Total has decided to sell off upstream assets that have a high breakeven price. Total needs today an oil price of USD 50 to breakeven.
that isn't what the article said at all but nice try at trying to manipulate the lazy reader.
from the article:
Its organic pre-dividend breakeven is below $25 a barrel, while the organic post-dividend breakeven - which would allow it to pay dividends and carry out investments - is below $50 a barrel.
This leaves Total optionality…they can lower dividends or lower further investments which further lowers their overall post-dividend break even. Also it is important to mention that Totals portfolio is mainly offshore deepwater and onshore/offshore natural gas. Gas prices globally on a BTU equivalent basis are lower than oil prices (if you used a global average of $6/MCF that equates to $36 per BOE) so that skews their portfolio breakeven substantially. As well the deepwater and ultra deepwater where Total has focussed E&P over the past decade has a higher breakeven than unconventionals (which is why Total is trying to grow their unconventional business).
You also failed to mention that when Pouyanne took over from De Margerie he focused on acquisitions. Those acquisitions often spook the market as to the overall long term impact on the bottom line. As a consequence Total needed to high grade their portfolio to alleviate those worries.
from the article:
“The announcement of the asset sales may help to offset some uncertainty around the recent growth and M&A strategy, demonstrating some ongoing discipline around the balance sheet and upstream portfolio,” said Henry Tarr, an analyst at Barenberg, which rates Total a “buy”.
So in fact what Total is doing is a normal course of business, something oil companies have been doing in good times and bad times for decades...refocus the portfolio to improve returns.
