Total scraps Russian bid as second quarter profits leap

France's Total SA ditched its offer for a stake in Russian gas firm Novatek on Thursday as it reported a 33-percent rise in second-quarter net profit that met analysts' expectations. The result caps a month of strong quarterly earnings by oil majors riding record crude oil prices - Total made more than a million euros an hour.
Net profit adjusted for special items was 2.91 billion euros ($3.6 billion) in the quarter versus 2.19 billion a year ago.
This was a shade below an average forecast of 2.93 billion euros in a Reuters poll of 12 analysts and coincided with a fall of almost 4 percent in oil and gas production.
The stock fell 2 percent after having set a life high on Wednesday.
Operating income from Total's key business segments was 5.54 billion euros versus 4.03 billion a year earlier.
Although flush with acquisition cash after months of high oil prices, the world's fourth-largest oil company by market value said it was abandoning a 10-month-old bid for a quarter of Russia's Novatek because of delays in winning local approval.
The French firm had already said it was unhappy with Russia's decision to list Novatek in London last month.
Novatek is Russia's only independent gas producer that has a very strong outlook for production growth.
Keen to find ways to absorb its massive cashflow and ensure long-term output growth, Total this week announced plans to buy Canada's Deer Creek Energy for $1.11 billion in cash. The deal gives it access to extra-heavy oil reserves that have become more attractive as oil prices hover near $60 a barrel.
Total's fall in production last quarter was sharper than expected and was blamed by the company on higher prices which reduce the volume of oil it is entitled to receive under certain production-sharing contracts.
Expressed in dollars, Total's quarterly net earnings leapt 39 percent compared with 32 percent at Exxon Mobil, the world's largest listed oil firm, and more than 40 percent at BP.
Total said it was confident of meeting its annual oil and gas production growth targets despite the 3.7 percent fall in the second quarter to 2.506 million barrels of oil equivalent per day.