Total, Statoil Q4 profits drop on weak gas prices

CHRISTOPHE de
Margerie, Total CEO.

PARIS/OSLO — French oil company Total and Norwegian rival Statoil reported drops in fourth-quarter profit due to weak refining margins and lower gas prices, echoing a theme seen across the sector. Total said yesterday fourth-quarter net profit, excluding one-off items and unrealised gains on fuel inventories, fell 28 per cent from a year earlier to 2.08 billion euros.

The result was slightly better than analysts had expected and Total affirmed its production growth plans, lifting the shares 2.7 per cent to 42.04 euros to outperform a 1.6 per cent rise in the DJ Stoxx European oil and gas sector index. Statoil’s adjusted operating profit fell 21 per cent to 34.4 billion Norwegian crowns ($5.84 billion), below a forecast for 35.1 billion and the company trimmed its 2012 production goal by 100,000 barrels per day, blaming weaker-than-expected gas demand growth due to the recession.

But Statoil’s decision to change its dividend policy to offer more predictable returns lifted the shares 2.5 per cent. The largest western oil company by market value, Exxon Mobil, recently reported a 23 per cent drop in fourth-quarter net income while the second-largest US oil company, Chevron, posted a 37 per cent drop.

Royal Dutch Shell Plc saw net profits drop 75 per cent in the quarter, after refining margins collapsed. Statoil said it will scrap its practice of paying a low basic dividend and an additional, and highly volatile, special dividend in favour of hiking its basic dividend to 6 crowns from 4.4 and aiming to grow this in line with earnings.

The 2009 payout will therefore be 6 crowns, compared to a total payout of 7.25 in 2008.“From now on there will be a floor of 6 crowns, compared to 4.4 crowns last year,” one dealer said. After so many missed growth targets in the sector, investors are more impressed with cash today than promises of growth tomorrow that may not materialise, the dealer said. — Reuters