French oil company Total makes Q4 profit of $2.8B

(AP) — Total SA made a net profit of euro2.07 billion ($2.8 billion) in the fourth quarter as increased production and higher prices for oil offset a steep drop in refining operations, the company said Thursday.

Europe's No. 3 integrated oil company said its fourth quarter earnings compared to a euro794 million loss a year earlier.

Paris-based Total, France's largest company by market capitalization, said its combined gas and oil production rose 1 percent from a year earlier to 2.38 million barrels a day in the fourth quarter.

On an adjusted basis, a closely watched measure of profitability that excludes inventory gains and losses and tax charges and credits, the French oil major's profit fell 28 percent to euro2.1 billion.

Earnings have been hammered across the oil industry by squeezed refining margins as global fuel consumption plunged. Total's downstream activities, which includes refining, saw its operating profit slump 93 percent in the fourth quarter.

The upstream business, which includes oil exploration and production, posted a slight 2 percent slide in earnings to euro1.95 billion in the fourth quarter.

The refining slump was offset by higher production combined with average selling prices for oil, which rose 43 percent in the quarter compared to a year earlier.

Chief Executive Christophe de Margerie called Total's performance "among the most resilient of the major oils."

Like rivals BP PLC and Royal Dutch Shell, Total's business of exploring for and producing oil benefited from an increase in crude prices at the end of 2009. But weak demand for gasoline, heating oil and other products severely depressed profits at the company's refineries.

"The earnings were more or less in line with expectations, just a bit above consensus," said Aymeric de Villaret, an oil sector analyst at investment bank Societe Generale in Paris. "It has held up better than most of its competitors," De Villaret said.

Total's shares rose 16 percent last year, but have slid back 10 percent since the start of the year amid global uncertainties about the economic recovery. In early trading Thursday Total's stock was up 2 percent at euro41.71.

Overall last year, Total's combined oil and gas production fell 3 percent to 2.28 million barrels a day. It made adjusted net profit of euro7.78 billion on sales of euro131 billion.

The company said it would continue to invest mainly in its upstream business this year, with 80 percent of its $18 billion investment budget set aside for exploration and production activities. It also intends to sell off non-core assets, through the gradual disposal of its remaining shares in French pharmaceutical company Sanofi-Aventis SA as well as a specialty chemicals subsidiary, Mapa Spontex.