• Tuesday, March 05, 2024
businessday logo

BusinessDay

Total’s quarterly profit drops as refining margins narrow

FRANCE TOTAL UTS ENERGY

Total SA Europe’s third-largest oil producer, reported a 19 percent decline in fourth-quarter profit as refining margins in the region narrowed and output dropped.

The company raised its dividendProfit excluding changes in inventories dropped to 2.47 billion euros ($3.4 billion) from 3.04 billion euros a year earlier, the Courbevoie, France-based company said Wednesday in a statement.

“The significant deterioration of European refining margins was partially offset by a more favorable environment for petrochemicals,” Chief Executive Officer Christophe de Margerie said in the statement.

The company said capital spending this year would drop to $26 billion this as oil and gas developments were completed. A strong balance sheet allows Total to increase returns to shareholders, the company said.

Total raised the quarterly dividend to 61 cents a share from 59 cents.

“The intensive investment phase that we embarked on to transform our production profile by 2017 reached a peak of $28 billion in 2013,” de Margerie said.

Total kept targets through 2017, planning to start new projects to increase production to 2.6 million barrels a day in 2015 and about 3 million barrels a day two years later. It also has promised to explore more aggressively for new oil and gas deposits, while reducing its European refining and petrochemicals business by 20 percent from 2012 to 2017.

The company earned $10.10 for every metric ton of crude it refined into fuels in Europe, compared with $33.90 a year earlier. Oil and gas production shrank 0.5 percent to 2.28 million barrels a day in the quarter, Total said.

Brent crude prices averaged $109.35 a barrel in the fourth quarter, 0.7 percent lower than a year earlier.

Total has a 16.8 percent stake in Kazakhstan’s Kashagan project, the world’s biggest crude discovery in 40 years, which produced its first oil in September before being shut because of gas leaks. The French producer has also grappled with security problems in Yemen and is seeking oil-production rights in Abu Dhabi after a concession expired.

As Total develops so-called mega-projects, de Margerie is selling assets to help pay for them. The company has targeted $15 billion to $20 billion in asset sales from 2012 to 2014, including stakes in Nigeria’s offshore Usan field, Congolese operations and an Angolan oil deposit.