* Total's Q4 adjusted net profit beats expectations
* CEO says cost savings help outperformance vs peers
* Says scouting for opportunities to snap up assets (Adds details, peer comparison, background)
By Bate Felix
PARIS, Feb 9 (Reuters) - French oil company Totalis on the hunt to buy assets from struggling rivals, it said onThursday, as it reported some of the biggest profits in theindustry for last year and raised its dividend.
Chief Executive Patrick Pouyanne said Total was reaping thebenefit of cutting costs more quickly than competitors followingthe start of an oil price rout in 2014, and of focusing onprojects with lower production costs.
"We have the second-best net adjusted profit in the yearamong oil majors although we don't have the same size ofproduction compared with some of them - we are fifth largest interms of production," he told reporters.
Total said it made an adjusted net profit of $8.2 billion in2016 and that on a comparable basis Shell made $7.2billion, BP $2.6 billion and Chevron $1.8 billion. OnlyExxon Mobil made more, with $8.9 billion, Total said.
In the fourth quarter, the French company's net profit rose16 percent to $2.4 billion, beating analysts' average forecastof $2.3 billion, while the dividend was set at 0.62 euros pershare, up from 0.61 euros in the previous three quarters.
"Another resilient set of results from Total, with earningsrobust across all segments," Jefferies analysts said in a note.
They have a "hold" rating on the stock, which was up 1.2percent to 47.4 euros at 1430 GMT.
"We reacted faster than our peers on cutting our costs andwe succeeded," Pouyanne said. "We deliberately made the choiceto go for projects with very low production costs."
"We did a lot of cost savings. The most spectacular was theaverage cost of production in exploration and production whichwas reduced to $5.9 per barrel of oil equivalent (boe), comparedwith $9.9/boe in 2014 and was the principal reason of ourresilience," he said.
Total said it made $2.8 billion of savings in 2016, beatingits target of $2.4 billion. It aims to make a further $3.5billion of savings in 2017 and cut production costs to $5.5/boe.
Pouyanne said the company's downstream business alsocontributed to the strong performance, with a return on capitalemployed of over 30 percent, which he said was ahead of the16-17 percent at peers.
NEW PROJECTS, OPPORTUNITIES
Total's solid balance sheet meant it could look foropportunities to pick up assets, the CEO said, adding thecompany planned to make final investment decisions on about 10projects within the next 18 months.
"We are in a field of opportunities," Pouyanne said. "Aftertwo years of very low prices, there are companies around theworld that have good assets but are struggling."
Total expects to invest $16-$17 billion in 2017, includingresource acquisitions, compared with $18.3 billion in 2016.
Production is forecast to grow by more than 4 percent,supporting the company's goal to increase output on average by 5percent per year from 2014 to 2020.
Pouyanne said the global oil market had not yet rebalancedand inventories were about 10 percent above normal. He added oilprices were likely to remain volatile.
A rebalancing of supply and demand would depend onimplementation of the deal to cut output agreed by theOrganization of the Petroleum Exporting Countries (OPEC) andnon-OPEC producers, he said.
Total predicted its breakeven oil price would continue tofall, reaching less than $40 per barrel before the dividend,with cash flow from operations expected to cover investments andthe cash portion of the dividend at $50 per barrel. (Reporting by Bate Felix and Benjamin Mallet; Editing by SudipKar-Gupta and Mark Potter)
BP (BP.)
