Total suffers first quarterly loss since 2015

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Updated 31 July 2020

Total suffers first quarterly loss since 2015

  • Total’s share price edged 0.2 percent higher in early trading in Paris, while the CAC 40 index shed 0.5 percent

PARIS: Total suffered its first net loss in five years in the second quarter due to the plunge in crude prices triggered by the coronavirus, the French oil company said on Thursday.
The $8.4 billion loss included $8.1 in writedowns in asset values due to the drop in oil prices, in particular for its oil sands investments in Canada where production costs are high.
But its adjusted net income — a measure that excludes changes in the value of its stocks of oil and exceptional items — remained positive. At $130 million, it was down 96 percent from the same period last year, however.
“During the second quarter, the Group faced exceptional circumstances: the COVID-19 health crisis with its impact on the global economy and the oil market crisis,” said the company’s chief executive Patrick Pouyanne in a statement.
The lockdowns imposed in many countries to slow the spread of the coronavirus triggered a massive drop in demand for oil, causing prices to plunge.
While crude prices have recovered somewhat as economic activity resumes, oil companies are reporting massive losses as lower prices make it difficult to operate profitably and accounting rules force them to take huge charges to the value of their assets.

FASTFACT

Total forecasts an average daily output between 2.9 and 2.95 million barrels per day.

Total’s output slid 4 percent to 2.85 million barrels per day of oil equivalent. For 2020, it now forecasts an average daily output between 2.9 and 2.95 million barrels per day, a slight reduction from earlier guidance.
The company’s board of directors decided to maintain an interim quarterly dividend of $0.66 per share, reaffirmed its sustainability at $40 per barrel oil and said that the breakeven point on its energy assets is below $25 per barrel.
The main international oil contract, Brent, was trading at $43.47 on Thursday.
Given the volatile situation Total said that it aims to cut operating costs by $1 billion and keep investments below $14 billion this year. However it reaffirmed ambitions to diversify, including by investing in a giant offshore wind project off Britain and acquiring more residential gas and electricity customers in Spain.
Total’s share price edged 0.2 percent higher in early trading in Paris, while the CAC 40 index shed 0.5 percent.


Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

Updated 09 August 2020

Aramco profits fall in tough quarter, but sees partial recovery from COVID-19 impact

  • Aramco see’s “partial recovery” from pandemic impact
  • Aramco president says company remains resilient

DUBAI: Saudi Aramco, the world’s biggest oil company, reported a net income of $6.57bn for the second quarter of 2020, the period which witnessed the most volatile oil market conditions for many decades.

The result, announced to the Tadawul stock exchange in Riyadh where the shares are listed, compared with income of $24.7 bn last year.

Amin Nasser, president and chief executive, said: “Despite COVID-19 bringing the world to a standstill, Aramco kept going. We have proven our financial resilience and operational reliability, setting a record in our business operations, while at the same time taking steps to ensure the health and safety of our people.”

Aramco’s dividend - a big attraction for the investors who bought into the world’s biggest initial public offering last year - will remain as pledged, Nasser added. Cash flow in the quarter amounted to $6.106 bn.

““Strong headwinds from reduced demand and lower oil prices are reflected in our second quarter results. Yet we delivered solid earnings because of our low production costs, unique scale, agile workforce, and unrivalled financial and operational strength. This helped us deliver on our plan to maintain a second quarter dividend of $18.75 billion to be paid in the third quarter,” he said.

Aramco said the loss was “mainly reflecting the impact of lower crude oil prices and declining refining and chemicals margins, partly offset by a decrease in production royalties resulting from lower crude oil prices and a decrease in the royalty rate from 20 per cent to 15 per cent, lower income taxes and zakat as a result of lower earnings, and higher other income related to sales for gas products.”

Sales and revenue in the period - which saw oil prices collapse on “Black Monday” in April - fell 57 per cent to $32.861 bn from the comparable period last year. 

Nasser said he was cautiously optimistic that the world economy was slowly recovering from the depths of the pandemic lockdowns.

“We are seeing a partial recovery in the energy market as countries around the world take steps to ease restrictions and reboot their economies. Meanwhile, we continue to place people’s safety first and have adapted to the new normal, implementing wide-ranging precautions to limit the spread of COVID-19 wherever we operate.

“We are determined to emerge from the pandemic stronger and will continue making progress on our long-term strategic journey, through ongoing investments in our business – which has one of the lowest upstream carbon footprints in the world,” he added.

Aramco expects capital expenditure to be at the lower end of the $25bn to $30bn range it has already indicated for this year.