8th Nov 2006 08:38
Total S.A.08 November 2006 Third quarter 2006 results stable at 3.1 billion euros Interim dividend of 0.87 euro per share, an increase of 16% (+25% expressed in dollars)(1) Main results • Third quarter 2006 adjusted net income(2) 3.11 billion euros - 3.96 billion dollars(3) +4% 1.35 euros per share +2% 1.72 dollars per share +6% • Nine months 2006 adjusted net income(4) 9.85 billion euros +10% 12.3 billion dollars +8% 4.24 euros per share +12% 5.28 dollars per share +11% Highlights since the start of the third quarter 2006 • Continuing exploration success - Positive results in the Gulf of Mexico, Congo, Libya, Nigeria, Angola, Indonesia and UK North Sea - New acreage in Nigeria, Indonesia, Colombia, Gulf of Mexico and the Netherlands • Entry in two major LNG projects : Brass LNG in Nigeria and Ichthys LNG in Australia • Launched development of the Tempa Rossa field in Italy • Start-up of Phase I Joslyn field SAGD (steam-assisted gravity drain) • Acquisition of 4.35% of Cepsa for 4.54 •/share as per the agreement with Santander to settle the arbitration process • Agreement on new contractual framework in Bolivia and an increase in the share of Block XX to 75% Paris, November 8, 2006 --- The Board of Directors of Total, chaired by CEOThierry Desmarest, met on November 7, 2006 to review the consolidated accountsfor the third quarter 2006. Adjusted net income was 3,111 million euros (M•) inthe third quarter 2006, in line with the level of the third quarter 2005.Commenting on the results, Thierry Desmarest said : "After a long period of advances, oil prices lost ground during the thirdquarter, following a slowdown in demand growth and as perceptions in the marketabout the risks related to global oil supplies eased. Refining margins werelower than the very high levels reached in 2005 following hurricanes in the Gulfof Mexico, but market conditions for petrochemicals improved as the cost ofnaphtha fell near the end of the quarter. Expressed in dollars, the 4% increase in adjusted net income reflects thebenefits of a slightly more favorable environment, which were partially offsetby an increase in UK petroleum taxes and lower production volumes. Nonetheless,the profitability of Total, 29% for the 12 months ended September 30, is stillat the level of the best among the majors. This performance reflects the qualityof the Group's portfolio of activities and the benefit of continued capitaldiscipline. Total is continuing to implement its investment program, designed in particularto generate production growth of close to 4% per year on average for the period2005 to 2010. Notably with the start-up of the giant Dalia field in Angolaanticipated next month, the return to a period of strong growth is confirmed for2007. The interim dividend was raised by 16%, a larger increase than theincrease in net income, and this demonstrates that the company is confident ofits ability to return to sustainable long-term strong production growth." • Key figures from the consolidated accounts of Total(5) 3Q06 2Q06 3Q05 3Q06 in millions of euros, 9M06 9M05 9M06 vs except earnings per share and number of vs 3Q05 shares 9M05 38,357 40,909 37,055 +4% Sales 117,369 99,042 +19% 6,352 6,672 6,288 +1% Adjusted operating income from business 19,712 17,100 +15% segments 3,079 3,369 3,008 +2% Adjusted net operating income from 9,688 8,659 +12% business segments 2,033 2,391 2,202 -8% = Upstream 6,824 5,897 +16% 798 787 706 +13% = Downstream 2,235 2,117 +6% 248 191 100 +148% = Chemicals 629 645 -2% 3,111 3,361 3,126 - Adjusted net income 9,848 8,951 +10% 1,35 1.45 1.33 +2% Adjusted fully-diluted earnings per 4.24 3.78 +12% share (euros)(6) 2,302.3 2,323.0 2,351.8 -2% Fully-diluted weighted-average shares 2,320.4 2,366.9 -2% (millions)6 2,419 3,441 3,645 -34% Net income (Group share) 9,543 9,932 -4% 2,667 2,779 3,357 -21% Investments 8,196 7,396 +11% 186 624 248 -25% Divestments (at selling price) 1,207 838 +44% 5,053 4,046 4,764 +6% Cash flow from operations 13,938 11,498 +21% 4,397 4,678 4,154 +6% Adjusted cash flow from operations 13,362 12,947 +3% • Third quarter 2006 results > Operating income