French supermajor Total reported a hike in its quarterly profit, boosted by higher oil prices, increased production and lower operating costs.
Adjusted net income was $2,8 billion in the fourth quarter 2017, an increase of 19% compared to the fourth quarter 2016.
For the full year, adjusted income was $10,5 billion, an increase of 28%. Adjusted net income excludes the after-tax inventory effect, special items and the impact of changes in fair value.
Oil and gas production was 2,613 thousand barrels of oil equivalent per day (kboe/d) in the fourth quarter 2017, an increase of close to 6% compared to 2016, due to start-ups and ramp-ups at Moho Nord in Angola, Kashagan in Kazakhstan Yamal LNG in Russia and Angola LNG.
Production was also boosted by Total taking over the giant Al-Shaheen oil field concession in Qatar and acquiring an additional 75% interest in the Barnett shale in the United States, partially offset by the exit from the southern sector of the Republic of the Congo and asset sales in Norway, as well as the interruption of production on Elgin-Franklin following the rupture of the Forties pipeline.
Despited the increase in the oil price, Total remains cautious, and is set to work further to drive the costs down to be able to mitigate any oil price fluctuations.
“Since the end of 2017 Brent has been trading between 65-70 S/b. supported by strong demand (+1.6 Mb/d in 2017), the extended production cuts by OPEC and Russia and a decrease in crude oil inventories, which, nevertheless, remain higher than the past five-year average, which could contribute to continuing price volatility,” Total said.
The French firm said it would maintain its strategy to cut costs with the objective of achieving over $4 billion of cost savings in 2018 and production costs of $5.5/boe for the year. Organic investments are projected at around $14 billion in 2018 in line with the target of $13 B to $15 B.
Production-wise, in the Upstream, output is expected to increase by 6% in 2018, confirming the objective to grow by 5% per year on average between 2016 and 2022.
“The Group intends to take advantage of the favorable cost environment by continuing to launch projects in 2018. The growing demand for LNG supports the Group’s strategy to develop along the integrated gas value chain, as illustrated by the announced acquisition of Engie’s LNG portfolio,” Total said.