Total cuts capex but assures market its dividend is safe

The techniques absolutely are a symbol that is actually essential oil majors are prolonged their ealier belt-tightening into year after year and 2017 after agencies from Chevron Corp.to actually Royal Dutch Shell Plc previewed sizable paying out cuts for 2015. According to Bloomberg, around $180 billion cutbacks have been made this year in the industry. Total’s stock was broadly unchanged. Revenue for Total was down 29 percent to $44.7 billion.

Crude prices have plunged by more than 50% since last summer. The group will then further reduce spending down to $20-21 billion in 2016, before returning to a “sustainable level” of $17-18 billion from 2017 onwards.

French oil and gas major Total put the protection of its dividend at the centre of its strategy on Wednesday, as it set out reduced investment plans and increased cost cuts in preparation for an extended period of depressed oil prices. “Capital discipline, further opex reduction and growing production will deliver improving cash flows”.

Chief Financial Officer Patrick de la Chevardière said on Wednesday said that the group wants to bring costs down so that it can break even at $45 a barrel by 2019 compared with $70 and $80 today and a break-even price of $110 back in 2013.

The energy company is now aiming at cost saving of $3 billion over the next two years, up from the previous estimate of $2 billion. Total SA also maintained its asset disposal target of $10 billion between 2015 and 2017. The company said that would delay three projects in Norway, Australia and Italy.

Total also took the opportunity to reassure investors over its dividend. The company’s chief executive has also made it clear that in future, investments would be directed to the refining sector, which is booming because of low cost of crude oil.

Newly appointed head of exploration Kevin McLachlan said Total will focus resources on less risky regions with an exploration budget of about $1.5 billion to $2 billion, against $1.9 billion previously.