Total logs profit despite COVID-19 effects

Total reported a 96 per cent drop in adjusted profit for the second quarter of 2020 due to lower prices and COVID-19 effects.

Impairments deepen Total's Q2 loss
Courtesy of Total

The company reported an adjusted net income of $126 million, down from $2.9 billion reported in the corresponding quarter last year.

Total noted it will take an $8.1 billion impairment on its assets.

Commenting on the results Total’s CEO Patrick Pouyanne said, “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 with Brent falling sharply to $30/b on average, gas prices dropping to historic lows and refining margins collapsing due to weak demand.”

He added that the OPEC+ production restraint has contributed to the market recovery since June, with an average brent price above $40/b.

The production was curtailed by close to 100,000 boe/d in the second quarter to 2.85 million boe/d. Total anticipates full-year production in the range of 2.9-2.95 million boe/d in 2020.

Total LNG sales jump

Total LNG sales jumped by 22 per cent in the second quarter compared to last year, due to an increase in trading activities.

Total sales reached 10.4 million tons in the second quarter, compared to 8.5 Mt in the corresponding quarter last year.

For the first half, total sales increased by 24 per cent year-on-year for the same reason and thanks to the ramp-up of Yamal LNG and Ichthys plus start-up of the first two Cameron LNG trains in the US.

LNG sales in the first six months reached 20.2 million tons, up from 16.3 Mt in the corresponding period in 2019.

The average LNG sales price fell by 30 per cent in the second quarter of 2020 compared to the previous quarter.

The share of volumes sold at spot prices increased in the second quarter 2020 compared to the first quarter of 2020 due to deferrals of LNG liftings by long-term contract buyers, while the average selling price of long-term LNG contracts LNG terms decreased by only 16 per cent due to the delayed impact of lower oil prices.

Outlook

Total noted the oil prices strengthened since the beginning of June, reaching around $40/b.

The oil environment, however, remains volatile, given the uncertainty around the extent and speed of the global economic recovery post-COVID-19.

Under its 2020 action plan, Total aims to keep net investments below $14 billion ith savings of $1 billion on operating costs compared to 2019.

The company aims to continue to profitably grow in low carbon electricity, particularly in renewables, with close to $2 billion of investments in 2020.

In LNG, Total anticipates significant deferred liftings in the third quarter and expects the decline in oil prices observed in the second quarter to have an impact on long-term LNG contract prices in the second half of the year.

Total further expects its overall production to hit the low point in the third quarter.

The ramp-up of Iara’s second FPSO in Brazil will contribute to production growth in the last part of the year.

In the Downstream, high inventory levels continue to weigh in on refining margins and utilization rates. In Marketing, activity in Europe returned to 90 per cent of its pre-crisis level since June and the company anticipates that it will remain at a comparable level in the coming months.

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