Oil Major profit falls 66%

LONDON – The French total reported a massive drop in full-year profits on Tuesday, following the tumultuous twelve months in which commodity prices fell amid the coronavirus pandemic.

The largest energy sector said the full-year net profit for 2020 reached $ 4.06 billion, exceeding the $ 3.86 million expectations of analysts surveyed by Refinitiv. It compared to $ 11.8 billion for fiscal year 2019, reflecting a 66% year-over-year drop.

Total also posted a fourth-quarter net profit of $ 1.3 billion, exceeding analysts ’expectations of $ 1.1 billion.

Shares of the total have risen around 0.8% to date, after falling more than 28% last year.

“Total faced two major crises in 2020: the Covid-19 pandemic that severely affected global energy demand and the oil crisis that pushed Brent’s price below $ 20 a barrel in the second quarter.” said Total CEO Patrick Pouyanne in a statement.

“In this particularly difficult context, the Group implemented an immediate action plan and demonstrated its resilience thanks to the quality of its portfolio,” he added.

Total said it would propose a fourth-quarter dividend payment of $ 0.66 ($ 0.8) per share, in line with previous quarters, and set the dividend for 2020 at $ 2.64 per share.

The oil and gas industry became a negative problem last year as the coronavirus pandemic coincided with a historic shock to demand, falling commodity prices, evaporation of profits, unprecedented declines and the reduction of dozens of jobs.

Last week, major UK-based oil and gas company BP reported its first net loss in a full year in a decade, while US oil giant Exxon Mobil recorded its fourth consecutive quarter of losses. Anglo-Dutch oil giant Royal Dutch Shell also reported a sharp drop in full-year profits.

BP CEO Bernard Looney described 2020 as the “toughest” of his career, while Exxon Mobil CEO Darren Woods said the last twelve months “presented the conditions for more challenging market than Exxon Mobil has ever experienced. “

Leading energy companies have warned that the ongoing coronavirus crisis is likely to continue to affect its short-term performance, while trying to reassure investors about its future profitability.

Total reaffirmed this trend in year-over-year results, saying the oil environment “remains uncertain and depends on the recovery in global demand, still affected by the Covid-19 pandemic.”

International benchmark Brent crude futures traded at $ 61.22 a barrel on Tuesday morning, up about 1.1%, while West Texas U.S. intermediate futures traded at 58, $ 54, up nearly 1%.

Brent prices topped $ 60 a barrel on Monday for the first time since January 2020.

Oil prices have steadily improved in recent weeks, thanks to continued support for production and the massive deployment of Covid vaccines.

Last month, Total became the first major energy company in the world to leave the American Petroleum Institute after a review of the influential oil and gas lobby.

Total said it had decided not to renew its API membership this year, citing disagreements over climate policies and the group’s support to facilitate drilling regulations.

The measure was believed to represent a growing rift between major oil and gas companies on both sides of the Atlantic.

Overall, major European oil and gas companies have been seen as more willing to accelerate plans to reduce carbon emissions in recent years, while US partners such as Chevron and Exxon Mobil have resisted calls to diversify your portfolio.

It comes as the global oil and gas industry faces growing pressure from climate emergency advocates, activist investors and policymakers around the world.

The global ratings of S&P, one of the most influential rating companies, warned last month that it could lower the credit score on several major producers, including Total, Royal Dutch Shell and ExxonMobil.

The rating firm said it believes “energy transition, price volatility and lower profitability are growing risks for oil and gas producers.”