London — Total's oil and gas production dropped 11% on the year in the third quarter, to 2.72 million b/d of oil equivalent and it forecast full-year output below 2.9 million boe/d on the back of OPEC+ cuts, as its third-quarter results showed financial improvement Oct. 30.
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In a results statement, Total said its Q3 production had been affected by OPEC+ cuts in Angola, Iraq, Kazakhstan, Nigeria and the UAE as well as voluntary reductions in Canada and disruption in Libya, noting in particular the "reinforcement" of cuts by Nigeria.
The company's liquids production was down 16% on the year at 1.44 million b/d, although it noted OPEC+ cuts were offset by increases from the UK's Culzean gas field, Norway's Johan Sverdrup, Brazil's Iara and Italy's Tempa Rossa.
In the context of strong OPEC+ compliance and lower North American production, Total "anticipates full-year 2020 production below 2.9 million boe/d," compared with 3.01 million boe/d in 2019, it said.
However, CEO Patrick Pouyanne noted a "more favorable" business environment, and the company highlighted its July sale of the UK's Lindsey refinery, as well as its conversion of the Grandpuits refinery to a "zero-oil" producer of biofuels and bioplastics.
"The oil market environment remains uncertain and will depend notably on the speed of the global demand recovery, affected by the COVID-19 pandemic," Total said.
Europe's largest refiner added that margins in the region had recovered in the fourth quarter, averaging above $10/mt, but "remain fragile given the low demand for jet fuel that weighs on the valuation of all distillates."
It added that it anticipated a positive impact from improved fourth quarter LNG prices, expected to be over $4/MMBtu, as a result of the oil price recovery over the previous two quarters.
Total reported an adjusted profit of $850 million, down 72% on the year, and reduced its debt gearing to 22% from the end of the previous quarter, making it again the least indebted of the European majors by far.
It reported an overall profit of $202 million, impacted by relatively modest impairments of $293 million, compared with an overall loss of $8.4 billion in Q2, impacted by over $8 billion of impairments.
Noting the company's low cost of upstream production, of just $5/boe, Total said the upstream division "carries" its corporate performance.
"The group is once again demonstrating its resilience thanks to its integrated model, by generating debt-adjusted cash flow of more than $4 billion [and] reducing gearing to 22% given its investment and cost discipline," Pouyanne said.