Total's Q1 profit beats forecasts, lifted by record output

Paris

RECORD output and high oil prices helped French oil and gas major Total report a consensus-beating rise in net adjusted profit during the first three months of the year, with Total adding it would surpass its production target for 2018.

Total's earnings echoed a similarly robust set of results from Royal Dutch Shell which also posted higher Q1 profits on Thursday.

Total produced 2.703 million barrels of oil equivalent per day (boe/d) in the first quarter, driven by ramp-ups and new acquisitions, up more than 5 per cent compared to the same period in 2017, and above analysts' estimates of 2.663 million boe/d.

It said the ramp-up of production from new projects such as Yamal LNG in Russia and Moho Nord in Congo, along with newly acquired assets, including Maersk Oil and Al Shaheen in Qatar, had enabled it to reach record production during the quarter.

It marked Total's highest output ever recorded in a quarter, surpassing a previous record of 2.66 million boe/d in 2003.

Net adjusted profit came in at US$2.9 billion, beating analysts' forecast of US$2.77 billion in the quarter.

"Oil prices continued to rebound in the first quarter 2018," said Total's chief executive officer Patrick Pouyanne in a statement.

"Brent rose to an average of US$67 per barrel, supported by strong demand, Opec-non-Opec compliance and geopolitical tensions," he also said.

"Cash flow after organic investments increased to US$2.8 billion, up by more than 50 per cent from a year ago, thanks to good operational performance and continued spending discipline," added Mr Pouyanne.

Total said it expected to exceed its 6 per cent production target for 2018 thanks to the start-ups and ramp-ups of new projects, such as Kashagan in Kazakhstan, Kaombo in Angola and Ichthys in Australia, later in the year.

It said this would support its target of 5 per cent per year on average output growth between 2016 and 2022, even though Total noted that the global environment remained volatile with persistent uncertainty around the evolution of global supply.

Total also said it would continue to exercise discipline on its cost base.

It maintained 2018 investments at US$15-US$17 billion, with an operating expense target of US$5.5 per barrel of oil equivalent. It said cost reduction plans were ongoing, with an objective of over US$4 billion in 2018.

Total said it will raise first quarter interim dividend by 3.2 per cent, while scrip shares issued in January for the second 2017 interim dividend were bought back to prevent dilution.

"In addition, the group bought back a further US$300 million of shares to return to shareholders part of the benefit realised from higher oil prices," Mr Pouyanne said. REUTERS