Holding the line: Total chief executive Christophe de Margerie has vowed to keep investments steady through the downturn
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Total defends UTS bid as profits fall
French giant Total defended its $500 million bid for Canadian oil sands player UTS Energy as it announced a drop in fourth-quarter profit due to lower oil prices.
Total boss Christophe de Margerie said UTS shareholder demands for more were unrealistic and, though he did not expect investors to immediately accept Total's C$1.30 (US$1.04) a share bid he dismissed calls for an offer above C$2.50.
UTS closed on Wednesday at C$1.78.
"If one looks at the current share price, it is very far away from the numbers cited by the main shareholders," Reuters quoted de Margerie telling a news conference.
UTS on Monday urged shareholders to reject the Total bid and formally sought rival offers.
The high cost of squeezing crude from Alberta's bitumen- drenched soil means new investments in the oil sands industry would not currently be profitable but Total hopes a recovery in crude prices and lower costs will make investments pay off.
Meanwhile, Total reported an 8% drop in net profit excluding one-off items and unrealised gains or losses related to changes in the value of inventories to €2.873 billion ($3.71 billion) in the fourth quarter. The result was ahead of forecasts.
Total shares rose 1.5% to €40.67 at 1127 GMT, outperforming a 1.1% fall in the DJ Stoxx European oil and gas sector index.
In dollar terms, Total's fourth-quarter underlying result fell 16% year-on-year, compared with a drop of 32% at Shell and 35% for UK supermajor BP, when calculated on a similar basis.
Full year adjusted net profit rose 14% to a new record of €13.92 billion.
Total said it would hold investment broadly steady, despite the collapse of crude prices, in the belief tight supplies in the longer term will push prices back up.
"We are committed to maintain our investments... It would be not only a mistake but also a serious error not to," de Margerie said, adding that "things could change" if oil prices remained sustainably under $40 a barrel.
Meanwhile, Yves Louis Darricarrere, head of exploration and production, said projects could be delayed to enable the company to take advantage of an expected fall in costs.
Analysts said Total's plans should underpin good growth in production.
"Total seems to be pointing to growth of circa 3% to 4% this year .. The company's clarity on long-term prospects and the depth of its growth portfolio remain impressive in our view," said Gordon Gray, oil analyst at Collins Stewart.
In 2008, Total reported success on exploration projects, with an organic replacement growth of 112%.