In the third quarter 2006, the average Brent price rose to 69.5 $/b, an increaseof 13% compared to the third quarter 2005 and stable compared to the secondquarter 2006. The TRCV European refining margin indicator fell to 28.7 $/t onaverage over the quarter, a decrease of 35% compared to the third quarter 2005and 25% compared to the second quarter 2006. Petrochemical margins in the Atlantic Basin moved higher relative to the samequarter last year and the previous quarter. The euro/dollar exchange rate was 1.27 $/• in the third quarter 2006 compared to1.22 $/• in the third quarter 2005 and 1.26 $/• in the second quarter 2006. In this context, the adjusted operating income from the business segments was6,352 M•, an increase of 1% compared to the third quarter 2005(7). Adjusted net operating income from the business segments was 3,079 M• comparedto 3,008 M• in the third quarter 2005, or an increase of 2%. These resultsinclude charges in the third quarter 2006 related to the increase in UKpetroleum taxes retroactive to January 1, 2006, of which 143 M• is related tothe first half of 2006. Excluding this 143 M• charge, the increase in theadjusted net operating income from the business segments is 7%. This increase, which is higher than the percentage increase in operating income,is due notably to the greater contribution of Chemicals in the results and tothe performance of the equity affiliates. > Net income Adjusted net income was 3,111 M• compared to 3,126 M• in the third quarter 2005.This excludes the after-tax inventory effect, special items, and the Group'sequity share of amortization of intangibles related to the Sanofi-Aventismerger. Excluding the 143 M• charge for the increase in UK petroleum taxesrelated to the first half of 2006, the increase in the adjusted net income is4%. The after-tax inventory effect (FIFO vs. replacement cost) had a negative effectof 478 M• in the third quarter 2006 compared to a positive effect of 729 M• inthe third quarter 2005. Special items had a negative impact on net income of 132 M• in the third quarter2006 and were composed mainly of the impact on deferred taxes related to the UKpetroleum tax increase (a charge of 71 M•) and restructuring charges in theChemicals segment. In the third quarter 2005, special items had a negativeeffect of 98 M• and were composed mainly of Group's equity share of specialitems recorded by Sanofi-Aventis. The Group's equity share of amortization of intangibles related to theSanofi-Aventis merger had a negative impact on net income of 82 M• in the thirdquarter 2006 and 112 M• in the third quarter 2005. Reported net income was 2,419 M• compared to 3,645 M• in the third quarter 2005. The effective tax rate (8) for the Group increased to 56% in the third quarter2006 from 55% in the third quarter 2005, mainly due to the increase in UKpetroleum taxes. In the second quarter 2006, which did not include the increasein UK petroleum taxes, the effective tax rate was 55%. In the third quarter 2006, the Group bought back 20 million of its shares(9) for1,035 M•. Adjusted fully-diluted earnings per share, based on 2,302.3 millionfully-diluted weighted-average shares, was 1.35 euros in the third quarter 2006compared to 1.33 euros in the third quarter 2005, an increase of 2%. Excludingthe charge for the increase in UK petroleum taxes related to the first half of2006, the increase is 6%; expressed in dollars, it is 11%. > Investments - divestments Investments in the third quarter 2006 were 2,667 M• (or approximately 3.4billion dollars) compared to 3,357 M• in the third quarter 2005. Excluding the890 M• acquisition of 82% of Deer Creek from the third quarter 2005, investmentsexpressed in dollars increased by 13% between the third quarter 2005 and thethird quarter 2006. Divestments in the third quarter 2006 were 186 M•. > Cash flow Cash flow from operations was 5,053 M•, an increase of 6% compared to the thirdquarter 2005. Adjusted cash flow (cash flow from operations before changes in working capitalat replacement cost) was 4,397 M•, an increase of 6%. Net cash flow(10) was 2,572 M• compared to 1,655 M• in the third quarter 