French oil major Total has posted a 40 percent drop in net profit for the first quarter of 2016. The oil company said its profit for the quarter was $1.6 billion, down from 2.6 billion a year ago.
Total said its average hydrocarbon price was only $26.4 per barrel, a 37 percent decrease compared to the first quarter 2015, adding the price was in line with the drop in the Brent price, which is a global benchmark for crude sales.
Chairman and CEO Patrick Pouyanne said: “Despite a 37% fall in the Brent price to 34 $/b since the first quarter 2015, the Group’s adjusted net income was $1.6 billion.”
He also said that the company’s upstream portfolio benefited from the lowest technical costs among the majors. Total’s hydrocarbon production grew 4% to 2,479 thousand barrels of oil equivalent per day, boosted by new project startups.
Pouyanne said that the production growth was in line with expectations, by the ramp-up of nine projects brought on stream in 2015 and the start-up of Laggan-Tormore in UK, and Vega Pleyade Argentina, in the first quarter.
In the Upstream segment, the company generated an adjusted net operating income of $498 million in the first quarter 2016. The company said that the 4% increase in production, reduced operating costs and lower exploration expense partially compensated the negative impact of the oil price environment.
In the Upstream, production in the second quarter will continue to benefit from the recent start ups but will be impacted by normal levels of seasonal maintenance. Production is expected to increase by 4% in 2016, with the start-up of Angola LNG and Incahuasi expected by mid-year and Kashagan by year-end.
As all of its peers, Total is working on cost cutting initiatives, and Pouyanne said all “teams continue to pursue their cost reduction efforts”.
“The organic investment of $4.6 billion during the first quarter is in line with the objective of limiting Capex to less than $19 billion in 2016. Operating costs are decreasing as planned with the objective of achieving $900 million in savings during the year,” the CEO added.
Elsewhere in Europe, Norway’s oil giant Statoil returned to profit in the first quarter of 2016, as it managed to partly offset the negative impact of low oil prices by cost cuts and impairment reversals.
Offshore Energy Today Staff