1st Quarter Results

Total S.A. 04 May 2007 Paris, May 4, 2007 Total reports strong first quarter 2007 results Main results for the first quarter 2007(1) • Adjusted net income(2)-(3) 3.0 billion euros -11% 3.9 billion dollars -3% 1.31 euros per share -9% 1.72 dollars per share -1% Highlights since the start of the first quarter 2007 • Upstream production of 2,431 kboe/d in the first quarter 2007 • Dalia successfully reached 240 kb/d plateau in mid-April • OPEC reduction impact of -37 kb/d • Launching development of the Jura field as a satellite to Alwyn • Successful exploration • Promising discoveries and launching of development studies for Egina, a new pole in deep-offshore Nigeria • Two major discoveries near Moho Bilondo in deep-offshore Congo • Four new oil discoveries on ultra-deep offshore Block 32 and deep-offshore Block 14 in Angola • New exploration blocks in Indonesia, Australia, Alaska and the UK North Sea • Finalized negotiations to acquire interests in Blocks 15/06 and 17/06 in Angola The Board of Directors of Total, led by Chairman Thierry Desmarest, met on May 3, 2007 to review the first quarter 2007 accounts. Commenting on the results, CEO Christophe de Margerie said: In the first quarter 2007, the average Brent oil price decreased by 6% compared to the same quarter a year ago and gas prices fell sharply in the UK. The Downstream and Chemicals segments benefited from strong demand while refinery throughput was constrained by a number of maintenance shut-downs. In this context, the adjusted earnings per share expressed in dollars showed only a limited decrease of 1% compared to the first quarter 2006 and an increase of 12% compared to the fourth quarter 2006. Profitability at the business segment level remained strong at 28%. This performance, which is among the best in the industry, shows that Total managed to maintain the quality of its portfolio and its investment and project management discipline while accelerating its growth effort and facing continued pressure from rising costs. The successful ramp-up of the Dalia field in Angola, which is already at its plateau, and the start-ups of Rosa in Angola and Dolphin in Qatar, planned for the second and third quarters of this year, confirm that we are returning to a period of growth. Total is pursuing its strategy of profitable growth over the long term, supported by continued exploration success, improvements to its refining and petrochemical facilities, and increased efforts in research and development to meet the new challenges facing the energy industry and the environment. • Key figures and consolidated accounts of Total(4) in millions of euros, 1Q07 4Q06 1Q06 1Q07 vs except earnings per share and number of shares 1Q06 Sales 37,043 36,433 38,103 -3% Adjusted operating income from business segments 5,729 5,454 6,688 -14% Adjusted net operating income from business 2,948 2,689 3,240 -9% segments • Upstream 1,961 1,885 2,400 -18% • Downstream 708 549 650 +9% • Chemicals 279 255 190 +47% Adjusted net income 2,992 2,737 3,376 -11% Adjusted fully-diluted earnings per share (euros) 1.31 1.20 1.45 -9% Fully-diluted weighted-average shares (millions) 2,280.9 2,288.1 2,335.8 -2% Net income (Group share) 3,049 2,225 3,683 -17% Investments 2,414 3,656 2,750 -12% Divestments (at selling price) 244 1,071 397 -39% Cash flow from operations 6,388 2,123 4,839 +32% Adjusted cash flow from operations 4,116 3,454 4,287 -4% • First quarter 2007 results > Operating income In the first quarter 2007, the average Brent price was 57.8 $/b, a decrease of 6% compared to the first quarter 2006 and 3% compared to the fourth quarter 2006. The European refining margin indicator (TRCV) averaged 33 $/t in the first quarter 2007, an increase of 28% compared to the first quarter 2006 and 45% compared to the fourth quarter 2006. Petrochemical margins in Europe were higher relative to the first quarter 2006 but slightly lower relative to the fourth quarter 2006. In the US, first quarter 2007 margins were sharply lower compared to both periods. The euro/dollar exchange rate was 1.31 $/€ compared to 1.20 $/€ in the first quarter 2006 and 1.29 $/€ in the fourth quarter 2006. In this context, adjusted operating income from the business segments was 5,729 million euros (M€), a 14% decrease compared to the first quarter 2006(5). Adjusted net operating income from the