France’s oil giant Total second quarter profit up 43 percent on stronger refinery business

France’s Total Q2 profit up 43 percent

PARIS — French oil company Total SA said Friday its second-quarter profit jumped 43 percent thanks to rising production and improving refinery activity after a rough 2009, and said it is reviewing drilling and accident policies after the BP spill.

Europe’s third-largest oil company reported euro3.1 billion ($4.05 billion) in profits for the quarter, compared to euro2.17 billion in the same period last year, when earnings were hit by slumping demand and prices during the global recession. The profit increase was bigger than anticipated — the consensus in the markets was for a more modest rise to around euro2.7 billion.

Bar the exceptional circumstances surrounding BP PLC, most major oil companies worldwide are recovering strongly from the recession — Total’s second quarter revenue rose 31 percent to euro41.3 billion from euro31.4 billion a year ago.

Analysts and investors welcomed Total’s figures, particularly the climb in production, and shares were up 1.1 percent in late Paris trading Friday to euro38.78.

“These are very strong figures compared to the peer group and Total has delivered significant year-on-year improvements across all of its businesses,” Evolution Securities said in a research note about Total’s earnings.

It warned, though, that the rest of the year would remain difficult because of unpredictable refining margins.

Total’s Chairman and CEO Christophe de Margerie said the Paris-based company benefited from a favorable economic environment for the first half of this year, including higher oil prices and a rise in refinery margins, and that he was “confident” about the outlook for the rest of 2010.

Total reported midyear profits up 28 percent to euro5.7 billion from euro4.4 billion a year ago. It said that when excluding changes in inventories and the value of a stake in Sanofi-Aventis SA, first-half profit rose 72 percent to euro3 billion.

While Total has limited exposure to the Gulf of Mexico, it is losing between $10 million and $25 million because it had to suspend a Gulf exploration venture with Cobalt International Energy Inc. amid the offshore drilling moratorium, Total chief financial officer Patrick de la Chevardiere said Friday.

“We do not know what will be the outcome for the Gulf of Mexico,” he said. “I have no idea if Cobalt will be allowed to continue.”

De Margerie said the spill “reminds us that security and the environment should remain absolute priorities” and said Total is now reviewing its accident and drilling procedures.

Total reported an 8 percent rise in petroleum production for the second quarter, to 2.36 million barrels of oil equivalent a day. During the second quarter, the company started up a liquefied natural gas plant in Yemen and reported offshore discoveries in Angola and Nigeria.

Total is France’s largest company by market capitalization and a bellwether for the country’s corporate earnings season.

Oil demand has been rising amid signs that the worst of the economic crisis is over. On Thursday, Exxon Mobil Corp. said its net income nearly doubled to $7.56 billion in the second quarter, and Royal Dutch Shell Group posted a 15 percent gain in net income.