Total writes down value of Canadian, US oilfields amid loss
French energy producer Total SA wrote down the value of oil and gas fields in Canada and the United States and said it would slash investment after the collapse in market prices led to a net loss of US$5.66 billion for the fourth quarter.
Total SA said Thursday, its earnings were weighed down by US$6.5 billion in charges, mainly against the value of oil sands in Canada and unconventional gas fields in the United States.
Overall, its oil and gas production slid two per cent to 2.23 million barrels a day in the fourth quarter.
After falling nearly 60 per cent from a peak last June, the price of oil bounced back more than 20 per cent in recent weeks. On Wednesday, the price of oil fell US$1.18 to US$48.84 a barrel in New York. On Thursday, prices regained some of the lost ground with oil trading at just under US$51 at early afternoon.
Sharp Spending Cuts
Total followed European peers BP and Royal Dutch Shell in announcing sharp spending cuts in response to falling oil prices. Total will lower investments more than 10 per cent to between US$23 billion and US$24 billion this year, and will also cut its exploration budget by about 30 per cent to US$1.9 billion. It also raised its forecast for operating cost cuts to US$1.2 billion, well above the US$800 million planned previously.
Last year, Total and its partners shelved indefinitely the US$11-billion Joslyn north oil sands mine in Alberta, Canada, saying its costs didn't support the investment. The company also took a US$2.1-billion charge to write down the value of its shale gas development in Ohio.
This week, the International Energy Agency forecast a "relatively swift" recovery in oil prices but said it doesn't expect the price of a barrel to come close to returning to the highs of over US$100 seen in recent years.
Total Chief Executive Patrick Pouyanne, who took over last October after the death in an aviation accident of former CEO Christophe de Margerie, said in a statement that Total is focused on generating cash flow and reducing its break-even point.