Total Posts 13% Rise in Profit On High Oil Prices

LONDON (Dow Jones Newswires), Oct. 28, 2011

Europe's third-largest oil producer Total Friday posted an expectation-beating 13% increase in its third-quarter adjusted income as high oil prices offset the impact of slightly lower output and its refining and marketing business improved its profitability.

Output was affected by lost production in Libya as the country fought out the last weeks of civil war. The lack of the high-quality Libyan crude favored by older, less complex European refineries has contributed to oil prices that are 47% higher on average than in the same quarter last year.

Chief Executive Christophe de Margerie said Total will continue to pursue the "bold" exploration strategy that has already yielded major discoveries in Azerbaijan, French Guyana and Norway.

Total said that it expected production to improve in the fourth quarter as Libya continues its "progressive recovery" and the Pazflor field in Angola ramps up output, though it said this would be partially crimped by maintenance at its liquefied natural gas projects in Norway and Yemen.

Adjusted net profit, which strips out items like petroleum inventory effects and proceeds from its stake in drugmaker Sanofi Aventis, was EUR2.80 billion. Net profit rose 17% to EUR3.31 billion. Expressed in dollars, Total's adjusted income rose 24%. Although the company reports in euros, oil is traded in the U.S. currency, which is the generally accepted industry benchmark for performance.

On this basis, Total's earnings compare favorably with sector peers like Italy's Eni, which Thursday reported a 7% rise in adjusted profit, but pale slightly against larger rival Shell's 42% rise in earnings. BP earlier this week posted a 3.6% fall in adjusted profit as it continues on its path of consolidation following last year's U.S. oil spill.

Total produced 2.319 million barrels of oil equivalent a day in the quarter, down 0.9% from 2.340 million boe/d a year earlier but up 0.3% from 2.311 million boe/d in the second quarter, despite ongoing maintenance in the quarter and the continued loss of Libyan production.

Refining and marketing earnings improved 47% from the corresponding period last year.

Santander analyst Jason Kenney said the earnings report was an "okay set of results," but pointed to the fact the quarter is really a transitional one for the French major as new projects come further on-stream and Libyan production resumes previous levels of output. "The best for Total should come at the end of next year," he said.

Since the start of the year, shares in Total have shed around 5% due to ongoing worries over the impact of the sovereign debt crisis on oil consumption and the Libyan revolution.

Copyright (c) 2011 Dow Jones & Company, Inc.