PARIS (Reuters) - French energy major Total reported a 96% fall in second-quarter net profit to $126 million on Thursday as the coronavirus knocked oil prices and demand but said it would maintain its dividend.
Total said its cash flow from operations fell 44% to $3.47 billion, but its adjusted net income was positive and its gearing was under control.
Chairman and Chief Executive Officer Patrick Pouyanne said the cash flow, and reduced spending, would enable Total to maintain a dividend of 0.66 euros ($0.7781) per share and that it was sustainable at that level with Brent crude at $40 per barrel, just below its current price.
“These results are driven in particular by the outperformance of trading activities, once again demonstrating the relevance of Total’s integrated model,” Pouyanne said in a statement.
Total said output cuts by the Organization of the Petroleum Exporting Countries and other producers and a pickup in demand, had contributed to a recovery in the oil market since June.
“The oil environment, however, remains volatile, given the uncertainty around the extent and speed of the global economic recovery post-COVID-19,” the company said.
Total’s oil and gas production during the quarter fell 4% to 2.85 million barrels of oil equivalent per day (mboepd).
It cut its output forecast for the year to around 2.9-2.95 mboepd from 2.95-3 mboepd.
It also reduced its planned 2020 investments to below $14 billion from $15 billion previously.
Total said it expected significant deferred liftings of liquefied natural gas (LNG) cargoes in the third quarter, and that the fall in oil prices in the second quarter would have an impact on long-term LNG contract prices in the second half of 2020.
The group said on Wednesday it would take an $8 billon impairment on the value of its assets, mainly in energy-intensive Canadian oilsands projects after the energy group slashed its oil and gas price outlook.
($1 = 0.8482 euros)
Reporting by Bate Felix; editing by Barbara Lewis