Total trims investments to put dividend at heart of strategy
By Karolin Schaps and Bate Felix
LONDON/PARIS (Reuters) - French oil and gas major Total put the protection of its dividend at the center of its strategy on Wednesday, as it set out reduced investment plans and increased cost cuts in preparation for an extended period of depressed oil prices.
The cost cutting deepens previous steps taken by Total to withstand the oil price rout and is similar to measures taken by rivals. So far only Italy's Eni has cut its dividend among oil majors, most of whom see the payout to shareholders as the chief factor supporting their shares.
"We cannot control the price of oil and gas but we can control our costs and allocation of capital," Chief Executive Officer Patrick Pouyanne told investors.
Total said it would reduce capital expenditure to between $20 billion and $21 billion from 2016 and to $17-19 billion per year from 2017 onwards. That compares with $23-24 billion in 2015 and a peak of $28 billion in 2013.
It also maintained its target of selling off $10 billion of assets in the coming two years.
Total shares, which plummeted to a two-year low of 36.92 euros in August, were up 2.2 percent at 40.64 euros by 1252 GMT.
"We are preparing the group to face low oil prices for a longer time and if oil prices rise this would be good for us," Chief Financial Officer Patrick de la Chevardiere told reporters.
He added that Total had decided to cut capital expenditure for next year so it can cover its dividend at $60 per barrel in 2017. "This is the cornerstone of everything we are doing," he said. "(Chief Executive) Patrick Pouyanne and myself do not want to be the first ones to cut the dividend." Continued...