(S&P Global Platts) Total’s oil and gas production dropped 11% on the year in the third quarter, to 2.72 million b/d of oil equivalent and it forecast full-year output below 2.9 million boe/d on the back of OPEC+ cuts, as its third-quarter results showed financial improvement Oct. 30.
In a results statement, Total said its Q3 production had been affected by OPEC+ cuts in Angola, Iraq, Kazakhstan, Nigeria and the UAE as well as voluntary reductions in Canada and disruption in Libya, noting in particular the “reinforcement” of cuts by Nigeria.
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The company’s liquids production was down 16% on the year at 1.44 million b/d, although it noted OPEC+ cuts were offset by increases from the UK’s Culzean gas field, Norway’s Johan Sverdrup, Brazil’s Iara and Italy’s Tempa Rossa.
In the context of strong OPEC+ compliance and lower North American production, Total “anticipates full-year 2020 production below 2.9 million boe/d,” compared with 3.01 million boe/d in 2019, it said.
However, CEO Patrick Pouyanne noted a “more favorable” business environment, and the company highlighted its July sale of the UK’s Lindsey refinery, as well as its conversion of the Grandpuits refinery to a “zero-oil” producer of biofuels and bioplastics.
“The oil market environment remains uncertain and will depend notably on the speed of the global demand recovery, affected by the COVID-19 pandemic,” Total said.
Europe’s largest refiner added that margins in the region had recovered in the fourth quarter, averaging above $10/mt, but “remain fragile given the low demand for jet fuel that weighs on the valuation of all distillates.”
It added that it anticipated a positive impact from improved fourth quarter LNG prices, expected to be over $4/MMBtu, as a result of the oil price recovery over the previous two quarters.
Total reported an adjusted profit of $850 million, down 72% on the year, and reduced its debt gearing to 22% from the end of the previous quarter, making it again the least indebted of the European majors by far.
It reported an overall profit of $202 million, impacted by relatively modest impairments of $293 million, compared with an overall loss of $8.4 billion in Q2, impacted by over $8 billion of impairments.
Noting the company’s low cost of upstream production, of just $5/boe, Total said the upstream division “carries” its corporate performance.
“The group is once again demonstrating its resilience thanks to its integrated model, by generating debt-adjusted cash flow of more than $4 billion [and] reducing gearing to 22% given its investment and cost discipline,” Pouyanne said.
