Total SA Chief Executive Officer Patrick Pouyanne, who replaced Christophe de Margerie following a fatal plane crash, will stick to his predecessor’s effort to cut costs, sell assets and boost output after profit declined.
Total said today adjusted net income dropped slightly in the third quarter compared with the previous year as crude prices fell, while production declined 8 percent.
Pouyanne, who was named to succeed de Margerie Oct. 22, plans to “hit the road” to visit contacts in the oil industry and in several resource-rich countries, Chief Financial Officer Patrick de La Chevardiere said. He also plans to meet investors in Europe and the U.S. before the end of the year, de La Chevardiere said.
“There is continuity of our strategy,” de La Chevardiere said on a conference call. This includes “strict discipline” on operating and investment costs due to the drop in oil prices.
The crude producer and explorer, France’s biggest company by sales, kept its dividend unchanged from the second quarter, at 61 euro cents a share.
The earnings were published little more than a week after de Margerie’s jet crashed on a Moscow runway on Oct. 20, killing the 63-year-old CEO. Pouyanne, 51, a refining chief at Total who had long been touted as a potential successor for de Margerie, was named CEO at an Oct. 22 board meeting in Paris.
In its September strategy update, Total had unveiled plans to cut costs and spending and sell more assets. The company also lowered a production target to 2.3 million barrels of oil equivalent a day next year.
Confirmed Goal
“We are confirming our production goal for 2015,” de La Chevardiere said on the call. Year-end output should reach about 2.2 million barrels of oil equivalent a day following the ramping up of the offshore Clov project in Angola to 160,000 barrels a day, he said.
Third-quarter net income excluding changes in inventories fell to $3.56 billion from $3.63 billion a year earlier, the Courbevoie, France-based company said today. That beat a $3.26 billion average of 13 analysts’ estimates compiled by Bloomberg. Production slid 8 percent from a year earlier to 2.122 million barrels of oil equivalent a day, while up from a record low last quarter.
“This looks like a solid set of results for Total,” Jefferies Group LLC analysts including Jason Gammel said in a note.
Total rose as much as 2.2 percent and was trading 50 cents higher at 46 euros at 10 a.m. in Paris.
Brent Slump
Average Brent crude prices in the quarter slumped 5.6 percent from a year earlier to $103.46 a barrel and traded as low as $94.24. This month, the international crude benchmark extended its decline and touched $82.60 a barrel on Oct. 16, the lowest in almost four years.
For Total, a $10 drop in the price per barrel would translate this year into a $1.5 billion reduction in annual profit, de La Chevardiere said.
A target of $15 billion to $20 billion for asset sales from 2012 to 2014 “will be fully achieved,” Total said in the earnings statement. The company plans another $10 billion through 2017.
Asset Sales
Among planned disposals is the sale of a 20 percent stake in Nigeria’s offshore Usan field. The French explorer is expecting to sign confidentiality agreements with about a dozen prospective buyers and will then begin a “standard” bidding process, de La Chevardiere said.
Total earlier this month reported a third-quarter European refining margin of $29.90 a ton compared with $10.90 a ton in the previous quarter and $10.60 a ton a year earlier. The measure was the highest since the end of 2012.
“We had a very good performance of refining and chemicals,” de La Chevardiere said. “All plants were producing as refining margins were good.”
As the biggest refiner in Europe, where it operates eight plants, Total has been hurt over the past year by lower crude-processing margins caused by overcapacity and a slump in fuel demand.
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