Total to cut 2016 capital budget by $3 billion

Sep 23, 2015 12:00 AM

Total SA plans to reduce its capital expenditures to $20-21 billion in 2016 from $23-24 billion in 2015 and a peak of $28 billion in 2013. The French multinational firm says it then will return to a “sustainable level” of $17-19 billion in 2017 and beyond.

This will be achieved in part by reducing personnel costs by more than $80 million/year, which will result in fewer contractors, according to Total's strategy and outlook presentation delivered at its investor day on Sept. 23. The company also has slashed its global rig fleet nearly in half since 2014 in a move that is “adapting rig count to activity levels,” it said.

The spending cuts will result in lower production growth than previously forecast. While the company reported a year-over-year output rise of 11% during this year’s first half, it expects growth of just 6-7%/year during 2014-17 and 5%/year when expanding the period to 2014-19.

Production increases largely will be upheld by 20 major startups, eight of which are scheduled for this year. The company also is targeting more than 1.5 billion boe in its 2016-18 exploration program.

In the US Gulf of Mexico, three appraisal wells are ongoing from the North Platte discovery and an exploration well is scheduled for the Goodfellow prospect. Each is estimated to have 400 million boe in contingent and prospective resources.

Total is also seeing startup of the GLNG, Yamal, and Icthys LNG projects, the latter of which has experienced delays and cost overruns.

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