* Total's Q4 adjusted net profit beats expectations
* CEO says cost savings help outperformance vs peers
* Says scouting for opportunities to snap up assets
(Adds details, peer comparison, background)
By Bate Felix
PARIS, Feb 9 French oil company Total
is on the hunt to buy assets from struggling rivals, it said on
Thursday, as it reported some of the biggest profits in the
industry for last year and raised its dividend.
Chief Executive Patrick Pouyanne said Total was reaping the
benefit of cutting costs more quickly than competitors following
the start of an oil price rout in 2014, and of focusing on
projects with lower production costs.
"We have the second-best net adjusted profit in the year
among oil majors although we don't have the same size of
production compared with some of them - we are fifth largest in
terms of production," he told reporters.
Total said it made an adjusted net profit of $8.2 billion in
2016 and that on a comparable basis Shell made $7.2
billion, BP $2.6 billion and Chevron $1.8 billion. Only
Exxon Mobil made more, with $8.9 billion, Total said.
In the fourth quarter, the French company's net profit rose
16 percent to $2.4 billion, beating analysts' average forecast
of $2.3 billion, while the dividend was set at 0.62 euros per
share, up from 0.61 euros in the previous three quarters.
"Another resilient set of results from Total, with earnings
robust across all segments," Jefferies analysts said in a note.
They have a "hold" rating on the stock, which was up 1.2
percent to 47.4 euros at 1430 GMT.
"We reacted faster than our peers on cutting our costs and
we succeeded," Pouyanne said. "We deliberately made the choice
to go for projects with very low production costs."
"We did a lot of cost savings. The most spectacular was the
average cost of production in exploration and production which
was reduced to $5.9 per barrel of oil equivalent (boe), compared
with $9.9/boe in 2014 and was the principal reason of our
resilience," he said.
Total said it made $2.8 billion of savings in 2016, beating
its target of $2.4 billion. It aims to make a further $3.5
billion of savings in 2017 and cut production costs to $5.5/boe.
Pouyanne said the company's downstream business also
contributed to the strong performance, with a return on capital
employed of over 30 percent, which he said was ahead of the
16-17 percent at peers.
NEW PROJECTS, OPPORTUNITIES
Total's solid balance sheet meant it could look for
opportunities to pick up assets, the CEO said, adding the
company planned to make final investment decisions on about 10
projects within the next 18 months.
"We are in a field of opportunities," Pouyanne said. "After
two years of very low prices, there are companies around the
world that have good assets but are struggling."
Total expects to invest $16-$17 billion in 2017, including
resource acquisitions, compared with $18.3 billion in 2016.
Production is forecast to grow by more than 4 percent,
supporting the company's goal to increase output on average by 5
percent per year from 2014 to 2020.
Pouyanne said the global oil market had not yet rebalanced
and inventories were about 10 percent above normal. He added oil
prices were likely to remain volatile.
A rebalancing of supply and demand would depend on
implementation of the deal to cut output agreed by the
Organization of the Petroleum Exporting Countries (OPEC) and
non-OPEC producers, he said.
Total predicted its breakeven oil price would continue to
fall, reaching less than $40 per barrel before the dividend,
with cash flow from operations expected to cover investments and
the cash portion of the dividend at $50 per barrel.
(Reporting by Bate Felix and Benjamin Mallet; Editing by Sudip
Kar-Gupta and Mark Potter)