Highlights since the beginning of the second quarter 2019
Signed agreement with Occidental to acquire the African assets of Anadarko for 8.8 B$
Sold mature fields in the UK North Sea for 0.6 B$
Started production at Kaombo Sul in Angola
Started production at Culzean in the UK North Sea
Launched the second development phase for the giant Mero field in Brazil
Launched the third development phase of the Dunga field in Kazakhstan
Started production at Cameron LNG in the United States
Agreed with Toshiba to take over its LNG portfolio, including a 20-year 2.2 Mt/y tolling agreement for the third train at Freeport LNG in the United States
Started up the biorefinery at La Mède in France
Started up second solar plant in Japan
Commenting on the results, Chairman and CEO Patrick Pouyanné said:
‘Markets remained volatile with Brent averaging $69/b in the second quarter, an increase of 9% compared to the previous quarter, but natural gas prices were down 36% in Europe and 26% in Asia. In this context, with a slight increase in production to 2.96 Mboe/d, adjusted net income increased by 5% compared to the previous quarterto 2.9 B$, and the return on equity remained above 11%.
Fueled by the ramp up of cash flow accretive projects, like Egina in Nigeria, Ichthys in Australia and KaomboNorte in Angola, plus the second-quarter start-ups of Kaombo Sul in Angola and Culzean in the UK North Sea,debt-adjusted cash flow (DACF) increased by 10% compared to the previous quarter to 7.2 B$. Cash flow after organic investments increased to 3.7 B$, up 13% from the previous quarter. Thus, the organic pre-dividend breakeven is below $25/b and the organic post-dividend breakeven is below $50/b.
Exploration & Production benefited from the higher Brent with a 15% increase in operating cash flow before working capital changes.
Although gas prices fell sharply, iGRP increased its operating cash flow before working capital changes by 42% thanks to 8% production growth and a 10% increase in LNG sales. Compared to the second quarter 2018, operating cash flow before working capital changes increased by 77%, driven by a doubling of LNG sales.
In signing an agreement with Occidental to acquire Anadarko’s assets in Africa, the Group is preparing for its future and capitalizing on its strengths. In Mozambique, it leverages its expertise in LNG, i n Ghana, the deep offshore and, in Algeria, its historic presence. The Group continues to grow in LNG with the signing of a sales contract with the Chinese company Guanghui, the takeover of Toshiba’s LNG portfolio and the start-up of Cameron LNG in the United States. This strategy is complemented by the divestment of high-breakeven assets, such as the recent sale of mature assets in the UK North Sea. This active portfolio management policy will continue with the sale of 5 B$ of assets over the 2019-20 period, the majority coming from Exploration & Production.
In the Downstream, adjusted net operating income was 1.1 B$, up 4% compared to the previous quarter, in an environment where refining margins fell by 16%. In addition, the Group strengthened its presence in biofuels with the start-up of the La Mède bio-refinery.
Total maintains a solid financial position with gearing of 20.6%, after taking into account the payment of two interim dividends in the quarter and the impact of the new IFRS 16 standard (2.7%). Consistent with its shareholder return policy, the Group increased the second interim dividend by 3.1% compared to last year to €0.66 per share and bought back 0.76 B$ as part of its target to buy back 1.5 B$ of share in 2019 with Brent at $60/b. The cash returned to shareholders, expressed in dollars, stands at 37% of operating cash flow before working capital changes for the first half 2019.’