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Total’s first-quarter profit slides on production, refining

TARA PATEL

COURBEVOIE, France (Bloomberg) -- Total SA’s first-quarter profit fell 10% as refining margins and output slumped. Profit excluding changes in inventories dropped to $3.33 bn from $3.7 bn a year earlier, the Courbevoie, France-based company said in a statement. The result compared with the $3.39 bn average of 10 analyst estimates compiled by Bloomberg. Production slid 6% to 2.179 MMboed.

Total declined 0.5% to 51.26 euros by 9:53 a.m. in Paris trading, paring gains for the year to 15%.

The company follows BP Plc and Italy’s Eni SpA in reporting lower first-quarter earnings. As the biggest refiner in western Europe, where it operates eight plants, Total has been hurt by lower crude-processing margins caused by overcapacity. Oil output fell after the loss of concessions in Abu Dhabi.

Since the start of the second quarter, margins have recovered from “very low levels” while crude-processing and petrochemicals are “favorable” in the U.S., CEO Christophe de Margerie said in today’s statement.

Second-quarter refining will be affected by “major turnarounds” at the Leuna and Vlissingen plants, Total said.

Adjusted net operating income for refining and chemicals slid 21% in the first quarter to $346 million on “strong deterioration” of the European environment, the company said. European refinery margins fell to $6.60 per metric ton of crude processed in the first quarter, from $26.90 a year before, Total said this month, citing its European Refining Margin Indicator.

The explorer will pay a dividend of 61 euro cents a share.

It is counting on new projects to increase its oil production to 2.6 MMbpd in 2015 and to about 3 million barrels two years later. Total has said output will be unchanged in 2014 as it ramps up projects to make up for a loss of 140,000 bpd from a concession in Abu Dhabi.

Total blamed the first-quarter output drop partly on security issues in Libya and Nigeria.

Production hurdles this year also include a leak at Kazakhstan’s Kashagan project, held 16.8% by the French company. The field, which was halted after producing its first oil in September, will probably remain idled beyond this year as 180 km (112 mi) of pipelines are replaced, operator North Caspian Operating Co. said April 28.

Output from Angola LNG, 13.6% owned by Total, has been curbed since June and was halted this month because of technical issues.

Total has vowed to explore for new oil and gas deposits more aggressively, while cutting European refining and petrochemicals businesses 20% from 2012 to 2017.

De Margerie is selling assets to help pay for development of so-called mega-projects. Total has targeted $15 bn to $20 bn of asset sales from 2012 to 2014, including stakes in Nigeria’s offshore Usan field, Congolese operations and an Angolan oil deposit. Asset sales could reach $25 bn, de Margerie said in February, without giving a timeframe.

Asset sales were $1.5 bn in the latest quarter, according to today’s statement.

04/30/2014

 

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