Oil company profit down 66%

LONDON – France’s Total reported a massive drop in full-year earnings on Tuesday after a tumultuous 12 months in which commodity prices collapsed amid the coronavirus pandemic.

The energy company said its full-year 2020 net profit was $ 4.06 billion, exceeding the expectations of $ 3.86 billion from analysts polled by Refinitiv. It compared to $ 11.8 billion for fiscal 2019, representing a 66% year-over-year decline.

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

Shares of Total are up about 0.8% year-to-date, down more than 28% last year.

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

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

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

The oil and gas industry entered a downward spiral last year as the coronavirus pandemic coincided with a historic demand shock, falling commodity prices, evaporating profits, unprecedented write-offs and tens of thousands of job losses.

Last week, British oil and gas company BP reported its first full-year net loss in ten years, while US oil giant Exxon Mobil reported its fourth consecutive quarter of losses. The British-Dutch oil giant Royal Dutch Shell also reported a sharp fall in annual profit.

BP CEO Bernard Looney described 2020 as the “toughest” of his career, while Exxon Mobil CEO Darren Woods said the past 12 months were “the most challenging market conditions Exxon Mobil has ever experienced”.

Major energy companies have warned that the ongoing coronavirus crisis is likely to continue to affect their performance in the near term, while looking to reassure investors about their future profitability.

Total confirmed this trend in its annual results, saying the oil climate “remains uncertain and is dependent on the recovery in global demand, still affected by the Covid-19 pandemic.”

International benchmark Brent crude oil futures traded at $ 61.22 a barrel on Tuesday morning, up about 1.1%, while US West Texas Intermediate futures were $ 58.54, up nearly 1%.

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

Oil prices have steadily improved in recent weeks, supported by ongoing production cuts and the massive rollout of Covid vaccines.

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

Total said it had decided not to renew its membership at API this year, citing disagreements over climate policy and the group’s support for relaxation of drilling regulations.

The move was thought to represent a growing rift between oil and gas majors on opposite sides of the Atlantic.

It is generally believed that in recent years, European oil and gas magnates are more willing to accelerate plans to cut carbon emissions, while US colleagues such as Chevron and Exxon Mobil have opposed calls to diversify their portfolios.

It’s as the global oil and gas industry is coming under increasing pressure from climate emergency campaigners, activist investors and policymakers around the world.

S&P Global ratings – one of the most influential rating companies – warned last month that it could lower the credit scores of a number of major producers, including Total, Royal Dutch Shell and ExxonMobil.

The rating agency said it believes “the energy transition, price volatility and weaker profitability are increasing risks for oil and gas producers.”