Net income, excluding Total's Sanofi-Aventis SA stake, fell to 3 billion euros ($4.14 billion) from 3.38 billion euros a year earlier, the Paris-based company said in a statement. That was higher than the 2.86 billion-euro median forecast of 10 analysts surveyed by Bloomberg News. Sales dropped 3 percent to 37.04 billion euros.
Chief Financial Officer Robert Castaigne said Total won't meet an earlier target of 6 percent output growth this year. He blamed output cutbacks by the Organization of Petroleum Exporting Countries and ``difficulties'' starting up a project in Azerbaijan.
``It's a good performance today,'' said Jason Kenney, an analyst at ING Wholesale Banking in Edinburgh, who has a `buy' rating on the stock. ``Unfortunately it's not a sparkling surprise but Total will still show strong growth.''
Total affirmed that output growth will average more than 5 percent a year for 2006 to 2010. Chief Executive Officer Christophe de Margerie has described the start of pumping at the Dalia field in Angola, which reached a peak last month of 240,000 barrels a day, as one of the highlights of 2007.
Total shares closed up 0.2 percent at 55.75 euros. The stock is up 2.0 percent this year, lagging a 9.5 percent increase in France's benchmark index.
Total Output
The euro traded at an average of $1.31 during the first three months of the year, compared with $1.20 a year earlier. The average price of crude oil fell to about $58 a barrel from $63.50 in the same period a year ago.
Output averaged 2.43 million barrels of oil and gas a day in the first quarter, compared with 2.40 million barrels a day in the final three months of 2006, and 2.44 million barrels a day in the year-earlier quarter.
Total said the start up of new fields including Dalia partially offset a drop in production in Nigeria and Venezuela and a slow start in Azerbaijan, a project at the Shah Deniz gas field led by BP Plc.
``The successful ramp up of the Dalia field in Angola, which is already at its plateau, and the start-ups of Rosa in Angola and Dolphin in Qatar, planned for the second and third quarters of this year, confirm we are returning to a period of growth,'' Total said in the statement.
`Low Point'
Total has been trying to boost production after hitting what it called a ``low point'' of 2.29 million barrels of oil equivalent a day in the second quarter of 2006, hurt by shutdowns in Nigeria and the impact of high oil prices on production-sharing contracts.
``Total is our favoured large-cap oil play because of its solid growth outlook relative to peers,'' analysts at Citigroup Inc. said in a report today. ``We feel the market is awaiting concrete evidence of production recovery after 2006 disappointments.''
Total, Europe's largest oil refiner, said profit from converting crude oil into gasoline, diesel and other products rose 28 percent in the first quarter. The average margin rose to $33 a ton from $25.80 a year earlier and $22.80 a ton in the fourth quarter of 2006.
Refining Margins
Castaigne said refining margins were about $40 a ton during the month of April. At a conference call with analysts he said he was optimistic refining margins would be good for the next four or five years.
The three-month period was Total's first full quarter of production after it installed a 550 million-euro distillate hydrocracker unit at its Normandy refinery, the oldest and largest in France. The unit will produce 1.3 million metric tons of sulfur-free diesel annually. The installation is at 90 percent utilization, Castaigne said.
Total said net investment was little changed at 2.84 billion euros in the quarter compared with last year.
Castaigne said talks continue with Iran on developing a gas field and building a liquefaction plant in South Pars, the world's biggest natural gas deposit that Iran shares with Qatar. ``Costs for the project will be higher than expected,'' he said. ``It will take more time to launch the project.''
He said there is ``no interference'' in the ongoing talks from an investigation by French judges into de Margerie's role in the alleged payment of bribes to Iran related to contracts signed in 1997 with National Iranian Oil Co. to develop South Pars.
BP, Shell
Castaigne said that Total is interested in Compania Espanola de Petroleos SA, known as Cepsa.
``It's not easy to justify such a share price,'' he said, adding that at the current level Total ``won't move'' on the company. Total has a 49 percent stake in the company.
Cepsa shares are up 39 percent in the past year.
BP, Europe's second-largest oil company, said last week profit dropped 17 percent in the first quarter because of lower energy prices and a seventh consecutive quarter of year-on-year production declines.
Royal Dutch Shell Plc, Europe's biggest oil company, reported an unexpected increase in first-quarter profit on a surge in revenue from refining crude and making chemicals.
Total holds about 173.2 million shares in Sanofi, the world's third-biggest drugmaker, according to stock exchange filings from February 2007. The 13 percent stake is worth about 11.8 billion euros.
Bloomberg
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