Total, Europe’s third-biggest oil company, said annual production will rise in the next three years as capex peaks.
Total will start up projects in Norway, Angola, and the North Sea in the coming months and keep output growth targets, the company said in a statement Sept. 23. Capital spending is expected to fall to US $24 billion to $25 billion in 2015 to 2017 compared with $28 billion to $29 billion this year, according to CFO Patrick de la Chevardiere .
“The biggest part of the investment program is now behind us,” CEO Christophe de Margerie said during a presentation to brief investors on strategy. “The next step is to bring the cash in.”
De Margerie has pledged to raise oil and natural gas output, explore more aggressively for new deposits, and sell assets. A 2Q production increase was the first year-on-year gain since the last three months of 2010. The explorer has also set a goal of $15 billion to $20 billion in asset sales from 2012 to 2014.
“The group anticipates investments to trend down starting in 2014 as it enters a growth phase for production and free cash flow,” Total said in a statement. Total expects a “strong increase in cash flow from upstream startups and downstream restructuring.”
Total is planning to drill “high potential” wells in the Gulf of Mexico, Iraq, Brazil. and Angola by the end of 2014, it said.
The oil explorer reiterated a goal to raise output potential to about 3 MMboe/d in 2017 and said it would reach 2.6 MMboe/d in 2015. Production advanced 1.3% to 2.29 MMboe/d in 2Q.
The number of projects starting up in the next three years will almost double compared with the previous three, Total said in a presentation. It also plans to sanction investment in the Yamal LNG project as well as one at Fort Hills in Canada this year, both of which would begin production in 2017.
Total confirmed a target to reduce its European refining and petrochemicals business by 20% from last year to 2017. It pledged to raise a profitability target to 13% from 9.5% currently for the division overall while lowering capex 30% through 2017.
In the marketing and services division, Total plans to “adapt its positions in Europe and expand in growing markets particularly in Africa and the Middle East,” it said.
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