Total profit tumbles due to lower prices

  • Business & Finance

French oil major Total recorded a decrease in its 3Q 2019 profit affected by lower oil and gas prices despite an increase in production. 

Total's Culzean field in the UK North Sea
Total’s Culzean field in the UK North Sea; Source: Total

Total’s adjusted net profit was $3.02 billion in the third quarter of 2019, a 24% decrease when compared to the same period last year and the adjusted net profit of $3.96 billion.

The company’s net profit totaled $2.8 billion in 3Q 2019, a 29% decrease compared to 3Q 2018.

The company achieved hydrocarbon production of 3,040 kboe/d in 3Q19, an increase of 8.4% compared to 3Q 2018 and production of 2,804 kboe/d.

This was due to a 12% increase related to the start-up and ramp-up of new projects, including Yamal LNG in Russia, Ichthys in  Australia, Kaombo in Angola and Egina in Nigeria, and Culzean in the United Kingdom, offset by 3% due to the natural decline of the fields, and 1% due to maintenance, notably in Norway.

During the period, the oil price was $62/b, an 18% decrease when compared to $75.2/b in the corresponding period of 2018.

Total Chairman and CEO, Patrick Pouyanne, said: “The group continues to achieve solid results despite a third quarter environment compared to a year ago that was marked by an 18% decrease in the Brent price to $62/b and gas prices that fell by about 55% in Europe and Asia.”

Since the start of the fourth quarter 2019, Brent has traded around 60 $/b on average. According to Total, the environment remains volatile, with uncertainty about hydrocarbon demand growth related to the outlook for global economic growth and in a context of geopolitical instability.

The company said it would continue its cost reduction program with more than 0.5 B$ of additional savings this year to reach cumulative savings of more than 4.7 B$ by the end of 2019. It will continue its 5 B$ asset sale program over the 2019-20 period (1.6 B$ was completed at the end of September) and 2019 net investments should be less than 18 B$.

Production growth should reach 9% in 2019, thanks to ramp-ups on projects started in 2018, start-ups since the beginning of the year, including Kaombo Sul in Angola and Culzean in the UK North Sea, Johan Sverdrup in Norway, and the upcoming lara 1 in Brazil.

The board of directors decided on September 23, 2019, to accelerate dividend growth for the coming years with guidance of increasing the dividend by 5-6% per year.

Offshore Energy Today Staff

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