Total Plans Production Increase, Asset Sales as Profits Rise

Total SA (FP), Europe’s third-largest oil producer, posted a 7 percent increase in profit on higher crude prices and pledged to raise output and sell assets this year.

Fourth-quarter profit, excluding changes in inventories and the value of a stake in Sanofi-Aventis SA, rose to 2.72 billion euros ($3.6 billion) from 2.56 billion euros a year earlier, the Paris-based company said today in a statement. That was in line with the average estimate of 15 analysts surveyed by Bloomberg.

“We have a strong desire to develop a bolder company,” Chief Executive Officer Christophe de Margerie told a press conference today. Total has said it expects output to increase this year after a decline in 2011 and has pledged to take more risks in looking for oil and gas.

“Good set of results,” said Bertrand Hodee, head of oil research at Kepler Capital Markets in Paris. Total is “entering a period of sustained growth from 2012 onwards.”

Total declined 1.4 percent to 40.58 euros as of the close of trading in Paris. The stock is down 6.7 percent in the past 12 months.

Output dropped 1.3 percent in 2011. Production in the latest quarter was unchanged at 2.384 million barrels of oil equivalent a day, according to the statement. Brent crude prices climbed to $109.02 a barrel on average in the fourth quarter, 25 percent higher than a year earlier.

Asset Sales

The French driller continues to “actively manage its asset portfolio with, in particular, a program of non-strategic asset sales,” Total said.

Production will climb this year with projects in Angola, Nigeria and Thailand.

In the fourth quarter, the company boosted its stake in OAO Novatek, the second-largest Russian gas company, to 14.1 percent. Last month, it acquired a $2.32 billion holding in Ohio’s Utica shale region from Chesapeake Energy Corp. (CHK) and EnerVest Ltd.

Output growth this year will rise 2 percent to 3 percent, depending on how production in Syria evolves, Yves-Louis Darricarrere, head of exploration and production, told reporters at a press conference. “We should be closer to 3 percent than 2 percent.”

The range stems from uncertainty about production in Libya and Syria, he said. Total’s Libyan output from three fields is at about two-thirds of the 50,000 barrels of oil equivalent a day that was the company’s share before civil war broke out while Syrian output of 30,000 barrels of oil equivalent a day has been stopped as civil unrest spreads.

Nigeria, Angola LNG

The company expects output to rise an average of 2.5 percent a year from the end of 2010 to 2015 with production starting this year at the Usan project in Nigeria and Angola LNG. By 2015, Total will have added 600,000 barrels of oil equivalent a day with 25 startups, de Margerie said.

Net investment will total $20 billion this year, compared with about $22 billion in 2011, with a 20 percent increase in funds set aside for “ambitious” exploration, Total said.

Total is pushing harder to make big discoveries by drilling more frontier exploration wells. So far the strategy has paid off with successes in Azerbaijan, Bolivia, French Guiana and Norway.

The producer has reached an agreement to become a partner with Tullow Oil Plc (TLW) and Cnooc Ltd. (883) in Uganda and is drilling wells in Kenya.

Anadarko Tie-Up

Total this year has sanctioned development of the second phase of the Ofon field off Nigeria, the offshore Hild field in Norway and the $34 billion Ichthys LNG venture in Australia. It’s also spending $500 million to explore three offshore blocks with Anadarko Petroleum Corp. (APC) in Ivory Coast.

The company is in talks with Kuwait Petroleum Corp. to build a refinery in China, and is developing a crude-processing plant in Saudi Arabia as it seeks to reduce exposure to European refining and move into faster-growing markets.

“We are in preliminary discussions with Kuwait which has a project to invest in China,” Patrick Pouyanne, head of the chemicals and refining, said at the press conference. “If we have an opportunity to invest in a big refining, chemicals platform we would be interested especially with a Middle Eastern producer.”

Total must further “adapt” its European crude-processing capacity, de Margerie said, after already cutting 550,000 barrels a day of capacity in the region.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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