business segments was 2,948 M€, a 9% decrease compared to the first quarter 2006. The lower percentage decrease relative to the decrease in operating income is mainly due to the Upstream segment, which has a higher effective tax rate, representing a smaller proportion of the results compared to a year ago. > Net income Adjusted net income was 2,992 M€, an 11% decrease compared to the first quarter 2006. This excludes the after-tax inventory effect, special items, and the Group's equity share of the amortization of intangibles related to the Sanofi-Aventis merger. The after-tax inventory effect had a positive impact on net income of 133 M€ in the first quarter 2007 and of 280 M€ in the first quarter 2006. There were no special items in the first quarter 2007. In the first quarter 2006, special items had a positive impact on net income of 110 M€ and were composed mainly of gains on the sale of Upstream assets in the US. The Group's share of the amortization of intangibles related to the Sanofi-Aventis merger had an impact on net income of -76 M€ in the first quarter 2007 and -83 M€ in the first quarter 2006. Reported net income was 3,049 M€ compared to 3,683 M€ in the first quarter 2006. The effective tax rate(6) for the Group was 54% in the first quarter 2007, a decrease compared to 55% in the first quarter 2006 and close to 57% in the fourth quarter 2006. In the first quarter 2007, the Group bought back 6 million of its shares for 306 M€. The number of fully-diluted shares at March 31, 2007 was 2,278.1 million compared to 2,285.2 million at December 31, 2006 and 2,333.7 million at March 31, 2006. Adjusted fully-diluted earnings per share, based on 2,280.9 million fully-diluted weighted-average shares was 1.31 euros, a decrease of 9% compared to the first quarter 2006, which is a smaller decrease than shown for adjusted net income due to the accretive effect of the share buybacks. Adjusted fully-diluted earnings per share, expressed in dollars, decreased by 1%. > Investments - divestments Investments were 2,414 M€ (or 3,164 M$) in the first quarter 2007 compared to 2,750 M€ (or 3,306 M$) in the first quarter 2006. Divestments in the first quarter 2007 were 244 M€ and included the sale of Upstream assets among which Canyon Express and the Aconcagua field in the Gulf of Mexico. Divestments in the first quarter 2006 were 397 M€. Net investments in the first quarter 2007 were 2,844 M$ compared to 2,829 M$ in the first quarter 2006. > Cash flow Cash flow from operations was 6,388 M€, an increase of 32% compared to the first quarter 2006. This includes a 2,098 M€ reduction in working capital in the first quarter 2007, mainly due to a temporary increase in liabilities related to the timing of payments for taxes on refined products and income. Adjusted cash flow from operations (cash flow from operations before changes in working capital at replacement cost) decreased by 4% to 4,116 M€. Net cash flow (7) was 4,218 M€ compared to 2,486 M€ in the first quarter 2006. The net-debt-to-equity ratio was 23% at March 31, 2007 compared to 34% at December 31, 2006 and 26% at March 31, 2006(8). • Upstream > Liquids and gas price realizations* 1Q07 4Q06 1Q06 1Q07 vs 1Q06 Brent ($/b) 57.8 59.6 61.8 -6% Average liquids price ($/b) 55.0 57.1 58.8 -6% Average gas price ($/MBtu) 5.69 6.16 6.16 -8% * consolidated subsidiaries, excluding fixed margin and buy-back contracts The decrease in Total's average realized price for liquids was in line with the decrease in the Brent price. However, with the exception of the UK market, gas price realizations were higher in the Group's main gas producing zones in the first quarter 2007 compared to the first quarter 2006. > Production Hydrocarbon production 1Q07 4Q06 1Q06 1Q07 vs 1Q06 Combined production (kboe/d) 2,431 2,403 2,440 - • Liquids (kb/d) 1,551 1,513 1,560 -1% • Gas (Mcf/d) 4,781 4,989 4,795 - Hydrocarbon production was 2,431 thousand barrels of oil equivalent per day (kboe/d) in the first quarter 2007 compared to 2,440 kboe/d in the first quarter 2006, mainly as a result of: • +3% due to the positive impact of new field start-ups, partially offset by normal declines on mature fields, • -1.5% due to OPEC reductions in Libya, Abu Dhabi and Venezuela, • -1% due to divestments and other portfolio changes, • -1% due to the impact of shut-downs in the Niger Delta because of security