Total's Start-ups Cushion Low Price Impact

Total reported October 28 a profit of $1.95bn for Q3, up 81% year on year. Adjusted for replacement costs and excluding special items, its profit was down 25% at $2.1bn. The decline is not as steep as some of its peers, thanks to the cushion provided by more production from the French major's field start-ups and re-starts.

Production was up 4% at 2.443mn barrels of oil equivalent/day – inclusive of 6.3bn ft³/d gas – in 3Q 2016; this was after a 7% increase from start-ups and ramp-ups, offset by a 2% fall arising from the Nigeria security situation, continued shutdown of Yemen LNG and Canadian wildfires.

CEO Patrick Pouyanne said that Total increased cash flow by 13% compared with 2Q 2016 despite a 27% reduction in European refining margins and flat Brent prices: “Following the start-up of Laggan-Tormore [UK], Vega Pleyade [offshore Argentina] and [the restart of] Angola LNG in the first half of the year, Incahuasi as put on stream in August and Kashagan in October. The five major projects of the year are thus all in production.” 

Total chairman and CEO Patrick Pouyanne (Photo credit: Total)

Gross capacities (at 100%) are 370,000 b/d at the giant Kazakh oil field Kashagan, which restarted in October after a few years' outage; and 50,000 boe/d at the Bolivian gasfield Incahuasi.

Among other 3Q events, Total made an oil discovery off Bulgaria opening up a new play; acquired the CI-605 licence offshore Cote d’Ivoire; and successfully appraised the deep offshore Owowo field in Nigeria. During 3Q, Total also exercised its pre-emption rights over some 65,000 boe/d of Barnett shale gas assets in the US. It is also a shareholder in Australia's Gladstone LNG, train 2 of which had its first full quarter in 3Q 2016.

Total’s average realised Brent oil price in 3Q 2016 was $45/b, down 9% on the year, while its average gas price was 23% lower at $3.45/mm Btu.

Its refinery throughput was 6% lower at 1.95mn b/d, while its European refining margin plunged by 53% to $3.49/b. But margins had firmed to $5.48/b in October due to tight markets, it noted.

Mark Smedley