Oil giant Total reports profits slip on weak dollar
PARIS (AFP) — French oil group Total reported on Wednesday a 3.0-percent fall in underlying profit to 12.203 billion euros (14.57 billion dollars), blaming weakness of the dollar.
The net adjusted figure excludes exceptional items. The full net figure rose by 12.0 percent to 13.181 billion euros.
Total, the fourth-biggest oil group in the world alongside US group Chevron, said that its net adjusted profit figure for 2007 had been set back by weakness of the dollar against the euro.
In dollar terms, net profit had risen by 6.0 percent to 16.723 billion dollars.
Chief executive Christophe de Margerie said Total was examining investment projects on the basis of an oil price of 80 dollars per barrel.
This was “closer to reality” than the price of 60 dollars which remained the company’s reference point in the long term.
“Sixty dollars a barrel seems to me to be certainly not in line with market prices, but it is a well-balanced point for taking long-term decisions,” he explained. The price of oil is currently about 90 dollars per barrel.
The group would increase its investment in dollars by nearly 19 percent this year to 19 billion dollars from 16 billion dollars in 2007, he told a press conference.
Of the increase, 25 percent reflected the effect of the fall of the dollar against the euro and 50 percent a rise in the costs of services used by an oil company.
He also said that there was a “crisis” in the US economy and that growth in Europe might be affected, but that this would have only a “minor impact” on the group’s performance.
In contrast to other oil majors that have experienced production falls, Total reported that output had risen by 1.5 percent to 2.391 billion barrels of oil equivalent per day in 2007 compared with the figure for 2006.
In that year net adjusted profit had reached a record high point.
Production should show further “significant growth” in 2008, even if the price of oil fell to 80 dollars a barrel, the company said.
The group’s proved reserves, a key measure of the value of an oil company, had fallen by 6.0 percent to 10.449 billion barrels of oil equivalent which, the group said, was equivalent to 12 years of production.
Proved and probable reserves together amounted to 20 billion barrels or more than 20 years of output.
Total recommended an 11.0-percent increase in the dividend to 2.07 euros per share, but the price of its shares was shopwing a fall of 0.83 percent at mid-day to 49.09 euros.
Brokers Raymond James commented that the results were slightly above the expected figures and that “refining and chemicals are doing better than hoped.”
In the fourth quarter alone, Total reported a 14.0-percent rise in net adjusted profit to 3.107 billion euros.
Sales in the whole of last year rose by 3.0 percent to 158.752 billion euros.
Margerie also said that Total did not rule out a second nuclear energy project. In January it reached a partnership arrangement with two other French groups Areva and Suez to propose two next-generation EPR nuclear reactors to the United Arab Emirates.
“Nuclear energy is not Total’s basic business. We shall see if we feel capable of launching ourselves into a new adventure,” he said. Total would take a decision in five to 10 years’ time.
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