OPEC Deal Tests Oil Majors' Appetite for Risk and Reward

Production Growth

Libra and Zinia phase two could be extremely profitable with oil at $50, said Pouyanne. Half the cash Total has allocated for exploration and production spending over the next four years isn’t committed to specific projects, so the company has some flexibility in its investment decisions, he said.

In a sign of growing confidence, the company on Friday reduced the discount offered to encourage investors to take dividend payments in shares -- a method many companies are using to conserve cash.

Total has focused recently on reducing capital expenditure to a range of $15 billion to $17 billion a year from 2017 to 2020, compared with $18 billion this year and a peak of $28 billion in 2013. It expects oil and natural gas output to increase by 5 percent annually to 2020, spurred by large projects initiated when crude was above $100. That rate of growth will slow to 1 percent to 2 percent a year from 2021, just as Pouyanne is saying a supply gap could emerge.

“Exploration at $40 per barrel is more complicated than at $100,” said Guillaume Chaloin, a fund manager at Meeschaert Asset Management in Paris, which oversees 2 billion euros ($2.1 billion). “But they have to renew their reserves.”

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net To contact the editors responsible for this story: James Herron at jherron9@bloomberg.net Dylan Griffiths