From a Bloomberg News: An interview with Total SA CEO Christophe de Margerie. His company is involved in Ohio's Utica shale through a joint venture with Chesapeake Energy and EV Energy Partners and its affiliates.
By Tara Patel
Aug. 30 (Bloomberg) -- Total SA is able to raise dividends as higher output boosts cash flow at France’s largest oil company, Chief Executive Officer Christophe de Margerie said.
"Our cash flow is seriously increasing and our policy is for a 50 percent payout on average," de Margerie said in an interview outside Paris. "An intelligent calculation will show that there is room for an increase in the dividend."
Total’s increase in oil and natural gas production combined with this year’s peak in spending on new projects means "the company will find itself in a very nice cash positive position," he said while attending a meeting of a French employers federation.
De Margerie is preparing to meet investors on Sept. 23 for an update on strategy that has seen Total pledge to raise output, explore more aggressively for new deposits and sell assets. A second-quarter production increase was the first year- on-year gain since the last three months of 2010. The explorer has also set a goal of $15 billion to $20 billion in asset sales between 2012 and 2014.
The Paris-based company, which has held quarterly payments at 59 euro cents (78 cents) a share for the past five quarters, will raise the dividend to 60 euro cent in November, according to forecasts by Bloomberg analysts.
De Margerie said the the final decision on dividends rests with company’s board.
Total will maintain targets for output growth over the next few years and the sale of businesses, he said in today’s interview.
De Margerie has pledged to boost oil and gas production by an average of 3 percent a year through 2015 as the company spends on projects from Angola to Kazakhstan. Total aims for output to reach about 3 million barrels of oil equivalent a day in 2017. Production advanced 1.3 percent to 2.29 million barrels of oil equivalent a day in the second quarter.
"We are clearly sticking to this even if some people think it’s too optimistic," de Margerie said. "It’s not. It reflects the investments we’ve made. These are bringing in the barrels we expected."
As well as investing in new fields, Total has sold assets such as a gas network in France and a field offshore Nigeria.
"We will show that we’ve reached" the goal of selling as much as $20 billion in assets, he said today. A revision of the target could come next year depending on investment needs.
De Margerie has been quizzed in the past by investors about the possibility of selling its specialty chemicals division. These assets include adhesives brand Bostik, rubber-based products maker Hutchinson, as well as Atotech, a business supplying solutions for metal coatings such as chrome.
"This is not a subject," de Margerie said, denying any plan for a sale.
Total executives are cautious when discussing possible sales of factories or refineries in France following a battle with the government and workers to shut its Dunkirk plant. Protests over that plan threatened nationwide fuel shortages and resulted in the company having to promise the government it wouldn’t close another one for five years.
Total is meeting with French unions Sept. 4 to discuss a future project for the Carling petrochemicals plant in northern France as well as its strategy for petrochemicals, de Margerie said today.