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Argus Media: Total reports lower profit, flags name change- Update

11 Feb 2021

Rowena Edwards and Caroline Varin of global energy and commodity price reporting agency Argus Media on Tuesday (9 February) published a summary on Total’s published results for 2020 focusing on how it fared throughout the pandemic and its plans to move forward with the energy transition:

Added quotes from chief executive

Total saw its fourth-quarter profit and full-year earnings plummet on year as the Covid-19 pandemic lowered fuel demand and weighed on oil and gas prices. But the firm performed relatively well compared with its peer group, some of which are reeling from record losses.

Total — which used today’s results announcement to confirm plans to change its name to TotalEnergies — reported a profit of $891mn for the fourth-quarter, a marked improvement on the previous three months but 66pc lower than the same period of 2019. A hit from heavy impairment charges in the second quarter, mainly related to Canadian oil sands assets, drove the firm to an overall loss of $7.2bn for the full year, compared with a profit of $11.3bn in 2019.

Adjusted profit — which strips out inventory valuation effects and one-off items — dropped by 59pc on the year to $1.3bn in October-December and was down by 66pc to $4.1bn for the full year.

“We demonstrated that we could resist better than our competitors in 2020, a year that brought extreme volatility,” chief executive Patrick Pouyanne said today.

Total’s fourth-quarter oil and gas production fell by 9pc from a year earlier to 2.84mn b/d of oil equivalent (boe/d), driven by Opec+ quotas, voluntary reductions in Canada, and maintenance and unplanned outages, notably in Norway. Full-year output was 2.87mn boe/d, 5pc lower than 2019. The company expects 2021 production to be stable compared with last year, benefitting from the recovery in Libyan production, and it expects LNG sales to rise by 10pc because of the ramp-up of the 15mn t/yr Cameron LNG facility in the US.

In the downstream, Total’s fourth-quarter refining throughput fell to 1.3mn b/d and the utilisation rate dropped to 60pc, compared with a respective 1.5mn b/d and 71pc a year earlier. Refining margins “remained depressed, still affected by low demand and high inventories,” Pouyanne said.

Total reiterated its plans to transform itself over the next decade, reducing its reliance on oil and focusing its energy production growth on LNG and renewables and electricity. It expects oil products to fall to 30pc of sales over the next decade from 55pc now. The company will propose changing its name to TotalEnergies at its annual general meeting on 28 May to reflect the transformation.

Total will allocate over 20pc of this year’s $12bn net investment budget — which includes organic capital expenditure (capex) and net acquisition spending — to renewables and electricity. The 2021 budget is almost $1bn lower than 2020 spending, when investment was reduced by a quarter from the previous year to tackle the impact of the Covid-19 pandemic.

If oil prices rise this year, Total’s priority will be to use the extra cash flow to reduce debt, but it remains open to raising investment levels as well, Pouyanne said. “If Total increases investment, there will be two uses. More investments in renewables — we could imagine 20pc [of the budget] could become 25pc — and we could restart drilling that we stopped last year,” he said.

The firm said it is maintaining its priorities for cash flow allocation, which include investing in profitable projects to implement its transformation into a broad energy company, supporting the dividend and maintaining a strong balance sheet. It is keeping its quarterly dividend flat at €0.66/share, unchanged from the previous three quarters.

 

Photo credit and source: Argus Media
Published: 11 February, 2021

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