Total profit falls despite output growth

French oil and gas company Total recorded a 4 percent decrease in first quarter profit while its production grew by 9 percent.

Total on Friday posted an adjusted net profit of $2.8 billion for the first quarter of this year, a 4% decrease when compared to $2.9 billion in the same period last year.

Commenting on the results, Chairman and CEO Patrick Pouyanne said: “Markets remained volatile with Brent averaging $63/b in the first quarter, down 6% from last year, while natural gas prices were down 11% in Europe and 30% in Asia. Adjusted net income was $2.8 billion this quarter, down 4%, and return on equity held steady at 12% this quarter.

“With strong growth in production that reached 2.95 Mboe/d, up 9% year-on-year, the Group’s cash flow (DACF) increased by more than 15% year-on-year to $6.5 billion (B$), driven by the ramp-up in cash-accretive projects, including Egina in Nigeria, lchthys in Australia and Kaombo in Angola.”

Total’s production was also positively impacted by increase in portfolio effect linked in particular to the integration of Maersk Oil’s assets. It was negatively affected by the natural decline of the fields and to planned maintenance, notably in Qatar.

According to Total, since the start of the second quarter 2019, Brent has traded at around $70/b in a context of compliance with OPEC quotas, disrupted production in Venezuela and uncertainty in Libya. The environment remains volatile, however, with uncertainty around the evolution of non-OPEC supply and the impact of global economic growth on demand.

The company maintains its spending discipline in 2019 with a net investment target of 15-16 B$, cost savings of 4.7 B$ and an average production cost of $5.5/boe.

Production growth should exceed 9% in 2019, thanks to the ramp-up of projects started in 2018 and the startups this year of Kaombo Sul in Angola, lara 1 in Brazil, Culzean in the UK and Johan Sverdrup in Norway. To take advantage of the favorable cost environment, the Group is working to launch profitable projects, including Mero 2 in Brazil, Tilenga & Kingfisher in Uganda and Arctic LNG 2 in Russia.