"Compared to the third quarter 2006, the environment in the third quarter 2007 was mixed. While the Brent oil price increased by 7% to nearly 75 $/b, the dollar fell by 7% relative to the euro. The average natural gas price was weaker, primarily as a result of lower UK spot prices. European refining margins fell by 17% to a more moderate level. The environment for Chemicals remained generally satisfactory.
In this context, Total was the best performer among the majors. In dollars, adjusted net income increased by 4% compared to the same quarter a year ago. Total benefited from the return to production growth, the high quality of its asset portfolio, and its efforts to limit the impact of cost inflation. The return on average capital employed (ROACE) for Total was 24% over the past twelve months.
The ROACE for the twelve months ended September 30, 2007 was 24% at the Group level and 26% at the level of the business segments compared to 25% and 28% respectively for the twelve months ended June 30, 2007.
The return on equity for the twelve months ended September 30, 2007 was 29%.
The Group maintains its net-debt-to-equity ratio around its target range of 25-30%.
The investment program of approximately 16 B$ (excluding acquisitions) for 2007 is in line with the target.
Total will pay an interim dividend of 1 € per share on November 16, 200715, a 15% increase compared to the 2006 interim dividend. Expressed in dollars, the increase is more than 25%.
In the Upstream segment, Total confirms its production growth target of 4% per year on average between 2006 and 2010 based on a projected Brent oil price environment of 60$/b. The growth will be driven mainly by seven major Total-operated projects, including three that have started producing recently and four that are being developed in line with expectations. The growth will be particularly high in the LNG business, where sales16 are expected to grow by 13% per year on average over the period.
In Refining, the Group is pursuing its strategy to upgrade its refining system by investing in more conversion and desulphurization capacity. Certain development projects, designed to supply growing markets, are currently under study.
In Petrochemicals, Total is pursuing its strategy to improve its competitiveness in Europe, to strengthen its position in Asia and to develop projects with ethane-based feedstock in the Middle East and North Africa.
Since the start of the fourth quarter 2007, oil prices have hit new record levels notably as a result of persistent tension on market supply. Refining margins have remained around the average of the third quarter 2007, and conversion margins have remained robust.
The return to growth in production confirmed during the third quarter, the successful execution of major projects, the strong management and investment discipline, and the success of exploration and negotiations for access to new reserves support the outlook of profitable growth of Total for the coming years and for the longer term.
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