UPDATE 2-Total to raise exploration budget, sell more assets

Wed Feb 13, 2013 12:54pm GMT

Quotes

   

* Confirms 3 pct annual output growth target to 2015

* Q4 adj net profit beats forecast at 3.08 bln euros

* Exploration budget rises to $2.8 bln (Adds analyst, shares, details)

By Michel Rose and Muriel Boselli

PARIS, Feb 13 (Reuters) - Total plans to raise its exploration budget in 2013 under an investment policy that takes advantage of high oil prices and financing from large-scale asset sales.

The world's fifth largest oil company by market value said it would spend $2.8 billion on exploration in 2013, up from $2.5 billion last year, with prospects to drill in Ivory Coast, Gabon, Kenya and Brazil.

Chief Executive Christophe de Margerie said he expected oil and gas output to grow by 2 to 3 percent in 2013, putting the French firm back on track after attacks on pipelines and a leak in the North Sea hit production in 2012.

Output slid by 2 percent to 2.3 million barrels of oil equivalent per day last year, but de Margerie confirmed a 2017 target for 3 million barrels of output capacity.

"This target is a bit questioned, we will be challenged, but we will rise to the challenge," de Margerie said at the group's annual results.

Total beat analysts forecasts in the fourth quarter, posting a 13 percent rise in adjusted net profit to 3.08 billion euros ($4.2 billion), buoyed by high oil prices and a bump in refining margins.

Its shares rose by as much as 1.4 percent in early trade, before edging down 0.26 percent by 1147 GMT, broadly in line with a 0.6 percent slide in the European oil and gas sector .

"Solid results in a tough year of disruption," said Societe Generale analysts in a note. Analysts said the results compared favourably with larger European oil majors BP and Royal Dutch Shell, which reported earlier this year.

Brent crude oil prices have been on an upward trend since November, averaging $111.6 per barrel in 2012 and trading near $118 on Wednesday.

"The environment remained favourable in the upstream, with Brent prices above $110 per barrel and, in the downstream, refining margins benefited from a temporary rebound at mid-year," de Margerie said.

Total has taken a bolder approach to managing its business in recent years, buying and selling assets more frequently and also merging its refining and chemicals businesses.

BUYING, SELLING

The company said it expected to reach the lower end of its assets sale target by the end of this year with the completion of the sale of its Nigerian Usan field and other divestments.

Total planned to sell assets worth $15 billion to $20 billion by 2014.

Net investments were seen at $22 billion in 2013, unchanged from the previous two years.

The group confirmed a target announced last September to expand output by about 3 percent a year on average for 2011 through 2015.

Asked whether he predicted the oil industry would consolidate in the near future, De Margerie said: "It's clear that when we see companies as big as Sinopec and Petrochina that are growing so fast, are we going to stay forever in a position of measured, natural and profitable growth?"

Total's head of refining and chemicals told Reuters on the sidelines of the presentation that South Korea's Samsung Total Petrochemicals has stopped purchasing oil from Iran after its French owner objected.

Samsung Total had bought one cargo of Iranian oil after a year's hiatus, unable to resist the cheap price given thin margins in plastics, people familiar with the deal told Reuters last month.

($1 = 0.7427 euros) (Additional reporting by Alexandre Boksenbaum-Granier; editing by David Holmes and Jason Neely)