Cheap Gas HIts Total's Q2 Profits

Low gas prices in Europe (-36%) and Asia (-26%) knocked a quarter off French Total's adjusted operating profit for its integrated gas, power and renewables business in the second quarter of this year, compared with Q2 2018, it said July 25. The profits stood at $429mn. Operating cash flow though was 77% up, as the Yamal LNG and Ichthys projects had ramped up in the intervening period. It sold twice as much LNG as it did in Q2 2018.

The company's 0utput is now tilted in favour of gas, with 1,549,000 barrels of oil equivalent/day of gas and 1,407,000 boe/d of oil to give a total 2,957,000 boe/d overall. This time last year, it was just over half oil (1,400,000 out of a total 2,717,000 boe/d in Q2 2018).

Overall the picture was similarly weak, with adjusted operating profit for the group down 19% on Q2 2018, at $2.9bn, and net income down 26% at $2.8bn. However, the return on equity was above 11% and its debt gearing is 20.6%.

CEO Patrick Pouyanne blamed volatile markets, as all the major indicators were down on Q2 2018. Brent crude was down 7%, Henry Hub down 11%, and the UK National Balancing Point and the Japan Korea Marker were both down 44%, showing the close relationship between the two.

Looking ahead, the company is planning to sell another $5bn of assets in the next year or two, mainly from the upstream; and it is continuing its move into LNG with the purchase of Anadarko's African assets. Its sale of mature UK assets has also lowered its average breakeven price.