French oil and gas major Total reported a 29 percent jump in third-quarter net profit as project ramp-ups and new investments lifted production, joining a list of energy companies benefiting from higher crude prices.
Total`s oil production rose 6 percent while adjusted net operating income from its upstream exploration and production branch soared 84 percent from a year ago. High demand for petroleum products led to a sharp increase in refining margin.
"The group took full advantage of the favourable environment thanks to the performance of its integrated model and its strategy to reduce its breakeven point," Chief Executive Patrick Pouyanne said in a statement.
Total, which has emerged from the prolonged oil downturn with a stronger balance sheet compared with peers, said its return on equity was close to 10 percent.
Jefferies analysts, who have a "hold" rating on Total, said the results were solid. The stock rose 1 percent in early trade, hitting its highest in nearly five months.
Also on Friday Eni said it swung to a profit in the quarter, while Statoil on Thursday posted a sharp rise in operating profit.
Total`s net adjusted profit for the quarter hit $2.7 billion, in line with the average of forecasts from analysts polled by Reuters.
Production increases in projects such as Kashagan in Kazakhstan, Moho Nord in Republic of Congo and Angola LNG, as well as new concessions such as Al-Shaheen in Qatar, contributed to the 2.58 million barrels of oil equivalent output per day.GROWTH TARGET
Total maintained its annual production growth target of around 5 percent in 2017, expected to remain steady at that level until 2022.
In the downstream segment, Total said its European refining margin indicator rose sharply to $48.2 per tonne compared with $41.4 a year before, due to strong demand for products after Hurricane Harvey led to numerous shutdowns of refining capacity.
"The downstream benefited from favourable refining margins and increased its results by 18 percent compared to the second quarter, despite the impact of Hurricane Harvey on American operations," Pouyanne said.
Total said cost reductions for 2017 will be more than $3.6 billion, above a $3.5 billion target, as it continued to drive down costs by measures such as reducing the number of expensive contractors in places like Nigeria and Angola.
The company said its cost of production dropped below $5 per barrel during the past three months, ahead of the target of $5.5 per barrel for the year.
It has said it would take advantage of the low cost environment to launch high-return projects.
It reiterated a target of $5 billion in savings by 2020 while pursuing efforts to reduce its breakeven point.
Total`s pre-dividend organic breakeven point, excluding acquisitions and divestments, is expected below $30 per barrel this year and should continue to fall to $20 in 2019.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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