Record production, high refining margins curb Total profit fall
By Bate Felix and Karolin Schaps
PARIS/LONDON (Reuters) – Record upstream production and high refining margins in Europe helped Total report better-than-expected fourth-quarter net profit but the company said it planned to cut costs and reduce spending further due to prolonged low oil prices.
Total, like peers, has seen revenue and profit shrink as oil prices have fallen by about 70 percent since mid-2014 because of global oversupply and slow economic growth. The downturn has forced firms to cut costs, reduce capital spending, delay projects and cut jobs.
Total said on Thursday that it did not plan to cut jobs.
It said a record increase in upstream production driven by the start of nine projects during the year, high margins from its refining and chemicals sector, and a strong performance in retail and lubricant businesses boosted its results.
Total said net adjusted income in the last three months of 2015 fell 26 percent to $2.1 billion. Hydrocarbon output grew 5.5 percent to 2.3 million barrels of oil equivalent per day year-on-year.
Analysts polled by Reuters had on average expected Total to deliver net adjusted profit of $1.931 billion and production of 2.371 million barrels of oil equivalent per day.
The French oil and gas giant said, however, that it planned to pursue capital spending reduction to around $19 billion in 2016, a decrease of more than 15 percent compared with 2015. It is also targeting asset sales of about $4 billion in 2016.
However, Total Chief Financial Officer Patrick de La Chevardiere said that with oil at around $30 per barrel it was difficult to sell an upstream asset at a reasonable price.
“This is not a garage sale,” he said. “If we cannot obtain a reasonable price, we cannot sell.”
(Editing by Alister Doyle and James Regan)