Total Profit Slips, As LNG Sales Dip
Total said April 26 that its first-quarter net income fell 7% year on year to $2.6bn. Production rose by more than 5%, despite the expiration of its lucrative Mahakam gas permit in Indonesia. But the loss of Mahakam, which feeds gas into Indonesia's giant Bontang LNG export complex, lowered Total LNG sales volume – despite the late 2017 start of exports from Russia's Yamal LNG. The company sold 16% less LNG year on year, or a total 2.5mn mt.
Adjusted net income, adjusted for special items, increased by 13% year on year to $2.9bn.
The volume increase in the quarter included ramp-ups of new projects like Yamal LNG, as well as the contribution of new assets such as Maersk Oil and the al Shaheen oilfield in Qatar; also the Timimoun gas field in Algeria started up. It also cited recent upstream concessions added in Abu Dhabi and Libya, and permits offshore Lebanon and Guyana, plus its agreement to buy French energy retailer Direct Energie.
Earnings from both Upstream, and its Gas/Renewables/Power divisions increased strongly, whereas a one-third fall in refining margins led to a similar fall in refining/chemical earnings.
Equity production grew 5% year on year in 1Q to 2.703mn barrels of oil equivalent/day. Liquids output rose 14% to 1.48mn b/d while gas declined by 3% to 6.66bn ft3/d. Total attributed a 1% increase in overall production to improved security in Nigeria and Libya. Total’s average sales gas price rose 15% to $4.73/mn Btu, while its liquids price firmed by 23% to $60.30/b, a multiple of its average break-even price.
Gas production grew in Europe/central Asia (up 9% to 3.157bn ft3/d) and in sub-Saharan Africa (up 20% to 0.857bn ft3/d) but declined sharply in Asia, thanks to Mahakam, by 45% to 0.731bn ft3/d.
Group investments during 1Q were up 83% year on year to $6.72bn, while divestments were 11% lower at $2.59bn. The latter included $2.169bn of asset sales, including its stake in the “higher cost” Martin Linge gas and oil development offshore Norway, an interest in Fort Hills in Canada, and the marketing arm of refiner/distributor TotalErg in Italy.
Looking forward, Total said its production growth in 2018 should exceed its target of 6%, thus supporting its 2016-22 target of 5%/yr average growth. (Banner photo is courtesy of Total)