Page 4 - Euroil Week 06 2020

EurOil COMMENTARY EurOil
France’s Total bucks trend
in fourth quarter
Total’s profits were steady despite a sharp fall in gas prices last year
FRANCE
WHAT:
Total’s profits were stable in Q4, while many of its rivals saw steep declines in earnings.
WHY:
The company benefitted from higher gas production and smaller impairment charges.
WHAT NEXT:
Output will continue rising in 2020, albeit at a slower rate. Total says it is on track to complete its $5bn divestment plan by year-end.
EUROPE’S oil and gas majors suffered greatly in the final quarter of last year, on the back of weak oil and even weaker gas prices.
One of the few bright spots was Total’s perfor- mance. The French major kept its net adjusted profit for the three-month period stable at $3.2bn, and even followed through on a pledge to increase dividends. Analysts polled by Reuters had expected the company’s income to slide to $2.7bn.
“This performance is better than that of our rivals in terms of resisting low oil prices,” CEO Patrick Pouyanne told reporters, noting that shareholders would be rewarded with a 6% hike in dividends for 2019 to €0.68 per share.
“Taking into account the strong visibility on cash flow, the group will continue to increase its dividend with the guidance of 5-6% per year,” Total said in an earnings statement.
“Total is not immune to sector headwinds, and has similar exposures to peers,” RBC Cap- ital Markets analyst Biraj Borkhataria said in a research note. “However, the balance sheet is stronger than most peers and earnings remain relatively defensive.”
The company also bought back $1.75bn in
shares last year ahead of schedule, and aims to buy back a further $2bn in 2020.
Bucking the trend
Total achieved debt-adjusted cash flow of $7.4bn in the quarter, up 20% year on year. Full-year cash flow was up 9.2% at $28.5bn.
Adjusted net operating income for October through December stood at $3.88bn, unchanged on the year, but declined 9% in the full year to $14.55bn.
Exploration and production income was up 3% y/y in the fourth quarter, as the impact of a 25% decline in gas prices was more than offset by an 8% increase in hydrocarbon production to 3.113mn barrels of oil equivalent per day (boepd), led by a 11% climb in gas output.
Among the projects either to come online or ramp up last year were the Yamal and Ichthys LNG terminals in Russia and Australia, and oil- fields in Angola, Nigeria, Norway and the UK.
“One of the reasons our results resisted the low oil environment was because of the strong LNG output, which grew 50%,” Pouyanne explained.
Earnings from integrated gas, renewables
P4
w w w . N E W S B A S E . c o m Week 06 13•February•2020