Total meets costs savings target early as oil rebound helps Q2 profits
PARIS, July 27 (Reuters) - French oil and gas company Total said it had met its cost saving target ahead of schedule as it reported a better-than-expected rise in second quarter net profit led by increased output and a rebound in oil prices.
Total said it had achieved $900 million in savings so far this year. On top of $1.5 billon saved last year, this brings it to its targeted $2.4 billion of savings for the period leading up to the end of 2016. It now hopes to save more by year-end.
Chief Executive Officer Patrick Pouyanne said that while oil prices remained volatile, Brent crude had recovered from the start of the year to average $46 per barrel in the second quarter.
"Total captured the benefit of this rebound, and adjusted net income rose to $2.2 billion in the second quarter 2016 (versus the first quarter), an increase of 33 percent compared to the first quarter," Pouyanne said in statement.
Compared with a year ago though, the fourth-biggest western oil company's revenue fell 17 percent to $37.215 billion, reflecting much lower oil prices and even though oil production in the quarter rose by over 5 percent.
A Reuters poll of analysts had forecast second quarter net adjusted profit of $1.9 billion, expecting production levels to be lower.
Total said the increase in oil output due to new projects coming on stream was dampened by deteriorating security in Nigeria and Yemen, and forest fires in Canada.
It said projects in Bolivia and Kazakhstan were expected to start in the second half of the year, helping it meet a 4 percent production growth target in 2016.
Capital expenditure in 2016 is expected to be $18-19 billion, it added.
Total kept its dividend unchanged for the second quarter, at 0.61 euros per share to be paid in January. (Reporting by Bate Felix; Editing by Richard Lough and Andrew Callus)
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