Total’s Quarterly Profit Rises 32% as Output, Prices Rise

Christophe de Margerie, chief executive officer of Total SA
Christophe de Margerie, chief executive officer of Total SA. Photographer: Antoine Antoniol/Bloomberg

Total SA, France’s largest oil company, said third-quarter profit rose 32 percent on higher production after new fields were started.

Profit excluding changes in inventories and the value of a stake in Sanofi-Aventis SA rose to 2.48 billion euros ($3.44 billion) from 1.87 billion euros a year earlier, the Paris-based company said today in a statement. That beat the 2.43 billion- euro average of 17 analysts surveyed by Bloomberg. Net income rose 47 percent to 2.83 billion euros.

Third quarter production rose 4.3 percent to 2.34 million barrels of oil equivalent a day compared with a year earlier, according to the statement.

The rise in profit and output “confirms the momentum,” Chief Executive Officer Christophe de Margerie said in the statement.

Total has reversed a slump in production that touched a nine-year low last year by starting fields in Nigeria, the Gulf of Mexico, Angola and Norway, as well as liquefied natural-gas projects in Yemen and Qatar. The Paris-based oil company expects production to be little changed next year because of a lull in new startups and has pledged to explore more aggressively in frontier regions to boost future output.

Total has forecast average production growth of 2 percent a year through 2014 and said it would increase exploration through 22 “promising prospects” to be drilled by the end of 2012.

The French oil company last week announced an agreement to buy a 60 percent stake in the Ivory Coast CI-100 deepwater exploration license from Yam’s Petroleum.

Clov Development

Total sanctioned investment in the Clov development off Angola and said final investment decisions could come for Ofon II and the Gladstone LNG venture this year. Engina in Nigeria could come at the start of 2011, while the company has also said it could sanction Sulige in China, Ichthys LNG in Australia, Shtokman in Russia and Ahnet in Algeria.

The French company has announced $6 billion in acquisitions since the start of the year and $4 billion in asset sales, according to a presentation last month.

In addition to buying a stake in Chesapeake Energy Corp.’s U.S. shale gas assets, Total has announced the acquisition of 20 percent of an LNG project fed by methane trapped in coal seams in Australia’s Queensland state and is completing the purchase of Canadian oil sands company UTS Energy Corp.

Oil futures averaged $76.21 a barrel in the quarter, a 12 percent increase from a year earlier, and natural-gas futures rose 23 percent.

Improved Margins

Total has benefited from improved refining margins. Profit from turning crude into fuel rose to $16.40 a ton compared with $12 a ton a year ago, the company said earlier this month.

Total shut down all five of its active refineries in France due to a strike by oil workers this month over a government plan to overhaul the country’s pension system. The labor action was the second this year led by the CGT union, the biggest among refinery workers.

Total has plans to reduce its refining capacity by about one-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.

The goal to sell its Lindsey refinery and U.K. marketing business is part of the restructuring that could also see development of downstream activities in countries where there is growth, de Margerie has said.

Total wants to reach an agreement to sell Lindsey by the end of the year, he said last month, adding that the oil company has received several offers for the 221,000 barrel-a-day oil-processing plant in northeast England.

Total also plans to dismantle its Flanders refinery near Dunkirk, France.

Royal Dutch Shell Plc, Europe’s largest oil company, yesterday posted earnings that beat analyst estimates for the third straight quarter while Exxon Mobil Corp. reported its largest third-quarter profit increase in six years as rising worldwide energy demand listed commodity prices.

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