RPT-UPDATE 2-Total raises dividend as oil and gas spending peaks

Wed Feb 12, 2014 5:44am EST

* Total says Q4 adj net profit fell 19 pct on year ago

* Output at 2.299 mln boed in 2013, down 0.04 pct on year ago

* Organic capex to be cut to $26 bln in 2014 vs $28 bln in 2013

* Group raises Q4 dividend by 3.4 pct to 0.61 euros a share

By Michel Rose and Benjamin Mallet

PARIS, Feb 12 (Reuters) - French oil firm Total raised its dividend on Wednesday and confirmed it would cut capital spending even though output was stalling, falling into line with industry peers by reducing investment to try to boost shareholder returns.

Fourth-quarter adjusted net profit fell 19 percent to 2.47 billion euros ($3.38 billion), missing analysts' forecast for 2.69 billion euros, hit by shrinking refining margins, lower oil prices and delays at key fields such as Kazakhstan's Kashagan.

Full-year output edged down to 2.299 million barrels of oil equivalent (boe) a day from 2.3 million in 2012 - a figure that will not help the fifth-biggest global oil company shake off a reputation for missing production targets.

Chief Executive Christophe de Margerie's initial 2-3 percent output growth goal for 2013 was later dropped and the firm's finance chief still expected an increase last September.

Defending the company's record at a news conference later, CFO Patrick de la Chevardiere said that unlike other top oil companies the group still had a growth target - to reach 3 million boe per day by 2017 - and "in terms of production we are alone in having a production level that is flat. The others are all falling."

Production delays at some projects where Total is not operator, including Kazakhstan's giant Kashagan field, in which Total has a 16.81 percent stake, and Angola LNG are holding back growth overall.

De Margerie told reporters it was too early to say when output at Kashagan, halted late last year due to a leaking gas pipe, might restart.

"We haven't finished studies on the pipes. Overall, there shouldn't be leaks on the offshore part, the most worrying part, but certainly leaks onshore, in which case it might not be too difficult to repair," De Margerie added.

In the fourth quarter Total's output fell 0.5 percent from a year ago due to declines and maintenance work on mature producing fields such as Elgin/Franklin in the North Sea and OML 58 in Nigeria. Security issues caused a 1 percent fall, with a worsening situation in Nigeria and Libya. This was itself offset by 1 percent growth from start-ups.

Other big oil firms have also reported lacklustre fourth-quarter results, with Shell posting what it said was the least profitable quarter in five years, while Exxon and Chevron also disappointed investors.

Total is betting on a string of start-ups in 2014 to see production rise again, including Angola's $8 billion CLOV project and the $5 billion Laggan-Tormore field off the coast of Scotland.

The group, Europe's third-largest investor-owned company by market value, said it would cut gross capital expenditure to $26 billion in 2014 from $28 billion last year, and said it would reward investors with a 3.4 percent rise in its quarterly dividend to 0.61 euros a share from 0.59.

Total shares were up 1.5 percent at 44.235 euros after the announcement. Total's shares have outperformed its peers in 2013, rising 19.3 percent in dollars, compared to 17 percent for BP, 16.9 percent for Exxon Mobil, 15.5 percent for Chevron and 4.2 percent for Shell.

"All told, the tone is constructive with the dividend statement and capex (capital expenditure) guidance supportive," said Deutsche Bank analysts in a research note.

"A decent set of Q4 results from Total, although, after the likes of Shell, BG and BP, the bar was fairly low," said Investec analysts.

Spurred on by historically high oil prices in the past few years, integrated oil companies increased their exploration spending to look for hydrocarbons in areas that until recently were deemed too remote or risky. Total's own 2013 spend of $28 billion was up from less than $24 billion the previous year.

But the shareholders who control them have raised the pressure to keep a lid on costs as they fear the oil price cycle could turn down and are demanding more generous payouts.

Total, which embarked on a so-called "high-risk, high-reward" exploration strategy to find giant fields in areas such as southern African seas, conceded last month it would start what De Margerie called a "soft landing" in capital expenditure.

"We maintain a rather substantial exploration budget of $2.8 billion however, even if, it's true, we did not find the major field we were looking for in 2013," said De La Chevardiere. "But our efforts continue in 2014."

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