Wednesday, Total S.A. (TOT), an integrated oil and gas company, announced that the company's 2009 capital expenditure is within the company's budget of $18 billion, excluding acquisitions and divestment's. The entitlement production of Total declined in first half year, compared to same period last year.
Total had $20 billion of cash at mid-June and Cash flow for 2010 is benefiting from start-ups and cost reduction, the company said.
The company said it has ample flexibility to manage its net debt and indicated that the company has $7.5 billion of Sanofi shares which are still to be sold based on June 30 position and share price. The company reported ongoing Sanofi divestment of $1.4 billion in the first half of the year. Total said, its Net-debt-to-equity ratio is 25%. In the first half-year, Total's entitlement production declined by 5.7% year-over-year. The entitlement production was negatively impacted by 90 kilo barrel of oil equivalent per day due to OPEC reductions and security issues in Nigeria impacted the decline in production by 40 kilo barrel of oil equivalent per day.
Total is implementing cost reduction programs in all its segments and restructuring refining and petrochemicals segment in Europe, the company said. Total is renegotiating its contracts in order to reduce operating expenditure. While, operating expenditure per barrel for the first six months of the year was reduced by 14% year-over-year, the company added.
Total has commenced 3 new upstream projects during first half year. While, Qatargas II TB and Yemen LNG are scheduled to commence production in Second Half of the year. Total expects a significant oil production from the two new start-ups.
Organization for Economic Cooperation and Development or OECD industry crude inventory surplus is increasing and the overall surplus remains high. Total expects crude and products floating storage to increase in second half of the year.
Total said, Investment cuts and delays are adding as another challenge to the existing political, environmental and technological challenges impacting the future production capacity. The company said, it is developing solar power plants and increasing its research and development on solar technologies.
Cash breakeven was around $60 a barrel of oil equivalent in the first half of 2009, Total said.
Tuesday, TOT closed at $61.37, up 0.72% on NYSE.
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