French oil major Total SA comfortably beat analysts' forecasts with a 50 percent rise in first-quarter net profit on Wednesday amid high oil prices, reviving petrochemicals and strong refining margins. But the world's fourth-largest oil company, worried by the slow response from Russia on its plan to buy a 25 percent stake in gas firm Novatek, told investors its six-year production target would suffer slightly if the deal fell through. Chief Financial Officer Robert Castaigne said during a conference call he saw average annual growth in gas and oil output at between 3 and 4 percent over 2004 to 2010, excluding Novatek. Total had been banking on average annual growth of 4 percent in the period.
"If we were to take a conservative view, I believe we should be closer to 3 than to 4 percent. But before 2010 we might have opportunities that could lead us to grow by 4 percent on average by 2010 without Novatek," Castaigne said.
The company that turned a record French corporate profit of nearly 10 billion euros last year said quarterly net profit adjusted for special items rose to 2.92 billion euros ($3.76 billion) versus 1.95 billion a year ago. A Reuters poll of 13 analysts had seen net profit at an average of 2.66 billion.
Total shares edged up 0.6 percent to 174.40 euros by 0900 GMT, slightly outperforming the DJ Stoxx energy index.
Expressed in dollars - Total is the only big oil group to publish its results in euros - quarterly earnings shot up 57 percent, outshining a 44 percent jump at ExxonMobil and 28 and 29 percent increases at Royal Dutch/Shell and BP respectively.
"Since the beginning of the second quarter 2005, the oil market environment has remained favourable with high oil prices and refining margins," Total said.
It said quarterly operating profit rose 53 percent to 5.456 billion euros, ahead of analysts' forecasts of 4.975 billion.
"This is a fantastic result... The business is very highly efficient on a unit per barrel measure. In any of its businesses it's top of the tree," said Jason Kenney, head of oil and gas research at ING in Edinburgh.
First-quarter oil and gas production fell 2.7 percent to 2.562 million barrels per day. The decline was expected for the most part due to higher prices on the volumes to which it is entitled under production sharing agreements and because of shutdowns in the Gulf of Mexico following Hurricane Ivan.
Total's ambitions to buy a blocking stake in Russia's Novatek have hit a snag with Russia's competition authorities delaying their backing of the deal, insisting that Novatek must complete its restructuring first.
Novatek also wants more money from Total and has said it could end up selling less than the previously agreed 25 percent. Castaigne said on Wednesday the French group still aimed for a blocking stake adding: "The price is not the issue. The issue is to get the approval from the anti-monopoly commission."
"It's a sweet deal if it can knock it on the head but Novatek is not crucial for Total," ING's Kenney said.
Echoing the experience of ExxonMobil, BP and Shell, Total's profit rise was mainly due to bumper earnings at its exploration and production division and strong refining margins.
Total's upstream or exploration and production business showed a 42 percent jump in operating profit adjusted for special items of 4.01 billion euros despite the output decline in the quarter.
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