issues. Excluding the effects of portfolio changes and OPEC reductions, underlying production growth was 2%. Compared to the fourth quarter 2006, production increased by 1.2%, mainly due to production ramp-up at the Dalia field. Excluding the impact of OPEC reductions imposed by Venezuela on heavy-oil projects, the underlying growth was more than 2%. There were no significant portfolio changes between the fourth quarter 2006 and the first quarter 2007. > Results in millions of euros 1Q07 4Q06 1Q06 1Q07 vs 1Q06 Adjusted operating income* 4,375 4,330 5,601 -22% Adjusted net operating income* 1,961 1,885 2,400 -18% • Income from equity affiliates 175 176 143 +22% Investments 1,989 2,638 2,081 -4% Divestments 173 523 353 -51% at selling price Cash flow 4,335 1,788 3,831 +13% Adjusted cash flow (M€) 2,966 2,371 3,266 -9% * detail of adjustment items shown in business segment information Adjusted net operating income for the Upstream segment was 1,961 M€, a decrease of 18% compared to the first quarter 2006. Expressed in dollars, the decrease in adjusted net operating income for the Upstream segment was 11%, reflecting mainly the lower hydrocarbon prices and, to a lesser extent, the increase in production costs and exploration activity. The average Upstream segment tax rate was 60% in the first quarter 2007, stable compared to the first quarter 2006. The increase in tax rates in the UK and Venezuela was offset by a favorable mix effect and by the impact of lower hydrocarbon prices. The increase in income from equity affiliates reflects mainly the growth from Trains 4 and 5 at Nigeria LNG. Compared to the fourth quarter 2006, adjusted net operating income for the Upstream segment expressed in dollars increased by 6%, essentially due to the increase in production and the decrease in the effective tax rate. The return on average capital employed (ROACE(9)) for the Upstream segment was 34% for the twelve months ended March 31, 2007 compared to 35% for the full year 2006. The 2007 investment program for the Upstream segment is proceeding as planned. • Downstream > Refinery throughput and utilization rates* 1Q07 4Q06 1Q06 1Q07 vs 1Q06 Total refinery throughput (kb/d) 2,421 2,435 2,421 - • France 988 971 899 +10% • Rest of Europe 1,167 1,210 1,217 -4% • Rest of world 266 254 305 -13% Utilization rates • Based on crude only 87% 86% 86% ns • Based on crude and other feedstock 90% 90% 89% ns * includes share of CEPSA The first quarter 2007 included three partial turnarounds: the distillation unit at Port Arthur and the catalytic crackers at the Donges and Antwerp refineries. The first quarter 2006 included a major turnaround for maintenance at the Provence refinery and a 3-week shutdown of the Flanders refinery. In the fourth quarter 2006, there was a major shut-down of the cracker at Port Arthur. The utilization rate for the distillate hydro-cracker in Normandy, which started up in 2006, was close to 90% on average in the first quarter 2007. > Results in millions of euros, 1Q07 4Q06 1Q06 1Q07 vs except European refining margin indicator 1Q06 European refining margin 33.0 22.8 25.8 +28% indicator - TRCV ($/t) Adjusted operating income* (M€) 973 750 856 +14% Adjusted net operating income* (M€) 708 549 650 +9% • Income from equity affiliates 63 63 61 +3% Investments (M€) 244 703 321 -24% Divestments (M€) 22 275 13 +69% at selling price Cash flow (M€) 1,905 261 1,201 +59% Adjusted cash flow (M€) 1,039 844 831 +25% * detail of adjustment items shown in business segment information Adjusted net operating income for the Downstream segment was 708 M€ in the first quarter 2007 compared to 650 M€ in the first quarter 2006, an increase of 9%. Expressed in dollars, the increase was 19%. This reflects mainly the stronger European refining margins, which were fueled by higher gasoline prices in the Atlantic Basin in a context of heavy maintenance activity that limited available supplies. The Downstream also benefited from the start-up of the distillate hydro-cracker in Normandy as well as good performance from Marketing and ongoing productivity programs. The Downstream segment ROACE for the twelve months ended March 31, 2007 was 25% compared to 23% for the full year 2006. • Chemicals > Results in millions of euros 1Q07 4Q06 1Q06 1Q07 vs 1Q06 Sales 4,995 4,610 4,689 +7% • Base chemicals 3,151 2,891 2,863 +10% • Specialties 1,844 