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REFILE-Oil majors' results surprise, but output fall, volatile trading lurk

Wed, 27th Apr 2016 14:37

(Refiles to clarify first paragraph)

* BP profit beat driven by refining, trading

* Total cites trading, petrochemicals for results

* Production gain unlikely to be repeated

By Karolin Schaps

LONDON, April 27 (Reuters) - Major oil companies'first-quarter results have so far not been as bad as feared butvolatile trading operations and a likely fall in production meanany respite could be short lived.

Europe's big oil producers had been expected to report theirworst quarterly earnings in the current downturn but instead BP, Total and Statoil have deliveredshare-boosting first-quarter results.

BP made a first-quarter profit of $532 million, againstexpectations of a $140 million loss, boosted, the company said,by refining and a strong performance from its trading unit. Thesame unit had a weak quarter at the end of 2015.

The British oil major does not disclose figures for itsenergy trading divisions, or give details on its performance.

"Given the lack of visibility on the repeatability of theseprofits, we have largely maintained our downstream (refining andtrading) earnings estimates," said Biraj Borkhataria, analyst atRBC Capital Markets, without disclosing his estimates.

France's Total, whose net adjusted profit beat expectationsby $400 million, also relied on a strong performance by itstrading and petrochemicals units, which are equally difficult toread.

Statoil's trading unit suffered from lower margins, it said,but a cost-cutting programme helped the company beatexpectations. Underlying production rose by 2 percent in thefirst quarter, after adjusting for divestments.

BP's production rose 5.2 percent, without contribution fromRussian oil major Rosneft, in the first three monthsof the year, mainly due to production sharing agreements (PSAs).

BP has warned production will fall in the second quarterbecause of fluctuations in PSA payments and planned fieldmaintenance.

Analysts struggle to predict higher production from PSAs ascontributions to oil majors on behalf of national governmentsdiffer depending on oil prices.

In Iraq, companies are being repaid their dollar investmentsin oil, meaning that during times of high oil prices they getone barrel to compensate for every $100 of investments, whileduring times of low prices they can get as many as threebarrels.

Total's production rose 4 percent in the quarter, equivalentto the target it had set for the full year, said AlexandreAndlauer, analyst at AlphaValue, which means it is unlikely toexceed that in coming quarters.

"The production surprise is a one-shot in our view but awelcomed one," he added.

European oil majors Eni and Shell reportfirst-quarter results on April 29 and May 4, respectively. (Additional reporting by Bate Felix in Paris; editing by SusanThomas and Keith Weir)

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