Total Q3 beats forecast on increased output and cost savings

French oil and gas major Total reported a better than expected third quarter net profit thanks to increased output from new projects and costs savings and despite a fall in refining margins in Europe and the prolonged downturn in a volatile oil market.
* Total said third quarter adjusted net income was $2.1 billion, down 25 percent compared with the same quarter in 2015. Third quarter revenue fell 8 percent compared with the same quarter a year ago, to $37.4 billion.
* A Reuters average poll of analysts had pegged Total's Q3 adjusted net profit at $1.880 billion.
* Production in the quarter was up 4.3 percent to 2.443 million barrels of oil equivalent per day (kboe/day) compared with a Reuters poll of 2.434 million, thanks to five major projects that started in 2016 and are in production.
* Total said its downstream contribution remained strong during the third quarter despite the decrease in European refining margins, and cash flow generation over the first 9 months was $5 billion, in line with the target for the year.
* It said the company continued to be disciplined on costs control and costs were coming down more quickly than expected. Operating costs continued to fall and savings are expected to increase to more than $2.7 billion in 2016, or 10 percent above the objective set at the start of the year.
* It said its cost reduction program is ahead of schedule, underlining its ability to deliver the $4 billion in savings target by 2018.
* Total said most of the savings were coming from its upstream segment where it was able for example to find $100 million in saving per year in its operations in Angola, another $100 million in rationalizing helicopter usage in West Africa, and an overall cost saving of $300 million in 2016 in the United Kingdom.
* Total's organic investments in the quarter were $4.1 billion, and the group plans to invest $18 billion in 2016 down from $18-$19 billion announced previously.
* Total said that following the remarks by OPEC countries and Russia, Brent rose to around $50 per barrel despite high inventory levels and with the market expected to remain volatile, it is pursuing its efforts to lower its breakeven.

Source: Arab News