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August 1, 2009

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Slumping demand, low prices hit Total

TOTAL SA added to the oil industry's worst midyear showing in years yesterday as slumping global energy demand and falling prices caused its net profit to drop 54 percent in the second quarter.

Europe's third-biggest oil producer said net profit for the April-June period was 2.17 billion euros (US$3.07 billion), down from 4.73 billion euros on year.

Total is the latest of the oil industry giants to report weak quarterly earnings. On Thursday Exxon Mobil and Royal Dutch Shell both reported disappointing profit figures, stung by a slowdown in demand that threatens to further hinder exploration and production.

The Paris-based oil company said its production in the second quarter averaged 2.18 million barrels of oil a day, down 7.3 percent from 2.35 million barrels a year earlier.

In a statement, Total blamed high maintenance, the impact of higher prices and weak gas demand for the drop in production from the previous quarter. Over the rest of the year, Total said it expects to benefit from ramped up production at its recently launched Akpo, Tahiti and Tyrihans fields, as well as the planned start up of new liquified natural gas projects in Yemen and Qatar, and the Tombua Landana field in Angola.

Total's adjusted net profit, its preferred earnings yardstick, fell 54 percent to 1.72 billion euros in the second quarter, down from 3.72 billion euros a year earlier. Expressed in US dollars to ease comparison with other international oil companies, Total said its adjusted net profit was US$2.35 billion, down from US$5.82 billion a year earlier.

Total's sales fell 35 percent in the quarter to 31.4 billion euros.

The company also said it would pay an interim dividend to shareholders of 1.14 euros per share in November, the same as last year's interim and final dividends.


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