Total to cut spending; reassures on dividend

French oil company Total 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 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 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.