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PARIS -(Dow Jones)- French oil major Total SA (TOT) Friday posted a 43% increase in second-quarter net profit, boosted by stronger production, higher oil prices and a stronger dollar.
Total's net profit was EUR3.1 billion for the three months to June 30, compared with EUR2.17 billion during the same period a year earlier.
Adjusted net profit for the period stood at EUR2.96 billion, up from EUR1.72 billion a year earlier. That beat an average forecast of EUR2.67 billion in a Dow Jones Newswires poll of 12 analysts.
Total's second-quarter production grew 8% to 2.36 billion barrels of oil equivalent per day from 2.18 billion barrels a day in the year-earlier period, boosted by higher-than-expected production from Total's five new projects started last year, the group said.
Over the period, the price of Brent crude oil averaged around $75 per barrel, while natural gas prices remained depressed.
Total's Chairman and Chief Executive Christophe de Margerie recently told Dow Jones Newswires that the price of oil could easily bounce back to $90 a barrel by year end, as the BP well disaster in the U.S. Gulf of Mexico was reducing investments in finding new fields. The spill in the Gulf "will probably trigger an additional delay in investment," he said. "There will be a very clear impact on production capacity."
Beyond the beneficial effect of higher oil prices, the dollar's strength also contributed to Total's net profit increase, de Margerie said. Oil prices are expressed in U.S. dollars. As the dollar rose against the euro during the European sovereign debt crisis over the period, this meant the company's profits expressed in euros increased accordingly, through a positive foreign exchange rate impact.
De Margerie also expressed optimism about the company's position over the remainder of 2010. "Based on strong operational performance, a capacity to adapt to changes in the environment and a solid balance sheet, the group approaches the second half of 2010 confident in its outlook and its strategy for growth as an integrated major," he said.
Total said its refinery output over the period dropped 2% from a year earlier, but was up 7% from the previous quarter, and that refining margins were slightly higher.
In the second quarter, the European refining margin indicator improved to $31.2 per ton, from $29.1 in the first quarter and $17.1 a year earlier, Total said. Last October, Total's Chief Financial Officer Patrick de la Chevardi�re told Dow Jones Newswires the company's oil-refining division was losing around EUR100 million a month at the time.
Total is in the last stages of converting a Dunkirk refinery into a storage unit and has offered to sell its U.K.-based Lindsey plant. Total didn't provide any detail regarding the sale process of Lindsey.
Since the start of the year, shares in Total dropped around 13% on worries over oil consumption following the sovereign debt crisis in Europe and the ongoing economic slowdown in most developed countries. Shares closed Thursday at EUR38.35.
Company Web site: www.total.com
- By Geraldine Amiel, Dow Jones Newswires; +33 1 40171740; geraldine.amiel@dowjones.com;
Copyright © 2010 Dow Jones Newswires
