Total, Repsol Earnings Down by over a Quarter
French major Total reported adjusted net income July 28 in 2Q 2016 down 30% to $2.2bn, while the same figure for Repsol’s 1H 2016 was 26% lower at €917mn, both year-on-year. As the impact of low oil and gas prices continued to be felt, corresponding net income figures were $2.1bn and €639mn.
Upstream production at Total increased by over 5% in 2Q to 2.42mn barrels of oil equivalent/day (boe/d), helped by a 6% volume gain from start-ups or ramp-ups at the UK Laggan-Tormore gas field, Gladstone LNG in Australia, the Termokarstovoe gas field with Russian partner Novatek, Vega Pleyade gas/condensate field offshore Argentina, and Moho Phase 1b oil field off Angola. But it was negatively impacted (-2%) by the security situation in Nigeria and forest fires in Canada. Insecurity at Yemen LNG means that force majeure there remains in place since April 2015, while Angola LNG’s resumption has been limited. Total acquired a 30% stake in Qatar’s largest oilfield Al Shaheen earlier this month, originally held by Maersk Oil, after it was retendered last year by Qatar Petroleum.
Total’s 2Q oil and liquids production was up 3% at 1.25mn b/d, while gas grew 9% to 6.47bn ft3/d. Its average liquids price was 26% lower at $43/b while gas was down 27% at $3.43/mn Btu. Net adjustments were - $86mn, mainly impairment of assets that will not be developed. Production growth for the year as a whole is forecast at 4%, after reaching 4.5% in 1H 2016. Total’s LNG 2Q sales increased by 15% to 2.76mn metric tons and this month it signed an agreement to supply 0.4mn mt/yr to Japan's Chugoku over 17 years.
Repsol upstream production in 1H 2016 was 60% higher at 705,500 boe/d, still because of the incorporation of Talisman assets in North America and in line with Repsol’s 2016-20 Strategic Plan, thus reversing a 1H 2015 upstream loss of €238mn into a 1H 2016 upstream adjusted gain of €63mn. Production increased year-on-year in Bolivia, Venezuela, Norway, Brazil and Peru.
Downstream earnings at both companies declined, by 4% for Repsol’s 1H 2016 to €917mn and by 25% for Total’s 2Q 2016 to €1.01bn, with refining margins decreasing by 35% for the 3-month period at the French major, but gaining $2.5/b to reach $6.4/b in 1H 2016 at Repsol. The contribution from Repsol’s 30% stake in gas marketer Gas Natural Fenosa declined slightly, in line with its earnings which were released July 27.
Mark Smedley