12/02/2015 - Press release

Fourth quarter and full-year 2014 results

Total’s Board of Directors, under the chairmanship of Thierry Desmarest, met on February 11, 2015, to review the Group’s fourth quarter accounts. Commenting on results, CEO Patrick Pouyanné said:

“After a long period of stability around $110 per barrel, oil prices fell dramatically in the second half of 2014, ending the year at $55 per barrel. In this context, Total generated adjusted net results of $12.8 billion[2], a decrease of 10% compared to the previous year. Given the current economic environment the company recognized after-tax impairments of about $6.5 billion at the end of the year, essentially related to Canadian oil sands, unconventional gas, notably in the United States, and refining in Europe.

The Upstream segment returned to growth with the start-up of its deep-offshore CLOV field in Angola in the second half of 2014. The Refining & Chemicals segment achieved its profitability target one year ahead of schedule and reported a remarkable set of results thanks to the success of its restructuring program and strong operational performance.

After delivering on its commitment to reduce expenditures in 2014, all of the Group’s segments are expanding their cost-cutting programs to get through this period, with no compromise on the absolute priority to safety.

Total successfully completed its 2012-14 asset sale program and plans to accelerate the execution of its 2015-17 asset sale program. As the first international company to enter the new ADCO concession in Abu Dhabi, Total demonstrates its ability to access resources under good conditions and create strong partnerships in a strategic region.

With its high-quality teams, financial strength and ability to adapt, the Group is focused for the short-term on generating cash flow and reducing its breakeven point, and for the medium term confirms its growth strategy.”

Summary and outlook

The ROACE[3] for the Group was 11.1% in 2014, a decrease of 1.9 percentage points compared to 2013. Return on equity was 13.5% in 2014, compared to 14.9% in 2013.

In response to the recent fall in the oil price, Total has launched an ambitious mitigation plan. The plan includes significant reductions to organic investments, operating costs and the exploration budget, as well as an acceleration of its asset sale program.

The Group plans to lower its organic investments by more than 10% from 26.4B$ in 2014 to 23-24€$ in 2015, by reducing investments in brownfield developments and stopping certain projects that have become less profitable. For operating costs, the reduction program announced in September 2014 has been expanded mainly in the Upstream segment. The initial target of 800M$ has been raised to 1.2B$ in 2015, an increase of 50%. The exploration budget has been reduced by about 30%, to 1.9 B$ in 2015.

Having achieved its 2012-14 asset sale target of 15-20 B$, Total plans to accelerate its 2015-17 asset sale program of 10 B$ by selling 5B$ of assets in 2015, in addition to benefiting from the completion of about 4 B$ of asset sales that were already signed and pending at the start of the year.

In the Upstream segment, the Group is focused on the execution and delivery of its major projects and plans eight start-ups this year, of which three already started production in January. The start-ups, plus the new ADCO volumes, will contribute to production growth for the Group of more than 8% in 2015.

In addition, refining overcapacity remains an issue in Europe, and the Group is advancing its restructuring plans by launching a capacity reduction program at its Lindsey refinery in the UK and will announce a new plan for its refining activities in France in the spring of 2015.

With the decline in the oil price, the petroleum industry has entered a new cycle. In this context, Total is implementing a strong and immediate response generating 8 B$ in cash in 2015, thereby reducing its breakeven point by 40 $/b without compromising the priority to safety.

Finally, despite intensive investments made for future growth, the Group’s balance sheet remains strong, allowing it access to the financial markets under very favorable conditions.

As it has demonstrated in the past, Total will make the adjustments necessary to successfully adapt to this period of low prices, while at the same time being prepared to take advantage of a recovery, for the benefit of its shareholders.


[1]Total changed the presentation currency of the Group’s Consolidated Financial Statements from the euro to the US dollar, effective January 1, 2014, to make its financial information more readable by better reflecting the performance of its activities, which are carried out mainly in US dollars. Comparative 2013 information has been restated.

[2] Definition of adjusted results – euro amounts represents dollar amounts converted at the average €-$ exchange rate for the period: 1.2498$/€ in the fourth quarter 2014, 13610$/€ in the fourth quarter 2013, 1.3256 $/€ in the third quarter 2014, 1.3285 $/€ for the year 2014 and 1.3281 $/€ for the year 2013.

[3] Calculated based on adjusted net operating income and average capital employed, using replacement cost.

 

Learn more about the results by accessing the press release on total.com