10-31-13 3:43 AM EDT | Email Article

By Geraldine Amiel

 

PARIS--Oil and gas major Total SA (TOT, FP.FR) Thursday said its hydrocarbon output in the fourth quarter should be higher than a year earlier, after it reported a 19% drop in adjusted net profit for the third quarter resulting from higher exploration costs, seasonal maintenance spending and the steep deterioration of refining activities.

"Our output in the fourth quarter should be higher," the company's chief financial officer Patrick de la Chevardiere said during a conference call. He noted he was mildly confident about Total's performance in the last part of this year and the start of the next, as crude oil prices were holding around $100-$110 per barrel, offsetting the negative impact of refining activities.

In the third quarter, Total posted the second consecutive quarterly production increase due to a string of ramp-ups and the restart of several wells, notably in the North Sea.

The company has engaged in a major race with peers to find additional oil and gas reserves to meet globally growing demand. It has boosted its investment for exploration and production since 2010 to an average of $18 billion annually.

Total is currently undertaking a disposal plan of $15 billion to $20 billion worth of assets, ending in 2014, to help support its cash flow and foster its investment plans, which are to decrease after this year. So far, it has sold a bit more than $10 billion of assets, with two more planned disposals in a near future, in Nigeria and Congo, which should bring the total amount of divestitures to $15 billion.

The scheme is expected to help the French major boost its hydrocarbon output potential to 3 million barrels of oil equivalent per day in 2017 from currently around 2.3 million.

The firm's oil and gas output over the quarter increased 2% to around 2.30 million barrels of oil equivalent per day, or mboe/d, thanks to the restart of the Elgin-Franklin platform in the North Sea and the ramp-up of several projects, allowing the group to offset the dent made by the bunkering, or the illegal tapping into pipelines, in Nigeria, as well as the labor actions in Libya which stopped oil exports for some time.

In the third quarter, Total's adjusted net earnings amounted to 2.72 billion euros ($3.6 billion), down from EUR3.36 billion a year earlier. The results were below expectations as analysts polled by Dow Jones Newswires expected an adjusted net profit of EUR2.77 billion. The figure, which is closely watched by investors, is adjusted to exclude an after-tax inventory effect, the impact of changes in fair value and special items such as transactions which are infrequent and unusual. Net profit for the quarter dropped 10% to EUR2.76 billion from EUR3.08 billion.

The oil major also announced a stable interim dividend for the quarter of EUR0.59 per share, as "some of the planned disposals haven't materialized yet," Mr. de la Chevardiere said, noting though that "we have some (financial) room to increase the dividend in the future."

 

Write to Geraldine Amiel at geraldine.amiel@wsj.com

 

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(END) Dow Jones Newswires

October 31, 2013 03:43 ET (07:43 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.
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