Total Must Curb Costs, Lower Break-Even Point, CEO SaysTara Patel
Total SA must lower its break-even point and cut spending amid weak crude prices that could last at least until the middle of the year, Chief Executive Officer Patrick Pouyanne said.
“We have to control costs,” Pouyanne said in an interview on France 2 television channel from Davos, Switzerland. “This won’t mean cutting jobs. Over the medium and long term, we’ll stick to our strategy.”
Europe’s second-largest oil company by market value will cut investment by 10 percent from last year’s $26 billion and reduce its exploration budget by 30 percent to less than $2 billion, the Financial Times reported today, citing an interview with Pouyanne. The company will also accelerate the planned sale of $10 billion in assets and shelve two Canadian oil sands projects, according to the report.
Pouyanne confirmed lower spending this year during a panel discussion at the World Economic Forum in Davos and said this would include less investment in the U.K. North Sea’s mature fields and in shale drilling in the U.S.
Total announced spending cuts in September. It also lowered its production target for this year to 2.3 million barrels of oil equivalent a day and outlined a plan for $10 billion of asset sales through 2017.
“Oil prices will stay at low levels for the first half of 2015,” Pouyanne said today in the France 2 interview, pointing to a sharp drop in crude in 2009 that was followed by a rebound.
Oil fell almost 50 percent last year, the most since the 2008 financial crisis, as the U.S. pumped crude at the fastest rate in more than three decades and the Organization of Petroleum Exporting Countries resisted calls to reduce supply. Brent for March settlement climbed as much as 1.4 percent to $48.65 a barrel on the London-based ICE Futures Europe exchange today.
Total is scheduled to announce earnings and investment plans on Feb. 12.