Total to curb spending, exploration as profit sinks on oil
By Bloomberg
Total SA will cut spending and curtail exploration this year after the crash in crude prices cut fourth-quarter profit 17 percent.
Net income excluding changes in inventories fell to $2.80 billion from $3.39 billion a year earlier, the Courbevoie, France-based company said today. That beat the $2.55 billion average of 11 analysts’ estimates compiled by Bloomberg. Production slid 2 percent from a year earlier to 2.23 million barrels of oil equivalent a day in the quarter.
“The group is focused for the short-term on generating cash flow and reducing its break-even point,” Chief Executive Officer Patrick Pouyanne said in the statement.
Total is the last of the big oil companies to report earnings after crude prices slumped to around $50 a barrel from more than $100 seven months ago. Producers from Exxon Mobil Corp. to Chevron Corp. posted lower profit. Firings, spending cuts and drilling delays have been announced.
Europe’s second-biggest oil company kept its dividend unchanged from the third quarter at 61 euro cents a share.
Total will cut investment to $23 billion to $24 billion from last year’s $26 billion and slash the budget for exploration by 30 percent to less than $1.9 billion. Exploration spending last year was stable at $2.8 billion for 60 wells compared with 2013.
The company is expecting to raise output this year by 8 percent to 2.32 million barrels a day.
Total has said it would reach a target of $15 billion to $20 billion for asset sales from 2012 to 2014 and plans another $10 billion through 2017 including $5 billion this year. Among planned disposals is the sale of a 20 percent stake in Nigeria’s offshore Usan field.
Total last month reported a fourth-quarter European refining margin of $27.50 a ton compared with $29.90 the previous quarter and $10.10 a year earlier.
Pouyanne has said he will unveil a reorganization of French refining and chemicals installations in the coming months that won’t lead to the shutdown of any sites or job losses.
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