French oil firm Total is to slash capital spending by 7% after profits slumped by 19% in the last quarter of 2013.
Total – one of the largest operators in the UK North Sea in terms of production and reserves – will cut investment despite global output stalling, falling into line with industry peers by reducing spending in an attempt to boost shareholder returns.
Fourth-quarter adjusted net profits plunged to just over £2billion, from about £2.5billion a year earlier, missing analysts’ forecast for £2.2billion.
The company was hit by shrinking refining margins, lower oil prices and delays on key fields, such as Kazakhstan’s Kashagan development.
Full-year output edged down slightly to just under 2.3million barrels of oil equivalent (boe) a day.
Total, which has exploration and production activities in more than 50 countries, had initially targeted 2.3% output growth and was still expecting an increase as late as September.
Chief financial officer Patrick de la Chevardiere said the company still aimed to reach 3million boe per day by 2017. “In terms of production, we are alone in having a production level that is flat. The others (rivals) are all falling.”
Chief executive Christophe de Margerie said it was too early to say when output from Kashagan, halted last year because of a leaking gas pipe, might restart.
Total’s fourth-quarter output was down by 0.5%, compared with a year earlier, due to declines and maintenance work on mature producing fields such as Elgin/Franklin in the North Sea and OML58 in Nigeria.
Other big oil firms have also reported lacklustre fourth-quarter results, with Shell posting what it said was the least profitable three months in five years.
Total is betting on a string of start-ups in 2014 to see production rise again, including Angola’s £4.8billion CLOV project and the £3billion Laggan-Tormore development west of Shetland.
The group said it would cut gross capital expenditure to £15.7billion in 2014, from nearly £17billion last year, and reward investors with a 3.4% rise in its quarterly dividend to 50p a share.
Full-year adjusted net profits fell by 12% to £8.8billion.