 2.5 million barrels.

However, stocks at Cushing, Oklahoma, the delivery point for benchmark futures, fell to their lowest since October 2018.