1,719 1,826 +1% Adjusted operating income* 381 374 231 +65% Adjusted net operating income* 279 255 190 +47% • Base chemicals 189 168 78 +142% • Specialties 93 82 103 -10% Investments 173 293 324 -47% Divestments 47 29 28 +68% at selling price Cash flow 107 725 (37) ns Adjusted cash flow 329 331 305 +8% * detail of adjustment items shown in business segment information Sales for the Chemicals segment increased by 7% to 4,995 M€ in the first quarter 2007 from 4,689 M€ in the first quarter 2006. Adjusted net operating income for the Chemicals segment was 279 M€, an increase of 47% compared to the first quarter 2006. Petrochemicals performed well, benefiting from higher cracker utilization rates and more favorable market conditions in Europe than in the US, due to stronger demand for polymers. The Chemicals segment ROACE for the twelve months ended March 31, 2007 was nearly 14% compared to 13% for the full year 2006. • Summary and outlook The ROACE for the Group was 26% for the twelve months ended March 31, 2007, stable compared to the Group ROACE for the full year 2006. Return on equity for the same periods was 31% and 33%, respectively. Implementation of the investment program is proceeding as planned. The Group confirms its objective to maintain its net-debt-to-equity ratio at around 25% to 30%. Pending approval at the shareholder's meeting on May 11, 2007, Total S.A. will pay the remaining 1 euro per share of the 2006 dividend(10) on May 18, 2007. Since the start of the second quarter 2007, oil prices have moved higher due to market concerns over global supplies and the impact of OPEC reductions on production. Refining margins have been on average higher than in the first quarter. The Group's production growth is expected to be substantial in 2007, mainly due to the start-up of Dalia, to be followed by Rosa and Dolphin; however, it should be lower than 6%, because of the now lower-than-expected contributions from Azerbaijan and Venezuela as well as the persistent uncertainties surrounding the situation in Nigeria. The Group is confident of achieving its target of more than 5% production growth on average through 2010(11) and is continuing to improve visibility for the longer term thanks to the satisfactory progress on Total-operated development projects, continued exploration success, particularly in West Africa, and ongoing negotiations to secure major new projects. To listen to the conference call with CFO Robert Castaigne and financial analysts today at 15:00 (Paris time) please call +44 (0)161 601 89 18 in Europe or +1 866 793 42 77 in the US (access code : Total) or log on to the company website www.total.com. For a replay, dial +44 (0)207 075 32 14 in Europe or 1 866 828 22 61 in the US (code : 195703). The March 31, 2007 notes to the consolidated accounts are available on the Total web site (www.total.com). This document may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, business, strategy and plans of Total. Such statements are based on a number of assumptions that could ultimately prove inaccurate, and are subject to a number of risk factors, including currency fluctuations, the price of petroleum products, the ability to realize cost reductions and operating efficiencies without unduly disrupting business operations, environmental regulatory considerations and general economic and business conditions. Total does not assume any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Further information on factors which could affect the company's financial results is provided in documents filed by the Group and its affiliates with the French Autorite des Marches Financiers and the US Securities and Exchange Commission. The business segment information is presented in accordance with the Group internal reporting system used by the Chief operating decision maker to measure performance and allocate resources internally. Due to their particular nature or significance, certain transactions qualified as 'special items' are excluded from the business segment figures. In general, special items relate to transactions that are significant, infrequent or unusual. However, in certain instances, certain transactions such as restructuring costs or assets disposals, which are not considered to be representative of normal course of business, may be qualified as special items although they may have occurred