Total Q3 Profits Down on Weaker Prices

Profits at Total slumped in the third quarter as a result of lower prices, despite a surge in production.

Production climbed 8.4% y/y arriving at 3.04mn barrels of oil equivalent/day, the French major reported on October 30, noting it was on track to boost full-year output by 9%. The growth largely came on the back of higher production at projects initiated last year.

Total also managed a 55% expansion in LNG output, thanks to increased contributions from Yamal LNG in Russia, Ichthys LNG in Australia and other ventures.

Debt-adjusted cash flow was stable in the three-month period, sliding only 2% y/y to $7.4bn. But adjusted net profits fell 24%, landing at $3.02bn.

 “The group continues to achieve solid results despite a third-quarter environment ... marked by an 18% decrease in the Brent price to $62 per barrel and gas prices that fell by about 55% in Europe and Asia,” CEO Patrick Pouyanne explained.

Adjusted net operating income from Total’s exploration and production activities fell 29% to $1.73bn, while earnings from its integrated gas, renewables and power segment dropped 18% to $574mn, and from marketing and services by 13% to $413mn.

Bucking the trend was Total’s refining and chemicals business, which saw a 1% increase in operating income to $952mn. Downstream cash flow also surged 14%, arriving at $2bn.

“Despite the volatile European refining margins, the downstream is well positioned to generate cash flow closer to $7bn in 2019,” Total said.

The company plans to fast-track its dividend growth and reward shareholders with a third-interim dividend of €0.68/share, 6% more than was distributed in 2018.

Rival BP, which reported its third-quarter results on October 29, also saw profits tumble because of bearish prices and output disruptions.