French super major Total has revealed its operation in Egina projects in Nigeria and other related projects has increase its finance cash inflows which is also the Debt-Adjusted Cash Flow (DACF) by 10 percent to $7.2 billion in q2 2019.
This implies the French major Total still has operating cash flow of $7.2billion after deducting working capital and financial charges. An operating cash flow indicates whether a company can generate sufficient positive cash flow to maintain and grow its operations or it may require external financing for capital expansion.
Total’s Chairman and CEO Patrick Pouyanné said fueled by the ramp up of cash flow accretive projects, like Egina in Nigeria, and other projects increased the firm’s DACF by 10 percent compared to the previous quarter to $7.2bilion.
“Cash flow after organic investments increased to $3.7billion, which was up by 13percent from the previous quarter while Exploration & Production benefited from the higher Brent with a 15pecent increase in operating cash flow before working capital changes,” Pouyanné said.
The start-up and ramp-up of new projects, such as Yamal LNG in Russia, Ichthys in Australia, Kaombo in Angola and Egina in Nigeria, contributed to 13percent production growth. This was offset by a 4percent decrease due to the natural decline of fields and maintenance.
Recall last year, Total started production on Egina field which is located around 1,600 meters of water depths, 150 kilometers off the coast of Nigeria. At plateau, the Egina field will produce 200,000 barrels of oil per day, which represents about 10 per cent of Nigeria’s production, according to a statement on its website.
Also, Total revealed plans to divest $5 billion worth of high-breakeven assets, primarily in the upstream sector, over the next two years.
“This strategy is complemented by the divestment of high-breakeven assets, such as the recent sale of mature assets in the UK North Sea,” Total said.
In the Q2 2019, Total sold mature fields in the UK North Sea to Norway-based private equity investor HitecVision and Oman’s oil and gas company for $635 million.
The company is looking at investing in high-return, long-life assets such as Liquefied Natural Gas(LNG) ventures and upstream projects in Africa. The organic investment target is $14 billion for all of 2019, the company said, in its financial report.
In Africa, Total noted that in signing an agreement with Occidental to acquire Anadarko’s assets, the Group is preparing for its future and capitalizing on its strengths while also noting that the Group will continues to grow in LNG with the signing of a sales contract with the Chinese company Guanghui.
Total expects the market to remain volatile with uncertainty around hydrocarbon demand growth.It said it will maintain its spending discipline in 2019 with an organic investment target of around $14/b and an average production cost of $5.5/boe.
“The group will continue to take advantage of the favorable cost environment to sanction new projects, notably Arctic LNG 2 and Lapa 3,” it added.
Further analysis of Total’s Q2 financials revealed hydrocarbon production averaged 2.9 million barrels of oil-equivalent per day (Mmboe/d), marking 9percent growth compared to last year’s 2.7 Mmboe/d.
In the Downstream sector, Total group adjusted net operating income increased by 4 percent to $1.1billion compared to the previous quarter while also strengthening its presence in biofuels with the start-up of the La Mède bio-refinery.
Oil accounted for 1.4 Mmboe/d in both quarters, while gas accounted for 1.5 Mmboe/d of the total in Q2 2019, and 1.3 Mmboe/d in Q2 2018.
Total also said its dividend will increase by 3.1 percent this year in line with its target of buying back $1.5 billion of shares in 2019 with Brent at $60/b.