within prior years or are likely to recur within following years. In accordance with IAS 2, the Group values inventories of crude oil and petroleum products in the financial statements in accordance with the FIFO (First in, First out) method and other inventories using the weighted-average cost method. However, in the note setting forth information by business segment, the Group continues to present the results for the Downstream segment according to the replacement cost method and those of the Chemicals segment according to the LIFO (Last in, First out) method in order to ensure the comparability of the Group's results with those of its main competitors, notably from North America. The inventory valuation effect is the difference between the results according to the FIFO method and the results according to the replacement cost or LIFO method. In this framework, performance measures such as adjusted operating income, adjusted net operating income and adjusted net income are defined as incomes using replacement cost, adjusted for special items and excluding Total's equity share of the amortization of intangibles related to the Sanofi-Aventis merger. They are meant to facilitate the analysis of the financial performance and the comparison of income between periods. Operating information by segment First quarter 2007 • Upstream Combined liquids and gas production 1Q07 4Q06 1Q06 1Q07 vs 1Q06 by region (kboe/d) Europe 746 752 778 -4% Africa 784 729 742 +6% North America 26 28 13 +100% Far East 256 258 253 +1% Middle East 402 416 411 -2% South America 206 211 236 -13% Rest of world 11 9 7 +57% Total production 2,431 2,403 2,440 - Liquids production by region (kb/d) 1Q07 4Q06 1Q06 1Q07 vs 1Q06 Europe 373 371 378 -1% Africa 679 633 656 +4% North America 17 17 2 +750% Far East 30 28 29 +3% Middle East 341 353 357 -4% South America 102 103 131 -22% Rest of world 9 8 7 +29% Total production 1,551 1,513 1,560 -1% Gas production by region (Mcfd) 1Q07 4Q06 1Q06 1Q07 vs 1Q06 Europe 2,019 2,073 2,172 -7% Africa 541 510 457 +18% North America 45 55 63 -29% Far East 1,260 1,417 1,238 +2% Middle East 326 334 284 +15% South America 580 598 579 - Rest of world 10 2 2 +400% Total production 4,781 4,989 4,795 - • Downstream Refined product sales by region (kb/d)* 1Q07 4Q06 1Q06 1Q07 vs 1Q06 Europe 2,655 2,720 2,689 -1% Africa 333 343 319 +4% Americas 597 480 626 -5% Rest of world 221 185 230 -4% Total 3,806 3,728 3,864 -2% * includes trading and equity share of CEPSA Adjustment items • Adjustments to operating income from the business segments in millions of euros 1Q07 4Q06 1Q06 Special items affecting operating income from the business - - (5) segments • Restructuring charges - 8 - • Impairments - (11) - • Other - 3 (5) Pre-tax inventory effect : FIFO vs. replacement cost 174 (389) 373 Total adjustments affecting operating income from the business 174 (389) 368 segments • Adjustments to net income (Group share) in millions of euros 1Q07 4Q06 1Q06 Special items affecting net income (Group share) - (18) 110 • Equity share of special items recorded by Sanofi-Aventis - (46) 2 • Gain on asset sales - 174 130 • Restructuring charges - (15) (15) • Impairments - (8) - • Other - (123) (7) Adjustment related to the Sanofi-Aventis merger* (76) (58) (83) (share of amortization of intangible assets) After-tax inventory effect : FIFO vs. replacement cost 133 (436) 280 Total adjustments to net income 57 (512) 307 * based on 13% participation in Sanofi-Aventis at 3/31/2007, 12/31/2006, and 3/31/2006 Net-debt-to-equity ratio in millions of euros 3/31/07 12/31/06 3/31/06 Current borrowings 9,625 5,858 12,618 Net current financial assets (10,918) (3,833) (10,598) Non-current financial debt 13,836 14,174 13,491 Hedging instruments of non-current debt (291) (486) (453) Cash and cash equivalents (2,962) (2,493) (4,313) Net debt 9,290 13,220 10,745 Shareholders equity 42,866 40,321 43,170 Estimated dividend payable (3,305) (2,258) (2,941) Minority interests 868 827 913 Equity 40,429 38,890 41,142 Net-debt-to-equity ratio 23.0% 34.0% 26.1% Effective tax rates Effective tax rates * 1Q07 4Q06 1Q06 Upstream 60.3% 62.1% 60.3% Group 54.0% 56.6% 55.5% * tax on adjusted net operating income / (adjusted net operating income - income from affiliates, dividends received from investments, and impairments of acquisition goodwill + tax on adjusted net