Total's output disappoints despite profits climb 03/08/2006 00:00

PARIS, Aug 3, 2006 (AFP) - The French oil major Total posted Thursday a 16 percent jump in first-half profit but disappointed the stock market with an 8.6 percent drop in production.

Total, the fourth-biggest oil group in the world, said net profit increased to EUR 6.74 billion in the first six months of the year, driven by high oil prices.

Sales rose by 27 percent on a 12-month basis to EUR 79.0 billion.

Company chairman and chief executive Thierry Desmarest said the oil industry "continued to benefit from favourable market conditions in the second quarter".

Oil prices had continued to rise as a result of strong demand and tight oil production capacity.

"Refining margins recovered, reflecting in particular the strength of gasoline (petrol) demand in the United States," Desmarest added.

"However the environment for the petrochemicals remained difficult due to an increase in raw material prices."

The net profit figure was calculated after stripping out changes in the value of oil being held in stock.

Crude oil production fell however by 8.6 percent in the second quarter to 2.290 million barrels of oil equivalent (mboe) owing to maintenance, and rebel attacks in Nigeria which accounts for about 10 percent of Total's output.

Net profit in the second quarter rose by 12 percent on a 12-month comparison to EUR 3.44 billion but fell by 6.5 percent from the first-quarter figure of EUR 3.68 billion.

The price of shares in Total fell by 1.53 percent to EUR 51.60 in midday Paris trading, while the CAC 40 index showed a loss of 0.58 percent overall.

One broker in Paris, who declined to be named, commented: "The results for the second quarter are not so good, in fact they are disappointing. They fall short of expectations with regard to net profit and for production levels."

Total financial director Robert Castaigne told a telephone press conference: "The second quarter should be the low point in our production."

By the end of the year, production should reach 2.4 million barrels per day, he added.

Looking ahead, a Total statement said: "Since the beginning of the third quarter 2006, oil prices have remained at very high levels and refining margins settled close to the level of the first half.

"The outlook for sustained growth in the coming years and over the longer term has been strengthened by projects under development which are progressing as planned, continued exploration success and the favorable pace of negotiations to gain access to new major projects."

Castaigne forecast that for 2007, based on average oil prices of US $60 a barrel and continued unrest in Nigeria, "we should have (production) growth of seven percent."

At JP Morgan, analysts commented on the second quarter results, saying: "Although slightly disappointing, we see nothing in the figures to alter what we think is a solid long term outlook."

Copyright AFP

Subject: French news