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Bloomberg: Total Third-Quarter Net Falls as Production Declines (Update4)

By Tom Cahill

Nov. 8 (Bloomberg) — Total SA, Europe’s largest oil refiner, said third-quarter earnings slid 34 percent after production fell because of disruptions in Nigeria.

Net income dropped to 2.42 billion euros ($3.1 billion), or 1.05 euros a share, from 3.65 billion euros, or 1.55 euros, a year earlier, Total said today in a statement. Profit excluding a stake in drugmaker Sanofi-Aventis SA was 3.11 billion euros, beating a median estimate from 11 analysts surveyed by Bloomberg News.

Production declined because Chief Executive Officer Thierry Desmarest had to curb pumping in Nigeria because of militant attacks. Bigger competitor Royal Dutch Shell Plc last month reported a jump in third-quarter profit as it increased output. Exxon Mobil Corp. also reported earnings that surpassed analyst estimates.

“They’ve had difficulty but it will get better going forward,” said Jane Coffey, head of global equities at Royal London Asset Management, which oversees about $14 billion.

Shares of Total were little changed, slipping 0.3 percent to 54.25 euros. Total shares have risen 5.7 percent in 12 months. Shell shares have gained 8.9 percent; Exxon has jumped 28 percent.

So-called adjusted profit was expected to be 3.03 billion euros, according to the median analyst estimate. The results don’t include Total’s 13 percent stake in drugmaker Sanofi-Aventis SA.

The company said oil and gas production dropped 5.8 percent to 2.29 million barrels of oil equivalent a day from 2.43 million barrels a day a year ago. Analysts expected a drop of 4.9 percent to 2.31 million barrels.

Nigeria Violence

Violence in Nigeria interrupted production. So did production-sharing contracts, which reduced the amount of oil Total could keep as prices rose. Total said Nigerian unrest cut production by 2 percent and that it lost 2.4 percent from the price impact of production sharing agreements.

Total pumped an average 2.29 million barrels of oil equivalent a day in the second quarter, an amount it called a “low point.” It managed to top that figure by just 4,000 barrels a day.

Total’s results didn’t compare well with rivals, analysts said.

The company had “unimpressive results during a quarter when most of Total’s peers have comfortably beaten expectations,” Jonathan Wright, an analyst at Citigroup Inc. in London, wrote in a note to clients. “This is unimpressive in a sector context.”

To contact the reporter on this story: Tom Cahill in Paris at [email protected]

Last Updated: November 8, 2006 07:17 EST

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