Total output hits record high as prices buoy profits

New projects and recent acquisitions powered an increase in output of more than 5% to 2.703 million barrels of oil equivalent per day (boe/d), topping the 2.663 million boe/d expected by analysts.

It raised output from new projects such as Yamal LNG in Russia and Moho Nord in Congo, while adding assets, including Maersk Oil and Al Shaheen in Qatar.

Net adjusted profit of US$2.9 billion topped the US$2.77 billion expected by analysts in a poll.

Higher oil prices are helping energy companies too, with Royal Dutch Shell also posted higher profits on 26 April.

“Oil prices continued to rebound in the first quarter 2018,” Chief Executive Officer Patrick Pouyanne said in a statement.

“Brent rose to an average of US$67 per barrel, supported by strong demand, OPEC-non-OPEC compliance and geopolitical tensions,” he said.

“Cash flow after organic investments increased to US$2.8 billion, up by more than 50 percent from a year ago, thanks to good operational performance and continued spending discipline,” Pouyanne noted.

Total said it expected to exceed its 6% production target for 2018 helped by start-ups and ramp-ups of new projects, such as Kashagan in Kazakhstan, Kaombo in Angola and Ichthys in Australia, later in the year.

Total aims for 5% annual output growth through 2022, though it noted persistent uncertainty about the evolution of global supply.

“The oil price is up and they have captured that through the earnings and the cash flow. It tells you they are holding the line on costs and all of that leverage is falling to the bottom line,” Bernstein analyst Clint Oswald said.

“They are pointing to higher-than-expected volumes this year so operations must be going well,” he said.

Total said it would continue to exercise discipline on its cost base. It maintained 2018 investments at US$15 – US$17 billion, with an operating expense target of US$5.5 per barrel of oil equivalent. It said cost reduction plans were ongoing, with an objective of more than US$4 billion in 2018.

The company said it would raise its first-quarter dividend by 3.2%, while scrip shares issued in January for the second 2017 interim dividend were bought back to prevent dilution.

“The group bought back a further US$300 million of shares to return to shareholders as part of the benefit realised from higher oil prices,” Pouyanne said.

The company said in February that it planned to buy back up to US$5 billion of stock over 2018 – 2020 to share the benefits of higher oil prices with investors.

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