Total Hires New Exploration Chief After Oil Finds Prove ElusiveTara Patel
Total SA said it plans to overhaul exploration after an almost four-year push by Europe’s second-biggest oil company for big new finds was “unsuccessful.”
Total hired Kevin McLachlan as new head of exploration, charged with reassessing the company’s drilling strategy, Chief Executive Officer Christophe de Margerie told analysts at an investor day in London. McLachlan comes from Murphy Oil Corp.
“We need a complete reassessment of what happened” to avoid more “disappointment,” de Margerie said.
Total unveiled in early 2011 plans to be bolder by drilling in areas considered riskier that had a chance of reaping bigger rewards. The company, based outside Paris, spent more than $10 billion as it sought finds that would help boost production.
“We have been more successful in acquiring new discoveries than making them,” Chief Financial Officer Patrick de La Chevardiere told journalists today.
Total today also announced cuts in production targets for the next three years and a drive to reduce costs and sell more assets. The company hasn’t decided whether the exploration budget will be decreased next year, de Margerie said.
Exploration spending this year was stable at $2.8 billion for 60 wells compared with 2013. The figures were $2.5 billion in 2012 and $2 billion the prior year. Total today highlighted 11 key wells planned for 2015 including off Angola, Brazil and in the Gulf of Mexico.
While peers have struck resources off Africa, Europe and the Americas, Total has mostly been forced to pursue acquisitions and alliances to access new reserves. The company bought a stake in Tullow Oil Plc’s discoveries in Uganda and forged an exploration venture with smaller competitor Cobalt International Energy Inc. in the Gulf of Mexico.
While Eni SpA and Statoil have had finds off Africa and the Americas, respectively, Total reported empty wells in the Gulf of Mexico and off French Guiana. The company instead has won an auction for Brazil’s Libra field in October and bought a stake in gas discoveries in Papua New Guinea in December.
“Frankly the results have been disappointing,” Arnaud Breuillac, head of exploration and production, told analysts today. “There have been small discoveries but we haven’t been able to find the elephant that we’ve been looking for.”
Total will be looking to McLachlan to “reorientate” the company’s exploration strategy, Breuillac said.