Total share price up, reports quarterly loss on lower oil prices

Lower oil prices claimed another victim on Thursday as Frances Total reported a net loss of $5.66 billion in the fourth quarter due to significant asset writedowns.

The company took impairment charges with a combined value of $6.5 billion, related to its Canadian oil sands business, its refineries in Europe and its US shale operations.

The writedown was the main contributor to the companys quarterly loss, which compares with a profit of $2.23 billion a year ago. Oil prices have fallen more than 50% with Brent trading close to $55 per barrel on the ICE Europe.

Totals quarterly report completes the “supermajors” or the five largest oil companies in the world to release their financial performance in the latest quarter.

Like his peers Total reduced its capital expenditure for 2015 by 10% to between $23 billion to $24 billion, outlining efforts to maintain dividend payments and discourage investors from selling its stock.

However, Total, and BP, did not manage to report a profit in the latest quarter, unlike rivals ExxonMobil, Chevron and Royal Dutch Shell, who stated hurt, but positive numbers.

Total will reduce its breakeven point by $40, with the aim to be profitable with oil trading at $70 per barrel. This action alone would generate $8 billion in cash in 2015, the company said.

Additionally, Total will reduce its worker count by 2 000 employees by 2017, with the intention to not hire any more staffers at its petrochemicals, refinery and output operations.

Under the cost cutting plan, the company also expects to sell $5 billion worth of assets by the end of this year.

Output of oil and gas dropped 2% during the three months to 2.229 million barrels of oil equivalent per day, primarily because of a license expiration the company had in the United Arab Emirates.

However, Total estimated an 8% increase in overall production this year, when new projects are expected.

Adjusted net profit, excluding the charge and some other items, stood at $2.80 billion versus $3.84 billion a year ago, in line with analysts expectations.

“The group is focused for the short-term on generating cash flow and reducing its breakeven point, and for the medium term confirms its growth strategy,” said Chief Executive Patrick Pouyanné.

Total lost 0.84% on Wednesday and closed at €46.95 in Paris. The stock edged up 0.88% to €47.37 at 13:06 GMT, marking a one-year increase of 7.70%. The company is valued at 111.54 billion.

According to the Financial Times, the 29 analysts offering 12-month price targets for Total have a median target of €49.00, with a high estimate of €58.00 and a low estimate of €41.00. The median estimate represents a 4.37% increase from the last closing price.