2005. • Results for the first nine months of 2006 > Operating income Compared to the first nine months of 2005, the average oil market environmentfor the first nine months of 2006 was marked by a strong increase in oil prices(+25% for Brent to 67 $/b) and by a decrease in refining margins (-24% for theTRCV European refining margin indicator to 30.9 $/t). The environment for Chemicals is generally comparable for the two periods. The euro/dollar exchange rate was 1.24 $/• compared to 1.26 $/• in the firstnine months of 2005. In this context, the adjusted operating income from the business segments roseto 19,712 M•, an increase of 15% compared to the first nine months of 2005. Special items affecting operating income from the business segments had anegative impact of 177 M•(11) for the first nine months of 2006 and a negativeimpact of 11 M€11 for the same period last year. Adjusted net operating income from the business segments rose to 9,688 M• from8,659 M• in the first nine months of 2005, an increase of 12%. The lowerpercentage increase relative to the increase in operating income is mainly afunction of the Upstream segment having a higher effective tax rate andrepresenting a larger proportion of the results in the first nine months of 2006compared to the first nine months of 2005. > Net income Adjusted net income increased by 10% to 9,848 M• from 8,951 M• in the first ninemonths of 2005. This excludes the after-tax inventory effect, special items, andthe Group's equity share of amortization of intangibles related to theSanofi-Aventis merger. The after-tax inventory effect (FIFO vs. replacement cost) had a positive impactof 78 M• in the first nine months of 2006 and a positive impact of 1,502 M• inthe first nine months of 2005. Special items had a negative impact on net income of 132 M• in the first ninemonths of 2006 and a negative impact of 274 M• in first nine months of 200511. The Group's equity share of amortization of intangibles related to theSanofi-Aventis merger had a negative impact on net income of 251 M• in the firstnine months of 2006 and a negative impact of 247 M• in the first nine months of2005. Reported net income was 9,543 M• versus 9,932 M• in the first nine months of2005. The effective tax rate for the Group was 56% in the first nine months of 2006and 53% in the first nine months of 2005. The increase in the UK petroleum taxesaccounts for half of the increase. The large share of the Upstream in theresults accounts for most of the remainder. In the first nine months of 2006, the Group bought back 62 million of its shares(12) for 3,229 M•. The number of fully-diluted shares as of September 30, 2006was 2,294.6 million compared to 2,312.9 million on June 30, 2006 and 2,352.2million on September 30, 2005. In October 2006, the Group bought back 4.7million shares for 246 M•. Adjusted fully-diluted earnings per share, based on 2,320.4 millionfully-diluted weighted-average shares rose to 4.24 euros from 3.78 euros in thefirst nine months of 2005, an increase of 12%, which is a higher percentageincrease than shown for the adjusted net income thanks to the accretive effectof the share buybacks. > Investments - divestments Investments were 8,196 M• compared to 7,396 M• in the first nine months of 2005.Investments expressed in dollars increased by 9% to 10.2 billion. Divestments in the first nine months of 2006 were 1,207 M• compared to 838 M•for the first nine months of 2005 and include the sale of Upstream assets in theUS and in France as well as the reimbursement of carried investments on Akpo inNigeria. > Cash flow Cash flow from operations was 13,938 M•, an increase of 21% compared to thefirst nine months of 2005. Adjusted cash flow (cash flow from operations before changes in working capitalat replacement cost) was 13,362 M•, an increase of 3%. Net cash flow was 6,949 M• compared to 4,940 M• in the first nine months of2005. The net-debt-to-equity ratio was 26% at September 30, 2006 compared to 30% atJune 30, 2006 and 26% at September 30, 2005(13), in line with the target rangeof the Group. • Analysis of segments results Upstream > Environment - liquids and gas