French oil and gas company Total posted a 26% drop in 2Q net profit as a result of lower oil and gas prices.
Total has said it plans to sell about $5 billion worth of assets, mostly from its Exploration & Production business.
The company on Thursday posted adjusted net profit of $2.9 billion, a 19% decrease from the adjusted net profit of $3.6 billion in the same period last year.
Total’s net income was $2.8 billion in 2Q 2019, a 26% decrease compared to 2Q 2018 and net income of $3.7 billion.
Hydrocarbon production was 2,957 kboe/d in 2Q 2019, an increase of 9% compared to 2Q 2018 due to start-up and ramp-up of new projects, offset by natural decline and maintenance.
Commenting on the results, Chairman and CEO, Patrick Pouyanné, said: “Markets remained volatile with Brent averaging $69/b in the second quarter, an increase of 9% compared to the previous quarter, but natural gas prices were down 36% in Europe and 26% in Asia. In this context, with a slight increase in production to 2.96 Mboe/d, adjusted net income increased by 5% compared to the previous quarter to 2.9 B$, and the return on equity remained above 11%.”
“Exploration & Production benefited from the higher Brent with a 15% increase in operating cash flow before working capital changes.”
He added: “In signing an agreement with Occidental to acquire Anadarko’s assets in Africa, the Group is preparing for its future and capitalizing on its strengths. In Mozambique, it leverages its expertise in LNG, in Ghana, the deep offshore and, in Algeria, its historic presence. The Group continues to grow in LNG with the signing of a sales contract with the Chinese company Guanghui, the takeover of Toshiba’s LNG portfolio and the start-up of Cameron LNG in the United States.
“This strategy is complemented by the divestment of high-breakeven assets, such as the recent sale of mature assets in the UK North Sea. This active portfolio management policy will continue with the sale of 5 B$ of assets over the 2019-20 period, the majority coming from Exploration & Production.”
Since the start of the third quarter 2019, Brent has traded above $60/b in a context of renewed OPEC+ quotas and uncertainties about the evolution of production in Libya, Venezuela and Iran. According to Total, the environment remains volatile, with uncertainty about hydrocarbon demand growth related to the outlook for global economic growth.
The Group maintains its spending discipline in 2019 with an organic investment target of around $14 billion and an average production cost of $5.5/boe. The organic pre-dividend cash flow breakeven will remain below $30/b.
Production growth should exceed 9% in 2019, thanks to the ramp-up of projects started in 2018 and the start-ups in the first half 2019 of Kaombo Sul in Angola and Culzean in the UK North Sea, as well as the upcoming Johan Sverdrup in Norway and lara 1 in Brazil.
Source: Offshoreenergytoday.com