Total takes $6.5 bln charge, cuts costs to counter weak oil by Reuters @FortuneMagazine February 12, 2015, 10:31 AM EST E-mail Tweet Facebook Google Plus Linkedin Share icons French oil and gas giant Total SA TOT will cut investment and jobs this year and accelerate its asset sales programme after taking a $6.5 billion writedown in the fourth quarter because of weak oil prices. Like many of its oil-producing rivals, the Paris-based firm was forced to write down the value of North American oil sands and shale assets as well as European refineries as a halving in crude prices since June and sluggish demand took their toll. Total said it would increase cuts to operational costs to $1.2 billion this year, above a previous target of $800 million. It will reduce organic investments by up to 13% to $23-24 billion and spending 30% less on exploration work. Chief Financial Officer Patrick de La Chevardiere said the oil major’s objective was to cut its breakeven point by $40 per barrel to about $70 (the International Energy Agency said earlier this week that prices wouldn’t get back to that level until 2020). Brent oil futures traded at $56/bbl on Thursday. Oil companies across the globe have announced billions of dollars of capital cost cuts to strengthen their books whilst facing lower profits. The budget cuts also signalled a more long-term change in its exploration strategy for Total, whose long-serving Chief Executive Christophe de Margerie died in a plane crash in Moscow last October. New Chief Executive Patrick Pouyanné said the cut to the exploration budget, to $1.9 billion in 2015, was in part due to the current low-price but driven more by a desire to revamp the process after having failed to return any major oil find in recent years. “We consider that after having spent a lot of money in exploration in the last three years without the results we expected, it was preferable that exploration teams be put under a certain pressure,” Pouyanné told reporters. The group will announce details of the new exploration strategy in September this year. Like its peers, Total maintained its shareholder payouts with a fourth-quarter dividend of 0.61 euros a share. It also expects to sell $5 billion in assets this year. Total had to write down projects such as the Utica shale gas venture in the United States, Fort Hills and Joslyn in Canadian oil sands but also the giant Kashagan project in Kazakhstan. In Britain, the group will halve the production capacity of its Lindsey refinery, which it failed to sell, and cut 180 jobs, with a plan for the French refining sector set to be announced in the spring. Total said some 2,000 jobs will go globally by the end of the year, mainly through natural attrition as it freezes hiring. The group had 99,000 employees at end-2013. The company’s net adjusted profit, which fell 17% to $2.8 billion in the quarter compared with the same period a year ago, came in higher than analysts had expected however. Revenue fell 19% to $52.5 billion.