Total has announced the results for the first quarter of 2014.
Commenting on the results, Chairman and CEO, Christophe de Margerie said:
“The Group reported adjusted net income of $3.3 billion for the first quarter, solid results albeit slightly lower than last year. The impact of sharply lower European refining margins was limited thanks to the implementation of performance improvement plans by the segment.
“Operational excellence and capital discipline are the cornerstones of our robust results. With the CLOV project expected to start up on schedule, the Group launched the Kaombo project in the first quarter in ultra-deep offshore Angola. Kaombo illustrates perfectly our commitments and ambitions by combining innovative engineering solutions and disciplined cost management to create a competitive project. Regarding exploration, several promising wells are in progress or about to start, notably in Brazil, the Kwanza basin in Angola, and deep-offshore Ivory Coast, following our recent discovery in the frontier San Pedro basin.
“In all the segments, our teams are working to translate our announced cost reduction commitment into tangible targets and are ready to participate in making the company more efficient, while keeping safety and the environment as our highest priorities.”
First quarter 2014 results
Net operating income from business segments
In the first quarter 2014, the Brent price averaged 108.2 $/b, a decrease of 4% compared to the first quarter 2013 and 1% compared to the fourth quarter 2013. The European refining margin indicator (ERMI) averaged 6.6 $/t, compared to 26.9 $/t in the first quarter 2013 and 10.1 $/t in the fourth quarter 2013.
The effective tax rate for the business segments was 55.7% in the first quarter 2014 compared to 58.6% in the first quarter 2013.
Adjusted net operating income from the business segments was 3,699 MS in the first quarter 2014 compared to 4,026 MS in the first quarter 2013, a decrease of 8%. This decrease was mainly due to a decrease in the Upstream results in line with the decrease in Brent and to the lower contribution of the Refining & Chemicals and Marketing & Services segments, which were impacted by a much weaker environment in Europe.
Net income (Group share)
Adjusted net income was 3,327 M$ compared to 3,698 M$ in the first quarter 2013, a decrease of 10.
Adjusted net income excludes the after-tax inventory effect, the effect of changes in fair value and special items:
• The after-tax inventory effect had a negative impact on net income of 137 M$ in the first quarter 2014 and a negative impact of 68 M$ in the first quarter 2013;
• Changes in fair value had a positive impact on net income of 21 M$ in the first quarter 2014 compared to a positive impact of 1 M$ in the first quarter 2013;
• Special items had a positive impact on net income of 124 M$ in the first quarter 2014 including mainly the gain realized on the sale (partial IPO) of an interest in Gaztransport & Technigaz (GTT) and the impairment of the Shtokman project in Russia. Special items had a negative impact on net income in the first quarter 2013 of 1,683 M$.
Net income (Group share) was 3,335 MS compared to 1,948 MS in the first quarter 2013. The effective tax rate for the Group was 57.7% in the first quarter 2014 compared to 59.2% in the first quarter 2013.
On March 31, 2014, there were 2,278 million fully-diluted shares, compared to 2,269 million on March 31, 2013. Adjusted fully diluted earnings per share, based on 2,277 million fully-diluted weighted-average shares, was $1.46 compared to S1.63 in the first quarter 2013.
Expressed in euro, adjusted fully-diluted earnings per share decreased by 14% to €1.07.
Hydrocarbon production was 2,179 thousand barrels of oil equivalent per day (kboe/d) in the first quarter 2014, a decrease of 6% compared to the first quarter 2013, essentially due to the following :
• +1% for start-ups and growth from new projects and a lower level of maintenance which more than offset the normal production decline;
• -5.5% for portfolio changes, essentially the expiration of the ADCO license in the United Arab Emirates and the sale of TOTAL’S exploration and production assets in Trinidad & Tobago, partially offset by the increase in production related to the interest in Novatek;
• -1.5% for security issues in Libya and Nigeria. Excluding the ADCO license, which expired in January 2014, hydrocarbon production in the first quarter 2014 decreased by 1% compared to the first quarter 2013 and increased slightly by 0.5% compared to the fourth quarter 2013.
Summary and outlook
The ROACE for the Group for the twelve months ended March 31, 2014, was 12%, compared to 13% for the full-year 2013.
Return on equity for the twelve months ended March 31, 2014, was 15%, stable compared to 2013.
Pending approval at the May 16, 2014 Annual Shareholders Meeting, TOTAL S.A. will pay the remainder of the 2013 dividend on June 5, 2014, of 0.61 C/share, an increase of 3.4%. The 2013 dividend represents a total of 2.38 €/share.
In addition, the Board of Directors decided on April 29, 2014, to pay a first quarter 2014 interim dividend of 0.61 €/share on September 26, 2014.
In the Upstream, the next anticipated operated start-ups are the CLOV project in Angola at the end of June, then Laggan-Tormore in the United Kingdom and Ofon Phase 2 in Nigeria in the second half of the year. Following an encouraging start for exploration at the beginning of the year, the Group is continuing its high-potential exploration program in Brazil, in the Kwanza basin of Angola, South Africa and Ivory Coast. In the second quarter, production will be impacted by heavy seasonal maintenance activity, mainly in the UK, Norway and Thailand.