Total LNG Sales Down 6%, Despite Start-Up
Total’s earnings and net profits fell in 1Q because low prices despite a 4% increase in production, it reported on April 27, while LNG sales were lower.
Adjusted net income fell by 37% to $1.6bn in 1Q 2016, from $2.6bn a year ago. Pre-tax income slumped by 91% to $142mn. Net of taxes, adjusted net operating income was 63% lower at $498mn, as Total’s effective tax rate flipped from 49% in 1Q 2015 to minus 7% in the latest quarter.
CEO Patrick Pouyanne spoke of the "resilience of our integrated business model" with good reason, as its refining/chemicals earnings increased by 3% whereas upstream's fell by 63%.
Oil and gas production was 2.48mn barrels of oil equivalent (boe/d) in 1Q 2016, up 4% year-on-year. New project start-ups such as the UK west of Shetland gas field Laggan-Tormore (production capacity 90,000 boe/d) and the Gladstone LNG venture in Australia contributed, but were offset by shutdowns at Yemen LNG and security in Nigeria. Just under half of production (1.19 boe/d) was gas, representing 6.4bn ft3/d, up 2%.
Total’s LNG sales in Q1 2016 were 6% lower at 2.46mn metric tons, despite Gladstone’s start-up.
Total said it expects oil and gas production in full year 2016 to be 4% higher than last year, citing the “start-up of Angola LNG … expected by mid-year.” Chevron said in February that Angola LNG would restart during 2Q 2016, so one can argue for now they are saying the same.
The French major completed the $900mn sale of assets in 1Q 2016 including the 362km Frigg UK Pipeline network in the northern North Sea, and a 20% stake plus transfer of operatorship in Kharyaga in Russia to Zarubezhneft.
Novatek, Total’s partner in the Yamal LNG venture and Russia's largest gas producer after Gazprom, also reported its 1Q results on April 27: profit of 115.9bn rubles ($1.75bn) was up 273%. Once joint venture disposal proceeds are stripped out, such as the sale of a 9.9% stake in Yamal LNG to China’s Silk Road fund, Novatek’s normalised profit of 58.2bn rubles ($880mn) was up 87%.
Novatek’s gas production and purchases were 17.2bn m3, compared to 16.2bn m3 in 1Q 2015. Gas production by itself was 12.1bn m3, only slightly down year-on-year. Liquids production and purchases were 4.4mn metric tons in 1Q 2016.
Mark Smedley