operating income) 2007 Sensitivities* Scenario Change Impact on operating Impact on net income (e) operating income (e) €/$ 1.25 $/€ +0.1 $ per € -2.2 B€ -1.1 B€ Brent 60 $/b +1 $/b +0.38 B€ +0.15 B€ European refining margin 30 $/t +1 $/t +0.09 B€ +0.06 B€ indicator TRCV * sensitivities revised once per year upon publication of the previous year fourth quarter results Return on average capital employed • For the twelve months ended March 31, 2007 in millions of euros Upstream Downstream Chemicals ** Segments Group Adjusted net operating income 8,270 2,842 973 12,085 12,855 Capital employed at 3/31/06* 23,282 11,296 7,187 41,765 49,615 Capital employed at 3/31/07* 24,808 11,442 7,129 43,379 50,773 ROACE 34.4% 25.0% 13.6% 28.4% 25.6% * at replacement cost (excluding after-tax inventory effect) ** capital employed for Chemicals reduced for the Toulouse-AZF provision of 122 M€ pre-tax at 3/31/06 and 153 M€ pre-tax at 3/31/07 and for the Arkema capital employed by 2,406 M€ at 3/31/2006 • For the twelve months ended March 31, 2006 in millions of euros Upstream Downstream Chemicals** Segments Group Adjusted net operating income 8,621 2,888 828 12,337 13,075 Capital employed at 3/31/05* 17,877 8,735 6,603 33,215 39,703 Capital employed at 3/31/06* 23,282 11,296 7,187 41,765 49,615 ROACE 41.9% 28.8% 12.0% 32.9% 29.3% * at replacement cost (excluding after-tax inventory effect) ** capital employed for Chemicals reduced for the Toulouse-AZF provision of 100 M€ pre-tax at 3/31/05 and 122 M€ pre-tax at 3/31/06 and for the Arkema capital employed by 2,204 M€ at 3/31/05 and 2,406 M€ at 3/31/2006 • For the full year 2006 in millions of euros Upstream Downstream Chemicals ** Segments Group Adjusted net operating income 8,709 2,784 884 12,377 13,162 Capital employed at 12/31/05* 23,522 11,421 6,885 41,828 49,341 Capital employed at 12/31/06* 25,543 12,384 6,920 44,847 52,263 ROACE 35.5% 23.4% 12.8% 28.6% 25.9% * at replacement cost (excluding after-tax inventory effect) ** capital employed for Chemicals reduced for the Toulouse-AZF provision of 133 M€ pre-tax at 12/31/05 and 176 M€ pre-tax at 12/31/06 and for the Arkema capital employed by 2,235 M€ at 12/31/2005 -------------------------- (1) percent changes are relative to the first quarter 2006. (2) adjusted net income = net income using replacement cost (Group share) adjusted for special items and excluding Total's share of amortization of intangibles related to the Sanofi-Aventis merger. First quarter net income (Group share) was 3,049 million euros. (3) dollar amounts represent euro amounts converted at the average exchange rate for the period (1.3106 $/€ in the first quarter 2007, 1.2023 $/€ in the first quarter 2006, 1.2887 $/€ in the fourth quarter 2006). (4) adjusted income (adjusted operating income, adjusted net operating income and adjusted net income) is defined as income using replacement cost, adjusted for special items and excluding Total's equity share of amortization of intangibles related to the Sanofi-Aventis merger; adjusted cash flow from operations is defined as cash flow from operations before changes in working capital at replacement cost; adjustment items are listed on page 13; first quarter 2006 results, with the exception of net income, have been restated for the Arkema spin-off per IFRS. (5) there were no special items affecting operating income from the business segments in the first quarter 2007; in the first quarter 2006, special items were composed of a 5 M€ charge related to the spin-off of Arkema. (6) defined as: (tax on adjusted net operating income) / (adjusted net operating income - income from equity affiliates, dividends received from investments and impairments of acquisition goodwill + tax on adjusted net operating income). (7) net cash flow = cash flow from operations + divestments - investments. (8) calculation shown on page 14. (9) calculated based on adjusted net operating income and average capital employed, using replacement cost, as shown on page 15. (10) including the interim dividend of 0.87 euros per share paid in November 2006, the 2006 dividend will be 1.87 euros per share. (11) based on Brent at 60 $/b in 2007 and 40 $/b thereafter. This information is provided by RNS The company news service from the London Stock Exchange

Companies

TotalEnergies SE (TTE)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today