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Production ramp up boosts Total’s 2017 profit

Feb 08, 2018
2 min read
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Total posted a 28 per cent jump in 2017 adjusted net income as higher oil prices and production growth pushed up the oil major’s upstream revenue.

The French company reported an adjusted net income or profit of US$10.6 billion for the year, while its fourth-quarter profit rose 19 per cent to $2.9 billion.

Its profit outpaced the average rise in Brent crude prices for 2017 of $54 per barrel, compared to $44 per barrel in 2016.

“The group demonstrated its ability to capture the benefit of higher prices-the Upstream, in particular, increased its results by more than 80 per cent and its operating cash flow by close to 40 per cent,” chairman and CEO Patrick Pouyanné.

He said the company had a return on equity above 10 per cent, the highest among the oil and gas majors.

The biggest share of profits was from its exploration and production, which was up 86 per cent year-on-year to $5.99 billion.

The French group in 2017 saw a 5 per cent growth in production to 2.56 million barrels of oil equivalent per day. It started production in Moho-Nord in the Republic of Congo, ramped-up Kashagan in Kazahkstan, and entered into the Al-Shaheen project.

Additionally, the group launched five upstream projects including the first phase of the Libra development in Brazil, as well petrochemical projects in the United States and South Korea.

In the US Gulf of Mexico, Total was part of a major discovery at the Ballymore prospect, its largest discovery in the area.  

Total’s downstream operations yielded $7 billion in cash flow and reported a return on capital employed of more than 30 per cent. However, refining and chemicals revenue was down 10 per cent to $3.79 billion.

The company’s cost reduction strategy implemented since 2015 has helped it to reduce its pre-dividend organic breakeven to $27 per barrel in 2017 and generated $22 billion of debt-adjusted cash flow.

The group also continued to strengthen its balance sheet, ending the year with 14 per cent gearing or debt-to-equity ratio, which Total said was a significant decrease compared to 2016.

SHARES

Total rewarded shareholders with a 10 percent increase in dividends over the next three years. The 2018 interim dividend will rise 3.2 percent, and it plans to buy back up to $5 billion shares over the 2018-2020 period.

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