PARIS: French energy major Total said its net profit for the first three months of the year fell 4 percent to $2.8 billion compared with a year ago due to volatile oil prices and debt costs, despite a new record oil and gas output.
Total said its adjusted net profit, which was down for the first time since the fourth quarter of 2016, was hit by oil prices, with the Brent price averaging $63 per barrel in the January to March period, down 6 percent year-on-year.
The adjusted net profit was nevertheless slightly above average analysts' forecast of $2.7 billion.
Natural gas prices slumped in Europe by 11 percent, and in Asia by 30 percent, Total said.
The company added that the increase in the net cost of its net debt compared with last year, mainly due to the rise in U.S. dollar interest rates, had also weighed on its profits.
Its refining margin had also been volatile during the quarter, the company said.
"Total's balance sheet is strong, with gearing below 20 percent, in line with the objective," said Total's chairman and chief executive Patrick Pouyanne.
Total's cash flow after organic investments rose 18 percent year-on-year to $3.2 billion thanks to strong operational performance and spending discipline. Its so-called organic pre-dividend cash breakeven was less than $25 per barrel.
Oil and gas output reached a new record level in the quarter at 2.95 million barrels of oil equivalent per day (Mboe/d), up 9 percent year-on-year.
Total increased its first interim dividend for 2019 by 3.1 percent to 0.66 euros ($0.7350) per share, and it also bought back shares during the quarter.
The French group said it would maintain discipline on spending in 2019 and it kept its net investment target unchanged at $15 to $16 billion, and cost savings at $4.7 billion.
Since the start of the second quarter, the Brent oil price has traded at around $70 per barrel with disruptions in Venezuela, uncertainty in Libya and compliance with OPEC production quotas providing some support to the price.
Nevertheless, Total said the environment remained challenging.
"The environment remains volatile, however, with uncertainty around the evolution of non-OPEC supply and the impact of global economic growth on demand," said Total.
Total said production growth should exceed 9 percent during the year, thanks to the ramp-up of projects started in 2018, and the start-ups of the Kaombo Sul project in Angola, Iara 1 in Brazil, Culzean in Britain and Johan Sverdrup in Norway.
It said it would take advantage of the low cost environment to launch other projects including Mero 2 in Brazil, Tilenga & Kingfisher in Uganda and Arctic LNG 2 in Russia.
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