Total Reports 72% Increase in Profit on Higher Output

Total SA, Europe’s third-biggest oil company, reported a 72 percent increase in second-quarter profit after projects started last year were ramped up.

Profit excluding changes in inventories and the value of a stake in Sanofi-Aventis SA rose to 2.96 billion euros ($3.9 billion) from 1.68 billion euros a year earlier, the Paris-based company said today in a statement. That beat the 2.65 billion- euro mean estimate of analysts surveyed by Bloomberg.

“These are very strong figures compared to the peer group,” Richard Griffith, an analyst at Evolution Securities Ltd. in London, wrote in an e-mailed note. “Total has delivered significant improvements across all of its businesses. Earnings risks appear to be the upside.”

Total’s results follow higher earnings for Royal Dutch Shell Plc, which said earlier this week that profit rose 15 percent after production climbed. Italy’s Eni SpA reported adjusted profit of 1.63 billion euros ($2.12 billion), helped by a stronger dollar. BP Plc reported a record loss of $17.2 billion in the second quarter after taking a charge for the Gulf of Mexico spill.

Total rose as much as 2.3 percent in Paris trading and was at 38.995 euros as of 10:50 a.m. local time. The shares are down 13 percent this year.

Yemen Startup

Production at Total rose 8 percent in the second quarter to 2.359 million barrels of oil equivalent a day from a nine-year low a year ago. Output was boosted by the start of a second train at Total’s Yemen LNG project, lower OPEC reductions and an improved security situation in Nigeria.

“In the second quarter, the economic environment for our activities was globally favorable,” Chief Executive Officer Christophe de Margerie said in the statement. “The group approaches the second half of 2010 confident in its outlook and its strategy for growth.”

Total approved an interim dividend of 1.14 euros a share, unchanged from last year.

“Given the strong cash delivery we are slightly disappointed,” Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh, said in an e-mailed note. “There is still room for an increase in the second half payment.”

Refinery throughput fell by 2 percent from a year earlier, Total said. Refining margins have “pulled back sharply” since the start of the third quarter, it said.

Refinery Availability

Total’s refinery utilization rate rose to 83 percent from 77 percent in the first quarter on improved reliability of refineries and a low level of scheduled turnarounds. Maintenance affected the Rome and Lindsey refineries in the quarter.

The company is reviewing all its deepwater exploration and production projects including Clov in Angola due to the Gulf of Mexico spill. A final investment decision is scheduled on Clov this year. The offshore drilling moratorium also forced Total to suspend its 2010 Gulf exploration venture with Cobalt International Energy Inc. which was aimed at plugging a portfolio gap.

‘We are reminded that safety and the environment must remain our top priorities in this business,” de Margerie said today. Total plans to have reduced its global processing capacity by about a fifth, or 500,000 barrels a day, between 2007 and 2011. About 85 percent of its 2.6 million-barrel-a-day capacity is in Western Europe, which de Margerie has said isn’t an area of growth.

Legal Battle

The French company is locked in a legal battle with a union over the planned dismantling of its Flanders refinery near Dunkirk, France. It is planning to sell its 221,000 barrel-a-day Lindsey oil-processing plant in northeast England.

U.S. oil futures averaged $78.05 a barrel in the quarter, up 31 percent from a year earlier.

Total plans to boost output by about 2 percent on average annually from this year through 2014 after starting fields in Nigeria, the Gulf of Mexico, Angola and Norway, as well as liquefied natural gas projects in Yemen and Qatar.

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