UPDATE 2-Strong refining margins boost Total's profit

Wed Oct 31, 2012 12:25pm EDT

* Q3 adj net profit up 20 pct to 3.35 bln euros

* CFO sees production down slightly in 2012 vs 2011

* CFO sees Elgin restart by end-2012 or "early 2013" (Adds analyst comment, shares)

By Michel Rose

PARIS, Oct 31 (Reuters) - Total said oil and gas output would fall slightly this year, hit by attacks on pipelines and a gas leak in the North Sea, after an industry-wide jump in refining margins lifted quarterly profit.

The third-quarter result from western Europe's No. 3 oil company on Wednesday followed the pattern of big global rivals that have already reported, including UK-based BP.

Total and other European refiners benefited from a temporary widening between the price of crude and the selling price of their fuels, thanks mainly to refinery closures in the United States and Europe.

However, weak oil demand in Europe means the windfall should be short-lived.

Total struggled to keep production of oil and gas - the long term driver of industry profits - at year-ago levels.

The French company reported a 20 percent rise in third-quarter net adjusted profit to 3.35 billion euros ($4.4 billion) on Wednesday, beating the 3.12 billion euros analysts had forecast. In dollar terms, profits were up 6 percent

Its output of oil and gas fell 2 percent to 2.27 million barrels of oil equivalent.

For 2012 as a whole, oil and gas production will be down slightly compared with the year before, Chief Financial Officer Patrick de la Chevardiere said in a conference call with analysts, as output was hit by rebel attacks on pipelines in Nigeria and Yemen.

Total said it may push back the date to restart production at the Elgin Franklin platform in the North Sea after a gas leak in May. The company had aimed to restart production there by the end of the year, but de la Chevardiere said that target could slip to early 2013.

Shares in Total were up 0.7 percent by 1615 GMT, outperforming a 1 percent decline in the European oil and gas sector.

Total offers the prospect of healthy longer-term growth in volumes and cash flows, but this is unlikely to be reflected in its share price in the short term, analysts at Canaccord Genuity wrote.

"While the dividend yield should keep Total attractive for some investors ... we recommend switching into the likes of BP, Royal Dutch Shell or Statoil," they said in a note to clients.

Total said the proceeds from asset sales since the beginning of the year had reached about $5 billion, including the sale of the group's remaining shares in pharmaceutical company Sanofi . ($1 = 0.7705 euros) (Reporting by Michel Rose; Editing by Andrew Callus and Erica Billingham)

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