Total SA Stands by Capital Discipline Despite High Oil Prices
September 25 2018 - 1:37PM
Dow Jones News
By Sarah Kent
LONDON--French oil giant Total SA (FP.FR) has no plans to loosen
its purse strings even as oil prices flirt with $82 a barrel.
Burned by the dramatic 2014 slump in oil prices, big oil
companies have been wary of raising their spending plans even as
crude surged toward its highest level in four years.
Total's comments Tuesday offer the first in-depth insight into
the industry's thinking since international benchmark Brent hit the
$80-a-barrel milestone in recent days.
"We continue to strongly believe that the best position in this
type of commodity market is to look to our breakeven and be
disciplined rather than betting on high prices," Chief Executive
Patrick Pouyanne told investors at the company's strategy update in
New York. "We've seen a very volatile market. We could face some
downturn in the future."
Even if prices do stay high, Total said it remains committed to
conservative spending plans. It plans to use any excess cash
generated by higher oil prices to help reduce the company's debt
burden and buyback shares.
Total kept its spending guidance steady at $15 billion to $17
billion a year out to 2020, while continuing to focus on bringing
down costs. It has reduced the oil price it needs to cover spending
and shareholder payouts from more than $100 a barrel in 2014 to
less than $50 a barrel.
"A significant reduction of the breakeven is important because
we don't control the prices, but this is something over which we
have control," Mr. Pouyanne said.
Write to Sarah Kent at sarah.kent@wsj.com
(END) Dow Jones Newswires
September 25, 2018 13:22 ET (17:22 GMT)
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