Total Profit Steady as Cash-Flow Jumps
July 27 2017 - 1:29AM
Dow Jones News
By Sarah Kent
French oil giant Total SA (TOT) on Thursday reported net profit
of $2 billion in the second quarter and a significant increase in
cash flow, signaling the company is continuing to look at new
investment opportunities despite ongoing oil price pressure.
The company's net profit for the quarter was steady compared
with a year earlier, but its debt levels continued to come down and
cash flow from operations soared 60% to generate enough firepower
to cover capital spending for the quarter.
The confident tone reflects a years-long campaign to bring down
costs across the business in response to intense pressure from a
dramatic slump in oil markets. Over the last three years the price
of crude has plummeted from $114 to $27 a barrel before rebounding
to their current level of around $50 a barrel, pummeling profit
across the sector.
Oil companies' cash generation has become a core focus for
analysts and investors anxious about ballooning debt levels and
dividend security in the wake of the oil price crash. In response
companies have worked hard to bring down the oil price at which
they will make enough cash to cover capital spending and dividend
payouts. Total is targeting a break even oil price of $50 a barrel
this year.
In addition to its cost cutting efforts, Total's performance in
the quarter was buoyed by a 3% increase in production, particularly
from high margin projects that grew their output over the course of
the period. The company is targeting production growth of more than
4% this year.
The results signaled are among the first reported by the oil
sector for the second quarter and suggest the company is continuing
to recover and adapt to a lower oil price environment and is ready
to take advantage of lower costs with new acquisitions and
projects.
-Write to Sarah Kent at sarah.kent@wsj.com
(END) Dow Jones Newswires
July 27, 2017 02:14 ET (06:14 GMT)
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