price realizations*3Q06 2Q06 3Q05 3Q06 9M06 9M05 9M06 vs vs 3Q05 9M05 69.5 69.6 61.5 +13% Brent ($/b) 67.0 53.7 +25% 65.4 66.2 57.8 +13% Average liquids price ($/b) 63.4 49.9 +27% 5.59 5.75 4.65 +20% Average gas price ($/Mbtu) 5.84 4.47 +31% * consolidated subsidiaries, excluding fixed margin and buy-back contracts The increase in Total's average liquids price was in line with the increase inthe Brent price for both the third quarter and first nine months comparisons. Total's average gas price was lower in the third quarter 2006 than in the secondquarter 2006 due to a decrease in spot prices. For the first nine months of2006, gas prices have benefited from the lag effect on long-term contracts,essentially in Europe. > Production 3Q06 2Q06 3Q05 3Q06 Hydrocarbon production 9M06 9M05 9M06 vs vs 3Q05 9M05 2,294 2,290 2,428 -6% Combined production (kboe/d) 2,341 2,498 -6% 1,485 1,466 1,607 -8% = Liquids (kb/d) 1,503 1,631 -8% 4,411 4,501 4,491 -2% = Gas (Mcfd) 4,568 4,742 -4% Hydrocarbon production was 2,294 thousand barrels of oil equivalent per day(kboe/d) in the third quarter 2006 compared to 2,428 kboe/d in the third quarter2005, a decrease of 5.5%, mainly as a result of : • -2.5% due to the price effect (14), • -1% due to divestments of onshore US assets, • -2% due to production shut-downs in the Niger Delta area due to safety issues. Excluding these elements, the positive impact of new field start-ups were offsetby the effects of normal declines, unscheduled maintenance and the terminationof the Jusepin field contract in Venezuela. Production volumes were stable from the second to the third quarter 2006. Thelevel of maintenance programs was generally unchanged. The re-start of theGirassol field was offset by production shut-downs and lower off-takes in theNetherlands. > Results 3Q06 2Q06 3Q05 3Q06 in millions of euros 9M06 9M05 9M06 vs vs 3Q05 9M05 5,000 5,376 5,199 -4% Adjusted operating income* 15,977 13,421 +19%2,033 2,391 2,202 -8% Adjusted net operating income* 6,824 5,897 +16% 172 155 113 +52% • Income from equity affiliates 470 328 +43%2,073 2,209 2,589 -20% Investments 6,363 5,590 +14%80 502 161 -50% Divestments 935 551 +70% at selling price 2,534 3,371 2,818 -10% Cash flow 9,736 7,737 +26% * detail of adjustment items shown in business segment information Adjusted net operating income for the Upstream segment was 2,033 M• in the thirdquarter 2006 compared to 2,202 M• in the third quarter 2005, a decrease of 8%. The third quarter 2006 includes a charge of 143 M• for the increase in the UKpetroleum taxes related to the first half of 2006 and 60 M• for the thirdquarter 2006. Excluding the charge for the increase in UK petroleum taxes related to the firsthalf of 2006, the decrease would be limited to 1%. Excluding the increase in UK petroleum taxes in its entirety, the adjusted netoperating income for the Upstream segment would have increased by 2%. Thisincrease corresponds to the improvement in the equity affiliates, which reflectsthe stronger oil market environment and in particular includes the growingcontribution from trains 4 and 5 at Nigeria LNG. The positive effect of higher oil and gas prices was offset by the negativeimpact of lower sales volumes, a decline in the value of the dollar and higherexploration and production expenses. The average Upstream tax rate increased to 64% in the third quarter 2006 from60% in the third quarter 2005 and the second quarter 2006, essentially due tohigher oil and gas prices and the increase in the UK petroleum taxes. The impactof including the charge for the increase in the UK petroleum taxes related tothe first half of 2006 in the third quarter 2006 is about 3%. The recurring effect on the tax rate of the Upstream segment caused by theincrease in the UK petroleum tax is expected to be approximately 1.5%. The return on average capital employed (ROACE(15)) for the Upstream segment forthe twelve months ended September 30, 2006 was 39% compared to 37% for thetwelve months ended September 30, 2005 and 40% for the full year 2005. Downstream > Refinery throughout3Q06 2Q06 3Q05 3Q06 Refinery throughput (kb/d) 9M06 9M05 9M06 vs