Total profit beats estimates on rising output

By Francois de Beaupuy on 2/7/2020

PARIS (Bloomberg) -- Total SA’s fourth-quarter profit beat even the highest estimate as record production offset the impact of slumping natural gas prices and strikes at its French oil refineries.

Project startups and ramp-ups from Russia to Australia fueled an 8% increase in hydrocarbon output and a jump in sales of liquefied natural gas. That helped to counter the effect of mild winter temperatures and slowing economic growth on demand for gas and chemicals, keeping the French giant’s plans for dividend increases and share buybacks on track.

That’s in contrast to many of Total’s peers that reported lower profit for the period. Last week, Royal Dutch Shell Plc reduced the pace of its share buybacks due to weak macroeconomic conditions, while Exxon Mobil Corp. and Chevron Corp. failed to impress. BP Plc was the only other oil major to offer investors a positive surprise by making a slight increase to its dividend.

“Total is not immune to sector headwinds, and has similar exposures to peers,” RBC Capital Markets analyst Biraj Borkhataria said in a note. “However the balance sheet is stronger than most peers and earnings remain relatively defensive.”

Total is so far rising to the challenge faced by the oil industry, juggling the competing priorities of investors’ desire for hefty payouts, the large investments needed to sustain production, and pressure from governments and consumers to fight pollution and transition to cleaner energy.

Total Chief Executive Officer Patrick Pouyanne reiterated the company’s commitment to conventional energy projects, saying it is working toward final investment decisions on projects in Uganda, the U.S. Gulf of Mexico, Brazil, Myanmar and Mexico.

Adjusted net income totaled $3.17 billion in the fourth quarter, little changed from a year earlier, the company based near Paris said in a statement on Thursday. Oil and gas production was 3.1 MMboed, up from 2.88 MMboed a year earlier. It expects output to rise by 2% to 4% this year.

Shares of the company rose 2.4% to 46.54 euros as of 9:07 a.m. in Paris.

Total boosted its fourth-quarter dividend to 68 euro cents per share, in line with a policy outlined in September to lift the payout by 5% to 6% a year. It repurchased $1.75 billion of shares in 2019 and intends to buy back another $2 billion this year, assuming oil prices average about $60 a barrel.

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