Total Profits Hold Firm Despite Lower Prices
Total's adjusted net income for Q4 2019 was $3.17bn, unchanged from the year prior period, as higher output offset the lower crude and gas prices and refining margins; but at $11.83bn, the year as a whole was down 13% on 2018. Benchmark UK and north Asian spot gas prices were both down 42% on Q4 2018 and Henry Hub was down 35%. But Total's average sale price of $3.76/mn Btu was down a quarter: some of its gas was sold on crude indexation.
Cash flow was $7.4bn, up more than 20% compared with Q4 2018, and adjusted net income was stable at $3.2bn, it said February 6.
Hydrocarbon production was 3.113mn barrels of oil equivalent (boe/d), of which 1.714mn boe/d was oil; the total was up 8% compared with last year, as new projects came on line or ramped up, including Yamal LNG in Russia, Egina in Nigeria, Ichthys in Australia, Kaombo in Angola, Culzean in the UK and Johan Sverdrup in Norway. Natural field decline took off 3%. Upstream contributed $2.031bn to net adjusted income, up 3% on Q4 2018. Gas production was down 2%, at 4.624bn ft³/day.
LNG sales increased by 35% year-on-year thanks to the ramp-up of Yamal LNG and Ichthys plus the start-up of the first Cameron LNG train in the US. In 2019, LNG sales increased by 57% compared to 2018 for the same reasons and also thanks to the acquisition of the Engie portfolio of LNG contracts in the third quarter 2018. Integrated gas and power contributed $794mn to net adjusted operating income, up 17%.
Total said the environment remained volatile, given the uncertainty about hydrocarbon demand related to the outlook for global economic growth and a context of geopolitical instability. But it said it has "strong capacity to generate cash flow and, in a $60/b environment, expects to increase it by about $1bn/year starting from 2019.
Total said it would continue to implement its strategy for profitable growth on the integrated gas and low-carbon electricity chains. LNG sales will benefit notably in 2020 from the start-ups of Yamal LNG train 4 – which had been expected last year – as well as Cameron LNG train 3, reaching than 30mn metric tons/yr.