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28/04/2016 06:03 AST
French energy company Total reported a better than expected net profit for the first quarter as high output and strong performance in refining and chemicals helped limit the impact of a prolonged fall in oil prices.
Net adjusted profit fell 37 per cent to US$1.6 billion but beat the $1.2bn expected by analysts polled by Reuters.
Weak oil prices have hurt the industry, with US major Exxon Mobil this week losing its Standard & Poor’s top credit rating for the first time in almost 70 years.
Total said hydrocarbons production rose by 4 per cent to 2.47 million barrels of oil equivalent per day compared with the same quarter last year, a level in the quarter last seen 10 years ago.
Three start-up productions from its Angola LNG, Bolivian Incahuasi gasfield and Kashagan oilfield in Kazakhstan will enable grow production at 4 per cent this year, Total said.
Total said in its downstream segment, although refining margins were down compared with 2015, the business had held up well and remained strong at the beginning of the second quarter.
“Refining & Chemicals improved its results compared to 2015 despite the decrease in refining margins to $35 per tonne, thanks to a record high utilisation rate of 94 percent and favourable petrochemicals margins," the Total chief executive Patrick Pouyanne said.
The company proposed to maintain its dividend unchanged at €0.61 per share, payable through cash and a scrip scheme.
Like its peers hurt by prolonged low prices and market oversupply, Total said it was cutting costs and aimed to spend less than the $19bn it had planned for investments in 2016.
The company said it had the lowest technical cost among oil majors in the upstream division at $23 per barrel of oil equivalent (boe) compared with peers at $26 to $44 boe.
Its upstream division generated a net operating income of $498 million in the first quarter.
Total said it aimed to reduce its cash break-even point to $40 per barrel compared with $45 announced in February.
“Operating costs are decreasing as planned with the objective of achieving $900m in savings during the year," Total said, adding it was selling off $900m of assets including the Fuka gas pipeline network in the North Sea.
The results, which Total dubbed “a solid result in line with our annual objectives", was welcomed on the Paris bourse where its share pride rose 1.95 in late morning trading to €44.59.
“The Upstream portfolio benefited from the lowest technical costs among the majors. The Downstream achieved a solid result in line with our annual objectives," Mr Pouyanne said while analysts at RBC Capital Markets also said the results were “solid".
Total is looking to hike production of hydrocarbons to counter a near 40 per cent fall in oil prices across the opening quarter and a drop of 60 per cent over two years.
The National
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