April 29, 2011 / 7:01 AM / 9 years ago

CORRECTED - UPDATE 2-Total affirms growth plans as oil price boosts Q1

(Corrects paragraph 9 to 2011 instead of 2010 in year on year comparison)

* Says to continue spending to raise output worldwide

* Q1 net profit up 35 pct, tops forecast

* Production drops 2 percent as expected by analysts (Recasts with more details, shares, analysts)

By Marie Maitre

PARIS, April 29 (Reuters) - France’s Total (TOTF.PA) pledged to keep up spending to bolster its oil and gas production worldwide as higher crude prices helped the energy group report a 35 percent year-on-year rise in quarterly net income.

France’s biggest company with a market value of 100 billion euros said it would forge ahead with investments, pegged at $20 billion for this year, as recent events in the Middle East and Japan may herald changes in energy demand and the energy mix.

“Growing geopolitical tensions and the aftermath of the earthquake in Japan will shift the balance of the global energy markets,” Chairman Christophe de Margerie said in a statement.

Total has been active on the merger and acquisition front in recent months in a drive to build up its presence in energy-rich countries such as Russia, Canada, Brazil or Australia.

The Paris-based group has recently purchased a $4 billion stake in Russian gas group Novatek after spending $3.2 billion on oil sands acquisitions last year. Meanwhile, it has reduced its exposure to low-margin European refinery activities by selling its holding in Spain’s Cepsa CEP.MC for $5 billion.

Late on Thursday, Total announced it was offering to pay up to $1.37 billion to take a majority stake in U.S. solar company SunPower Corp SPWRA.O as the oil and gas major sought also to make inroads into the market for renewable energy. [ID:nN28286200]

Total, which has a relatively low debt-to-equity ratio at 19.3 percent, said it would sell more assets such as its British refinery of Lindsey or a stake in drugmaker Sanofi-Aventis (SASY.PA), which it has gradually trimmed to 5.5 percent.

These should bring in 10 billion euros in 2011, it said.

Total said on Friday adjusted net income, which excludes unrealised gains related to increases in the value of inventories, rose to 3.1 billion euros ($4.60 billion) in the first quarter of 2011 from 2.3 billion a year earlier.

This came in above the average forecast of 2.95 billion euros from 10 analysts polled by Reuters, but the result did little to boost the stock in a market where trading was thinned by the broadcast of the wedding of Britain’s Prince William.

Total shares were down 0.1 percent to 42.95 euros by 0938 GMT, in line with the European energy sector .SXEP.

“Total’s results ... are rising faster than those of all its European rivals thanks to a stable production,” said CM-CIC Securities analysts, who reiterated a “buy” rating on the stock.

In dollar terms, Total’s net profit rose 34 percent year-on-year, which compares to Royal Dutch Shell’s (RDSa.L) 22 percent earnings rise and the 69 percent profit jump reported by industry mammoth Exxon (XOM.N) to $10.65 billion.

Total’s core upstream oil and gas production business drove the gain. The unit’s net profit nearly doubled to 2.9 billion euros thanks to a 38 percent year-on-year increase in the average price of Brent over the quarter.

The sharp oil price rise, fostered by political unrest in key Middle Eastern and North African producing countries and growing global demand for energy, helped counterbalance a 2 percent drop in Total’s production to 2.371 million barrels per day.

The small dip had been largely anticipated by analysts and is mainly explained by the shutdown in output in Libya and effects on production sharing agreements in producing countries where Total’s volume entitlement decreases when oil prices rise.

Total said the situation in Libya would continue to affect its overall output in the second quarter, but this would be offset by the positive impact of the integration as of April 1 of a 12 percent stake in Russian gas group Novatek. (Editing by Hans Peters) ($1=.6740 Euro)

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