vs 3Q05 9M05 2,533 2,432 2,379 +6% Total refinery throughput* 2,462 2,407 +2%976 888 951 +3% = France 922 944 -2%1,257 1,214 1,124 +12% = Rest of Europe* 1,228 1,143 +7%300 330 304 -1% = Rest of world 312 321 -3% * includes share of Cepsa The refinery utilization rate was 92% in the third quarter 2006 compared to 88%in the third quarter 2005 and 86% in the second quarter 2006. A major turnaround of the steam-cracker at the Port Arthur refinery began at theend of the third quarter 2006. In the third quarter 2005, there were turnarounds at the Antwerp and Normandyrefineries. The utilization rate in the second quarter 2006 was affected by the completionof a turnaround at the Provence refinery. > Results 3Q06 2Q06 3Q05 3Q06 in millions of euros 9M06 9M05 9M06 vs (except the TRCV refining margin index) vs 3Q05 9M05 28.7 38.3 44.3 -35% TRCV - European refining 30.9 40.4 -24% margin indicator ($/t) 1,002 1,036 981 +2% Adjusted operating income * 2,894 2,816 +3%798 787 706 +13% Adjusted net operating income * 2,235 2,117 +6%64 81 71 -10% • Income from equity affiliates 206 211 -2% 383 368 493 -22% Investments 1,072 1,069 -90 50 21 +329% Divestments 153 124 +23% at selling price 1,180 984 893 +32% Cash flow 3,365 2,512 +34% 1,142 1,087 796 +43% Adjusted cash flow 3,060 2,520 +21% * detail of adjustment items shown in business segment information Adjusted net operating income for the Downstream segment was 798 M• compared to706 M• in the third quarter 2005, an increase of 13%. The negative impact of the less favorable refining environment was more thanoffset by improved conditions in the marketing sector as well as by the increasein refinery throughput and other favorable market effects. The ROACE for the Downstream segment for the twelve months ended September 30,2006 was 28% compared to 32% for the twelve months ended September 30, 2005 and28% for the full year 2005. Chemicals > Results Under IFRS rules for discontinued operations, the historical statements onincome, with the exception of net income, have been restated to exclude thecontribution of Arkema. 3Q06 2Q06 3Q05 3Q06 in millions of euros 9M06 9M05 9M06 vs vs 3Q05 9M05 4,849 4,965 4,042 +20% Sales 14,503 12,471 +16%3,135 3,122 2,402 +31% = Base chemicals 9,120 7,604 +20%1,713 1,843 1,640 +4% = Specialties 5,382 4,867 +11% 350 260 108 +224% Adjusted operating income* 841 863 -3%248 191 100 +148% Adjusted net operating income* 629 645 -2% 155 85 1 x155 • Base chemicals 318 369 -14% 87 109 88 -1% • Specialties 299 261 +15% 202 176 275 -27% Investments 702 678 +4%4 67 - ns Divestments 99 30 +230% at selling price 291 (7) 498 -42% Cash flow 247 785 -69% 329 255 213 +54% Adjusted cash flow 889 1,107 -20% * detail of adjustment items shown in business segment information Sales for the Chemicals segment increased by 20% to 4,849 M• in the thirdquarter 2006 from 4,042 M• in the third quarter 2005. Adjusted net operating income for the Chemicals segment rose to 248 M•, a sharpincrease from the third quarter 2005. In a context of solid market demand, petrochemical margins benefited from adecrease in naphtha prices at the end of the quarter. Specialties continue to benefit from global economic growth and have performedwell taking into account the seasonality of certain activities. The ROACE for the Chemicals segment for the twelve months ended September 30,2006 was 13.5%, the same level as for the twelve months ended September 30,2005. For the full year 2005, the ROACE for the Chemicals segment was 15%. • Interim dividend Net income for Total S.A., the parent company, was 3,429 M• for the first ninemonths of 2006, compared to 2,763 M• for the first nine months of 2005. The Board of Directors met on November 7, 2006, and, after reviewing theaccounts, approved an interim 2006 dividend of 0.87 euro per share, an increaseof 16% compared to the interim dividend paid in November 2005. Expressed in dollars, the increase is 25%(16). The payment date will be November 17, 2006. • Summary and Outlook For the twelve months ended September 30, 2006, the ROACE was 29% at the Grouplevel and 32% at the level of the business segments, compared to 