Total, France's largest company, kickstarted the sector's first-quarter earnings reporting with an upbeat tone, as its adjusted net profit surged 56 percent to $2.6 billion compared with the same period of 2016. Analysts had forecast Total's net adjusted profit at $2.4 billion in the quarter. Brent crude prices rose 58 percent during the period.
"No question Total is through the worst of it and in a sweet spot," said Bernstein analyst Oswald Clint, who rated Total as "market-perform", saying he saw better returns at peers including Shell. Total's shares were trading 0.15 percent lower at 0851 GMT.
Total said it had approved the development of its Aguada Pichana Este project in the Argentine Vaca Muerta shale gas site, and had increased its stake in the license to 41 percent from 27 percent. Greater confidence in an oil price recovery following years of lower investment and after Opec and other major producers agreed to cut output is expected to lead to a cautious revival in project approvals.
Shell in February approved the development of its Kaikias deepwater field in the Gulf of Mexico, the first project clearance since 2015. The first phase of the project will cost around $500 million, Total Chief Executive Patrick Pouyanne told journalists on the sidelines of an oil summit in Paris. Total maintained its investment, production and savings guidance stated in February, when it said it aimed to make a further $3.5 billion of savings in 2017. It had set its capital expenditure, excluding resource acquisition, at $14 billion-$15 billion in 2017. It said its cash flow in the months ahead would benefit from production growth and cost reduction, after it generated free cash flow of $1.7 billion in the first quarter, while Total's oil production rose 4 percent.
Copyright Reuters, 2017