Bloomberg News

Total Plans Production Increase, Asset Sales as Profits Rise

February 13, 2012

(Updates with shares in fifth paragraph.)

Feb. 10 (Bloomberg) -- Total SA, Europe’s third-largest oil producer, reported an increase in profit on higher crude prices and said it would raise output and sell assets this year.

Profit, excluding changes in inventories and the value of a stake in Sanofi-Aventis SA, climbed 7 percent to 2.72 billion euros ($3.6 billion) in the fourth quarter from 2.56 billion euros a year earlier, the Paris-based company said today in a statement. That was in line with the average estimate of 15 analysts surveyed by Bloomberg.

Chief Executive Officer Christophe de Margerie has focused on exploration and dealmaking to bolster reserves and production. Total has said it expects output to increase this year after a drop in 2011 and has pledged to take more risks in looking for oil and gas.

“Good set of results,” said Bernard Hodee, head of oil sector research at Kepler Capital Markets. Total is “entering a period of sustained growth from 2012 onwards.”

The shares fell 1.2 percent to 40.65 euros as of 9:50 a.m. in Paris.

Output fell 1.3 percent over the year. Production in the latest quarter was unchanged at 2.384 million barrels of oil equivalent a day, according to the statement. Brent crude prices climbed to $109.02 a barrel on average in the fourth quarter, 25 percent higher than a year earlier.

‘Actively Manage’

The French company continues to “actively manage its asset portfolio with in particular a program of non-strategic asset sales,” according to the statement. Production will rise in 2012 from projects in Angola, Nigeria and Thailand.

In the fourth quarter, the French driller increased its stake in OAO Novatek, the second-largest Russian gas company, to 14.1 percent. Last month, it acquired a $2.32 billion holding in Ohio’s Utica shale region from Chesapeake Energy Corp. and EnerVest Ltd.

“We have a strong desire to develop a bolder company,” de Margerie said at a press conference.

Total wants to become a world leader in liquefied natural gas, de Margerie said today.

Chief Financial Officer Patrick de la Chevardiere said in October he is “very confident” output growth will be more than 3 percent this year with the startup by July of the Usan project in Nigeria and Angola LNG. The French company expects output to rise an average of 2.5 percent a year from 2010 to 2015.

Total said investment will be $20 billion this year from about $22 billion in 2011 with a 20 percent increase in funds set aside for “ambitious” exploration.

Total is pushing harder to make big discoveries by drilling more frontier exploration wells. So far the strategy has paid off with successes in Azerbaijan, Bolivia, French Guiana and Norway, according to the company.

Uganda, Kenya

The producer has reached an agreement to become a partner with Tullow Oil Plc and Cnooc Ltd. in Uganda and is drilling wells in Kenya.

Total this year has sanctioned development of the second phase of the Ofon field offshore Nigeria, the offshore Hild field in Norway and the $34 billion Ichthys liquefied natural gas venture in Australia. It’s also spending $500 million to explore three offshore blocks with Anadarko Petroleum Corp. in Ivory Coast.

The company is also in talks with Kuwait Petroleum Corp. to build a refinery in China. Total is developing a crude- processing plant in Saudi Arabia as part of a plan to reduce exposure to European refining and move into faster-growing markets.

--With assistance from Brian Swint in London. Editors: Will Kennedy, Amanda Jordan

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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