29% and 31%respectively for the twelve months ended September 30, 2005. The return on equity for the twelve months ended September 30, 2006 was 34%. The Group maintains its target range of around 25-30% for the net-debt-to-equityratio. Since the beginning of the fourth quarter 2006, oil prices have remained high,albeit at a level below the year-to-date average, and refining margins havemaintained a level close to that of the third quarter 2006. To listen to the conference call with CFO Robert Castaigne and financialanalysts today at 15:30 (Paris time), 14:30 (UK time) please call +44 (0)207 1620025 in Europe or +1 334 323 6201 in the US (access code : Total) or log on tothe company website www.total.com. For a replay, dial +44 (0)207 031 4064 inEurope or 1 954 334 0342 (code : 722207). The September 30, 2006 notes to the consolidated accounts are available on theTotal web site (www.total.com). This document may contain forward-lookingstatements within the meaning of the Private Securities Litigation Reform Act of1995 with respect to the financial condition, results of operations, business,strategy and plans of Total. Such statements are based on a number ofassumptions that could ultimately prove inaccurate, and are subject to a numberof risk factors, including currency fluctuations, the price of petroleumproducts, the ability to realize cost reductions and operating efficiencieswithout unduly disrupting business operations, environmental regulatoryconsiderations and general economic and business conditions. Total does notassume any obligation to update publicly any forward-looking statement, whetheras a result of new information, future events or otherwise. Further informationon factors which could affect the company's financial results is provided indocuments filed by the Group and its affiliates with the French Autorite desMarches Financiers and the US Securities and Exchange Commission. The business segment information is presented in accordance with the Groupinternal reporting system used by the Chief operating decision maker to measureperformance and allocate resources internally. Due to their particular nature orsignificance, certain transactions qualified as "special items" are excludedfrom the business segment figures. In general, special items relate totransactions that are significant, infrequent or unusual. However, in certaininstances, certain transactions such as restructuring costs or assets disposals,which are not considered to be representative of normal course of business, maybe qualified as special items although they may have occurred within prior yearsor are likely to recur within following years. In accordance with IAS 2, the Group values inventories of crude oil andpetroleum products in the financial statements in accordance with the FIFO(First in, First out) method and other inventories using the weighted-averagecost method. However, in the note setting forth information by business segment,the Group continues to present the results for the Downstream segment accordingto the replacement cost method and those of the Chemicals segment according tothe LIFO (Last in, First out) method in order to ensure the comparability of theGroup's results with those of its main competitors, notably from North America.The inventory valuation effect is the difference between the results accordingto the FIFO method and the results according to the replacement cost or LIFOmethod. In this framework, performance measures such as adjusted operating income,adjusted net operating income and adjusted net income are defined as incomesusing replacement cost, adjusted for special items and excluding Total's equityshare of the amortization of intangibles related to the Sanofi-Aventis merger.They are meant to facilitate the analysis of the financial performance and thecomparison of income between periods. Operating information by segment Third quarter and first nine months of 2006 • Upstream 3Q06 2Q06 3Q05 3Q06 Combined liquids and gas production by 9M06 9M05 9M06 vs region (kboe/d) vs 3Q05 9M05 674 708 698 -3% Europe 720 773 -7%716 692 753 -5% Africa 717 783 -8%17 7 40 -58% North