Total SA, the world’s fourth-largest oil and gas giant, has posted strong annual results for 2018 on the back of favourable oil prices, which the company says puts it in a strong position to increase production this year by an estimated 9%.
Total revealed a successful year thanks to a rise in oil prices from $54 per barrel to $71 per barrel.
Total SA results
The company boasted revenues of $209.4 billion, up $37.9 billion compared to 2017.
The Paris-based company beat profit expectations in the final quarter of 2018, causing its full-year profit to rocket 28% to reach an adjusted net income of $13.6 billion.
In addition to rising oil prices caused by the slowing of global production, net investments of $15.6 billion and strict financial discipline resulting in a $4.2 billion cost reduction also contributed to the company’s annual success.
Entering 2019 following a strong financial performance, a forecasted oil price increase, a share price increase and the discovery of two new reserves of oil and gas point to another successful year for Total.
New discoveries in the North Sea and South Africa
Total has started 2019 positively, announcing the discovery of two new oil and gas reservoirs. One, Glengorm, is the largest gas field discovery in the UK for a decade and is 25% owned by the French company. The field is estimated to contain natural gas condensate equivalent to approximately 250 million barrel of oil.
In addition to the North Sea discovery, an even larger source of gas condensate was found 175 kilometres off the southern coast of South Africa; the reserve is said to contain an estimated equivalent of 1 billion barrels of oil. These discoveries are especially significant considering the lack of new finds in recent years.
Only 3.5 billion barrels were discovered in 2017. The rarity of large discoveries makes these finds financially significant. Not only will it help increase future production and profits, but it could also attract potential investors and help Total reach performance targets in 2019.
The share price in January 2019 increased by 3.89% in the Euronext Paris stock exchange in response to the news.
Oil price to remain stable
Total will likely continue to grow throughout 2019, especially if the price of oil tracks the World Bank Commodities Price Forecast, which predicts oil prices to remain around $74 per barrel.
The company has predicted production growth to increase more than 9%, eight major start-up operations targeted for activation in 2019 will help total accomplish this goal. Virtually all cash flow and income of energy exploration and production companies are directly attached to oil and gas production.
The company is also expecting an increase in net investments of between $15 to 16 billion and is targeting cost reductions of $4.7 billion.