By Tom Cahill and Tara Patel
Feb. 14 (Bloomberg) — Total SA, Europe’s biggest oil refiner, raised its annual production target through 2010 because of new fields in Angola and Canada.
Output growth will rise by an average 5 percent, compared with a previous forecast of 4 percent, Paris-based Total said today. Fourth-quarter profit, excluding the value of Total’s stake in drugmaker Sanofi-Aventis SA, fell 10 percent to 2.74 billion euros ($3.6 billion) from a year earlier. That beat the 2.65 billion-euro median estimate in a Bloomberg News survey.
Christophe de Margerie, who succeeds Thierry Desmarest today as chief executive officer, is counting on the Dalia field in Angola, which started in December, and the Joslyn heavy oil project in Canada to lift output. Royal Dutch Shell Plc, Europe’s biggest oil company, said earlier this month that much of its growth will come from Canadian oil sands.
“Total’s efforts to increase production are starting to bear fruit,” said Eric Doutrebente, who oversees $3.5 billion, including Total shares, at Toqueville Finance in Paris.
Shares of Total gained 90 cents, or 1.7 percent, to 53.40 euros at 10:55 a.m. in Paris. Total stock rose 4.4 percent in 2006, their slowest pace of growth in four years.
Overall output will rise by 6 percent in 2007, down from an earlier projection of 7 percent, because of the impact of quota cuts from the Organization of Petroleum Exporting Countries, said Chief Financial Officer Robert Castaigne.
Militant Violence
The revised target for 2007 also anticipates that Nigerian production will continue to be “disrupted” by militant violence in the Niger Delta, Castaigne said in an interview. Total doesn’t expect its Angolan output will be trimmed by the African nation’s membership of OPEC this year, he added.
Total said at a press conference in Paris that fourth- quarter results were trimmed by charges from the restructuring of its chemicals unit. Including the Sanofi stake, net income fell 5 percent to 2.2 billion euros from 2.34 billion euros, the company said.
Production averaged 2.40 million barrels of oil and gas a day in the fourth quarter, compared with 2.46 million barrels a year ago.
Total has been trying to boost production after hitting what it called a “low point” of 2.29 million barrels of oil equivalent a day in the second quarter, hurt by shutdowns in Nigeria and the impact of high oil prices on production-sharing contracts.
Reserve Replacement
Reserve replacement, a measure under U.S. Securities and Exchange Commission rules showing exploration performance, was 102 percent for the year, compared with 95 percent in 2005.
Total said it had 11.12 billions barrels of oil equivalent reserves at the end of 2006, compared with from 11.11 billion barrels at the end of 2005, according to SEC reporting standards.
Average annual output fell 5 percent last year to 2.36 million barrels a day of oil equivalent, from 2.49 million barrels a day in the previous year as new field start-ups failed to offset declines and because of disruptions in the North Sea.
Total’s results come after BP Plc, Europe’s second-largest oil company, said earlier this month that fourth-quarter oil and gas output fell 4.5 percent from a year ago to 3.84 million barrels a day and profit dropped 22 percent to $2.88 billion. Shell said output rose 4.1 percent to 3.65 million barrels of oil equivalent and net income rose 21 percent to $5.28 billion.
Refining Margins
Total said last month profit from converting crude oil into gasoline, diesel and other products fell 50 percent in the fourth quarter from a year earlier, when hurricanes shut down competing U.S. refineries. The average margin shrank to $22.80 a ton from $45.50 a year earlier amid warm weather at the end of 2006.
“Short term, we are more or less in line with our long-term view” of refining margins, Michel Benezit, the head of Total’s refining and marketing unit, said in an Feb. 1 interview. “We were below that level in the last three weeks of the year and above it for the first 10 days of January. That’s normal volatility.”
Total in October started a 550 million-euro distillate hydrocracker unit at its Normandy refinery, the oldest and largest in France. The equipment will produce 1.3 million metric tons of sulfur-free diesel annually.
In almost 12 years as chief, Desmarest increased Total’s production more than sixfold, from about 345,000 barrels of oil equivalent a day in 1994. The company earned $654 million that year, compared with the 2006 profit of 12.6 billion euros, a record for France.
De Margerie was detained for 48 hours in October and placed under formal investigation by a French judge over a possible role in kickbacks paid to obtain Iraqi oil between 1996 to 2001, during the United Nations-supervised oil-for-food program.
“There is no reason for the investigation,” de Margerie said today. Total has denied any wrongdoing.
Total’s profits have already made it a target of French politicians such as Socialist presidential candidate Segolene Royal, who has proposed a tax on the “super profits” of oil companies.
To contact the reporters on this story: Tom Cahill in Paris at [email protected] ;
Last Updated: February 14, 2007 05:06 EST
EBOOK TITLE: “SIR HENRI DETERDING AND THE NAZI HISTORY OF ROYAL DUTCH SHELL” – AVAILABLE ON AMAZON
EBOOK TITLE: “JOHN DONOVAN, SHELL’S NIGHTMARE: MY EPIC FEUD WITH THE UNSCRUPULOUS OIL GIANT ROYAL DUTCH SHELL” – AVAILABLE ON AMAZON.
EBOOK TITLE: “TOXIC FACTS ABOUT SHELL REMOVED FROM WIKIPEDIA: HOW SHELL BECAME THE MOST HATED BRAND IN THE WORLD” – AVAILABLE ON AMAZON.