America 12 44 -73%250 250 255 -2% Far East 251 248 +1%396 402 407 -3% Middle East 403 394 +2%234 225 266 -12% South America 231 247 -6%7 6 9 -22% Rest of world 7 9 -22%2,294 2,290 2,428 -6% Total production 2,341 2,498 -6% 3Q06 2Q06 3Q05 3Q06 Liquids production by region (kb/d) 9M06 9M05 9M06 vs vs 3Q05 9M05 354 358 367 -4% Europe 363 392 -7%620 604 682 -9% Africa 626 703 -11%7 1 9 -22% North America 3 10 -70%28 29 30 -7% Far East 29 30 -3%345 350 354 -3% Middle East 351 342 +3%124 118 157 -21% South America 124 146 -15%7 6 8 -13% Rest of world 7 8 -13%1,485 1,466 1,607 -8% Total production 1,503 1,631 -8% 3Q06 2Q06 3Q05 3Q06 Gas production by region (Mcfd) 9M06 9M05 9M06 vs vs 3Q05 9M05 1,738 1,900 1,798 -3% Europe 1,935 2,068 -6%509 469 377 +35% Africa 478 426 +12%48 31 159 -70% North America 48 180 -73%1,240 1,231 1,252 -1% Far East 1,237 1,218 +2%272 279 288 -6% Middle East 278 280 -1%602 589 615 -2% South America 590 568 +4%2 2 2 - Rest of world 2 2 -4,411 4,501 4,491 -2% Total production 4,568 4,742 -4% • Downstream 3Q06 2Q06 3Q05 3Q06 vs Refined product sales by region (kb/d)* 9M06 9M05 9M06 3Q05 vs 9M05 2,688 2,658 2,702 -1% Europe 2,677 2,636 +2%353 318 346 +2% Africa 329 335 -2%583 603 714 -18% Americas 604 640 -6%147 198 48 +206% Rest of world 192 176 +9%3,771 3,777 3,810 -1% Total 3,802 3,787 - * includes trading and equity share of Cepsa Adjustment items • Adjustments to operating income from business segments 3Q06 2Q06 3Q05 in millions of euros 9M06 9M05 (122) (50) - Special items affecting operating income from business (177) (11) segments(10) (23) - = Restructuring charges (33) -(50) - - = Impairments (50) (11)(62) (27) - = Other (94) -(681) 383 1,066 Pre-tax inventory effect : FIFO vs. replacement cost 75 2,179 (803) 333 1,066 Total adjustments affecting operating income from (102) 2,168 business segments • Adjustments to net income (Group share) 3Q06 2Q06 3Q05 in millions of euros 9M06 9M05(132) (110) (98) Special items affecting net income (Group share) (132) (274)(2) (35) (87) = Equity share of special items recorded by (35) (165) Sanofi-Aventis- - - = Gain on asset sales 130 -(80) (44) - = Restructuring charges (139) (90)(32) - - = Impairments (32) (8)(18) (31) (11) = Other (56) (11)(82) (86) (112) Adjustment related to the Sanofi-Aventis merger* (251) (247) (share of amortization of intangible assets)(478) 276 729 After-tax inventory effect : FIFO vs. replacement cost 78 1,502 (692) 80 519 Total adjustments to net income (305) 981 * based on 13% participation in Sanofi-Aventis at 9/30/2006, 6/30/2006 and 9/30/ 2005 Net-debt-to-equity ratio in millions of euros 9/30/2006 6/30/2006 9/30/2005 Current borrowings 11,426 13,707 12,856Net current financial instruments (108) 45 (806)Non-current financial debt 12,994 13,256 13,377Hedging instruments of non-current debt (526) (588) (599)Cash and cash equivalents (13,366) (14,602) (14,989)Net debt 10,420 11,818 9,839 Shareholders equity 41,761 40,272 39,725Accrued dividend payable based on shares (2,756) (1,860) (2,362) at the close of the period*Minority interests 863 783 1,015Equity 39,868 39,195 38,378 Net-debt-to-equity ratio 26.1% 30.2% 25.6% * as of September 30, 2006, this represents a dividend of 1.62 •/share for each 2.5 • par value share 2006 Sensitivities* Scenario Change Impact on operating Impact on net income (e) operating income (e)•/$ 1.20 $/• +0.1 • per $ +1.6 B• +0.8 B• Brent 40-50 $/b +1 $/b +0.41 B• +0.17 B• TRCV - European refining 25 $/t +1 $/t +0.09 B• +0.06 B•margin indicator * sensitivities revised once per year upon publication of the previous year fourth quarter results Return on average capital employed • For the 12 months ended September 30, 2006 in millions of euros Upstream Downstream Chemicals** Segments Group Adjusted net operating income 8,956 3,034 951 12,941 13,680Capital employed 21,663 10,017 6,837 38,517 45,273at September 30, 2005*Capital employed 24,561 11,431 7,257 43,249 50,371at September 30, 2006*ROACE 38.8% 28.3% 13.5% 31.7% 28.6% * at replacement cost (excluding after-tax inventory effect) ** capital employed for Chemicals reduced for Arkema by 2,268 M• at 