April 27 (Bloomberg) -- Total SA, Europe’s third-largest oil producer, said second-quarter production would be cut by a gas leak in the North Sea as earnings in the first three months were weighed down by a weak refining market.
Profit excluding changes in inventories and the value of a stake in Sanofi-Aventis SA was little changed at 3.07 billion euros ($4.04 billion) from 3.1 billion euros a year earlier, the Paris-based company said today in a statement. That compared with the 3.06 billion-euro average estimate of 11 analysts surveyed by Bloomberg.
Production was almost unchanged at 2.37 million barrels of oil equivalent a day, according to the statement. Second-quarter output will be hurt by the leak at the Elgin platform and incidents in Nigeria and Yemen, the company said.
Total is making “good progress on the Elgin incident,” Bertrand Hodee, an analyst at Kepler Capital Markets, said in a note. Results were “toward the high end” of consensus estimates.
Total shares were little changed at 36.50 euros. The stock has dropped 11 percent since the gas leak began last month.
The oil company is attempting to plug the leak with heavy mud, known as a top-kill operation, while at the same time drilling two relief wells as an alternative solution. Efforts to stem the leak and loss of production have cost more than $50 million so far.
Before the accident, Total had forecast production would climb this year with projects in Angola, Nigeria and Thailand after dropping 1.3 percent in 2011.
“If we take a conservative view that Elgin Franklin will not restart before the end of the year, then 2012 production could be flat,” Chief Financial Officer Patrick de la Chevardiere said. The company is losing 0.2 percent of production growth for each month that Elgin Franklin remains shut.
Halts at Elgin and Nigeria through the second quarter could shave 70,000 barrels of oil equivalent a day off output while maintenance could cut another 93,000 barrels a day, he said.
“We will not restart production from Elgin Franklin until we can do it safely,” de la Chevardiere said. “There is a possibility it could restart gradually sometime before the end of the year.”
Total is also seeking to halt a Nigerian leak at a gas plant which has led to lost output of 20,000 barrels of oil equivalent a day.
Total reported a 77 percent drop in quarterly earnings from refining and chemicals due to a “strong deterioration” in European petrochemicals.
Adjusted net operating income from the oil company’s refining and chemicals division was 61 million euros, compared with 266 million euros last year.
Total’s three platforms at the Elgin and Franklin fields about 240 kilometers (150 miles) east of Aberdeen, Scotland, are some of the biggest installations in the world to pump oil and natural gas from high-pressure, high-temperature wells. Total is the operator, with a 46 percent stake in the fields, in which the company has drilled new wells and added platforms in recent years in a bid to forestall the fields’ decline.
The French driller started production this month at the Islay gas field that straddles the U.K. and Norwegian parts of the North Sea, and Greater Bongkot in the Gulf of Thailand. Output is scheduled to start next at Sulige in China and the Angola LNG project.
Higher Libyan output for Total was offset by a decrease in Syria, where the French company stopped production due to unrest.
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, according to the company.
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