Total posts $5.7 billion loss for Q4 2014

Feb 12, 2015, 3:38 PM EST
Total CEO Patrick Pouyanne appears on stage during the INYT/Energy Intelligence Oil & Money Conference - Day 2 on October 30, 2014 in London, England.
Anthony Harvey/Getty Images for The New York Times

On Thursday the French oil giant Total reported a $5.7 billion loss for the fourth quarter of 2014. The firm has enacted a hiring freeze and will sell off assets as it struggles to become profitable with lower global oil prices. The company swung to a net loss in the three months to the end of December from a net profit of $2.23 billion in the same quarter the previous year, reports the Wall Street Journal. It wrote off $6.5 billion of the value of its less profitable shale and oil sands ventures, as well as its unprofitable European refineries. Total said it aims to become profitable at an oil price of $70 a barrel; Brent crude was trading at $55.80 a barrel on London’s ICE Futures exchange on Thursday morning. Still, the company proposed raising its dividend in the hopes of keeping investors from selling the stock.

Total said it would increase cuts to operational costs to $1.2 billion this year, above a previous target of $800 million, notes Fortune. It will reduce organic investments by up to 13% to $23-24 billion and spending 30% less on exploration work. New Chief Executive Patrick Pouyanné said the cut to the exploration budget, to $1.9 billion in 2015, was in part due to the current low-price but driven more by a desire to revamp the process after having failed to return any major oil find in recent years. “We consider that after having spent a lot of money in exploration in the last three years without the results we expected, it was preferable that exploration teams be put under a certain pressure,” Pouyanné told reporters. The group will announce details of the new exploration strategy in September this year.

Total said some 2,000 jobs will go globally by the end of the year, mainly through natural attrition as it freezes hiring. The group had 99,000 employees at end-2013. The company’s net adjusted profit, which fell 17% to $2.8 billion in the quarter compared with the same period a year ago, came in higher than analysts had expected however. Revenue fell 19% to $52.5 billion.

The company said it would accelerate the sale of some assets, echoing plans announced by other companies, according to the New York Times. Despite the loss, analysts at Bernstein Research in London told clients on Thursday that they “like the company’s response” to low prices. The Bernstein analysts said that Total had the best performance of the major oil companies on its return on capital, at 11.1 percent for 2014. Total also beat its peers by replacing 100 percent of the reserves that it produced in 2014.