9/30/2005 and for the Toulouse-AZF provision of 45 M• pre-tax at 9/30/2005 and 85 M• pre-tax at 9/30/2006 • For the 12 months ended September 30, 2005 in millions of euros Upstream Downstream Chemicals** Segments Group Adjusted net operating income 7,302 2,955 917 11,174 11,943Capital employed 17,700 8,451 6,776 32,927 37,157at September 30, 2004*Capital employed 21,663 10,017 6,837 38,517 45,274at September 30, 2005*ROACE 37.1% 32.0% 13.5% 31.3% 29.0% * at replacement cost (excluding after-tax inventory effect) ** capital employed for Chemicals reduced for Arkema by 2,411 M• at 9/30/2004 and by 2,268 M• at 9/30/2005 and for the Toulouse-AZF provision of 139 M• pre-tax at 9/30/2004 and 45 M• pre-tax at 9/30/2005 • For the full year 2005 in millions of euros Upstream Downstream Chemicals** Segments Group Adjusted net operating income 8,029 2,916 967 11,912 12,586Capital employed 16,280 9,654 6,205 32,139 38,314at December 31, 2004*Capital employed 23,522 11,421 6,885 41,828 49,341at December 31, 2005*ROACE 40.3% 27.7% 14.8% 32.2% 28.7% * at replacement cost (excluding after-tax inventory effect) ** capital employed for Chemicals reduced by 2,058 M• for Arkema at 12/31/2004 and 2,235 M• at 12/31/2005 and for the Toulouse-AZF provision of 110 M• pre-tax at 12/31/2004 and 133 M• pre-tax at 12/31/2005 -------------------------- (1) adjusted net income = net income using replacement cost (Group share)adjusted for special items and excluding Total's share of amortization ofintangibles related to the Sanofi-Aventis merger ; the changes in the adjustednet income and the interim dividend are relative to the third quarter 2005 ;assumes an exchange rate of 1• = $1.27 on the payment date to calculate thechange in the interim dividend expressed in dollars (2) percent changes are relative to the third quarter 2005 (3) dollar amounts represent euro amounts converted at the average •/$ exchangerate for the period (1.2743 $/• in the third quarter 2006, 1.2199 $/• in thethird quarter 2005, 1.2582 $/• in the second quarter 2006, 1.2447 $/• in thefirst nine months of 2006, and 1.2626 $/• in the first nine months of 2005) (4) percent changes are relative to the first nine months of 2005 (5) adjusted income is defined as income using replacement cost, adjusted forspecial items and excluding Total's equity share of amortization of intangiblesrelated to the Sanofi-Aventis merger ; adjusted cash flow from operations isdefined as cash flow from operations before changes in working capital atreplacement cost ; adjustment items are listed on page 14. Reminder : under IFRS rules for discontinued operations, the historicalstatements (3Q05 and 9M05) of income with the exception of net income, have beenrestated to exclude the contribution of Arkema. (6) adjusted retroactively to take into account the 4-for-1 stock splitcompleted on May 18, 2006 (7) special items affecting operating income from business segments in the thirdquarter 2006 included restructuring charges in the Chemicals segment ; therewere no special items affecting operating income from business segments in thethird quarter 2005 (8) defined as : (tax on adjusted net operating income) / (adjusted netoperating income - income from equity affiliates, dividends received frominvestments and impairments of acquisition goodwill + tax on adjusted netoperating income) (9) excludes 2.3 million shares which are reserved for share grants as perdecision of the Board on July 18, 2006 (10) net cash flow = cash flow from operations + divestments - investments (11) details of these elements shown on page 14 (12) excludes 2.3 million shares which are reserved for share grants as perdecision of the Board on July 18, 2006 (13) calculations detailed on page 15 (14) impact of hydrocarbon prices on entitlement volumes from production sharingand buy-back contracts (15) calculated based on adjusted net operating income and average capitalemployed, using replacement cost, as shown on page 16 (16) based on an exchange rate of 1• = $1.27 on the date of payment This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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