April 27, 2012:

PARIS- Total sounded a cautious note on second-quarter oil and gas production on Friday as the French oil group posted a 1 percent drop in adjusted net income due to a slowdown at its refining and chemicals business. Total expects production in the second quarter to be impacted by the gas leak it is trying to stop at its Elgin platform in the North Sea. Total did not reiterate its earlier goal of growing production by 2.5 percent on average a year at $100 a barrel in its earnings statement.

Adjusted net income, which excludes special items, slipped to 3.07 billion euros ($4.06 billion) in the first quarter. Sales rose 4 percent to 21.4 billion, Total said. Shares in Total were down 1.6 percent at 35.925 euros by 0714 GMT, underperforming a 1.2 percent weaker French blue-chip CAC 40 index and a 0.4 percent decline in the European oil and gas index. The group has brought several production facilities on stream this year, including the offshore Usan oil field in Nigeria, the Islay field in the North Sea and the Bongkot field in the Gulf of Thailand. Hydrocarbon production reached 2.372 million barrels of oil equivalent a day in the first quarter, stable versus the same period a year earlier.

Adjusted net operating income at Total's refining and chemicals division fell 77 percent to 61 million euros after it sold its stake in Spain's Cepsa last year to help reduce its exposure to low-margin European refinery activities. In addition, the European refinery margin indicator (ERMI) fell 15 percent to an average of $20.9 per tonne in the first quarter. "In the context of oil prices that were favourable for upstream but difficult for refining and chemicals, the group is satisfied with its first-quarter profit," Chairman and Chief Executive Christophe de Margerie said.

Oil prices averaged $118.6 per barrel, up 13 percent against the first quarter of 2011 and 9 percent against the previous three months. Total has been making headway in its attempts to stop the gas leak at its Elgin platform. It said that it had taken a provision for the incident but did not specify the amount in the statement. Total has said the leak is costing it $2.5 million a day.  Total's earnings follow those of Royal Dutch Shell and Exxon Mobil on Thursday. The top two publicly traded oil companies showed both the challenges and potential gains of growing output even a little, with Exxon's production declining and Royal Dutch Shell's exceeding estimates.

By Reuters