* Total's Q1 net profit jumps 56 percent year-on-year
* Oil production rises 4 percent in the quarter
* Total clears Argentina Vaca Muerta shale project
* Maintains 2017 guidance stated in February
* Dividend 0.62 euro per share
(Recasts, updates throughout)
By Bate Felix
PARIS, April 27 French energy company Total
gave the go-ahead on Thursday to develop its first
major project since 2014 after reporting a sharp rise in
quarterly profit that underscored its drive to cut costs
throughout the oil price downturn.
Total and its peers including Royal Dutch Shell and
Exxon Mobil are cautiously refocusing on growth after
years of slashing spending, which involved cutting thousands of
jobs and scrapping major projects.
Total, France's largest company, kickstarted the sector's
first-quarter earnings reporting with an upbeat tone, as its
adjusted net profit surged 56 percent to $2.6 billion compared
with the same period of 2016.
Analysts had forecast Total's net adjusted profit at $2.4
billion in the quarter. Brent crude prices rose 58 percent
during the period.
"No question Total is through the worst of it and in a sweet
spot," said Bernstein analyst Oswald Clint, who rated Total as
"market-perform", saying he saw better returns at peers
Total's shares were trading 0.15 percent lower at 0851 GMT.
Total said it had approved the development of its Aguada
Pichana Este project in the Argentine Vaca Muerta shale gas
site, and had increased its stake in the license to 41 percent
from 27 percent.
Greater confidence in an oil price recovery following years
of lower investment and after OPEC and other major producers
agreed to cut output is expected to lead to a cautious revival
in project approvals.
Shell in February approved the development of its Kaikias
deepwater field in the Gulf of Mexico, the first project
clearance since 2015.
The first phase of the project will cost around $500
million, Total Chief Executive Patrick Pouyanne told journalists
on the sidelines of an oil summit in Paris.
“For us, this is a new era. During the last few years, 2015,
2016, we have not been able to take more capex (capital
spending). Now we have room, we have more cash,” Pouyanne said.
Pouyanne said he hoped the Organization of the Petroleum
Exporting Countries, Russia and other producers would extend
their production cuts to keep the market stable, and for prices
to reach $60 per barrel.
Total had said in February that it planned to take advantage
of the recovery in prices to launch about a dozen projects by
August 2018, with the French company having emerged from the
prolonged oil price rout faster than its peers.
It has signed deals in recent months in which it has either
increased its stake or expanded its role in projects in Uganda,
Brazil and Azerbaijan.
Total maintained its investment, production and savings
guidance stated in February, when it said it aimed to make a
further $3.5 billion of savings in 2017.
It had set its capital expenditure, excluding resource
acquisition, at $14 billion-$15 billion in 2017.
It said its cash flow in the months ahead would benefit from
production growth and cost reduction, after it generated free
cash flow of $1.7 billion in the first quarter, while Total's
oil production rose 4 percent.
The company said its planned ramp-up of recently started
projects would continue to boost output, although this would be
affected by seasonal maintenance as well as the full
implementation of the OPEC quotas.
OPEC, Russia and other producers have agreed to cut
production by 1.8 million barrels per day for six months from
Jan. 1 to support the market.
(Additional reporting by Ron Bousso; Editing by Sudip Kar-Gupta
and Dale Hudson)