Total to cut spending; reassures on dividend

LONDON (ShareCast) - (ShareCast News) - French oil company Total (Swiss: FP.SW - news) said on Wednesday that it plans to cut its capital and operating spending next year on concerns that the drop in crude oil prices will persist. In a presentation to investors and media, Total said it will further reduce investment to $20-21bn in 2016 from $23-24bn this year, before returning to a sustainable level of $17-19bn from 2017 onwards.

In addition, the group said the start-up of three projects - the Ichthys in Australia, Martin Linge in Norway and Tempa Rossa in Italy - has been postponed to beyond 2017.

Total also lifted its opex target by 50% to $3bn from $2bn by 2017.

It (Other OTC: ITGL - news) said production is planned to grow by 6-7% per year between 2014 and 2017 and by an average of 5% per year between 2014 and 2019. The main drivers for production growth include twenty major start-ups, eight of which are in 2015, and increasing production efficiency, the company said.

Total also took the opportunity to reassure investors over its dividend. "Capital (Other OTC: CGHC - news) discipline, further opex reduction and growing production will deliver improving cash flows. The group confirms that organic free cash flow will cover the dividend by 2017 at $60 per barrel." At 0952 BST, Total shares were up 1.4% at €40.23.