TOTAL S.A. TOT along with its partners announced the start-up of the second Floating Production Storage and Offloading (“FPSO”) P-70 of the Lara cluster (Block BM-S-11A), located offshore Brazil. It has a 22.5% working interest in the block. The operator of the block is Petroleo Brasileiro S.A. - Petrobras PBR with a 42.5% interest.
The start-up of the second FPSO on Lara will result in a production of 150,000 barrels of oil per day, doubling the current production volumes from the Lara cluster. The ramp up of production from the Lara cluster is in sync with TOTAL’s goal of producing more oil at competitive costs that will help it withstand choppy prices.
TOTAL’s long-term plan is to produce 150,000 barrels of oil per day by 2025 from Brazil-based assets. This objective is achievable through the development of its assets on the Iara, Mero and Lapa projects.
Weak Oil Prices
Oil prices continue to remain weak as the outbreak of the pandemic has lowered the demand for oil globally. The decision from OPEC+ countries to cut down production and gradual reopening of economic activities might have a positive impact on demand, as well as prices of oil. Cutting down oil production from the OPEC+ will help it in reducing the supply glut in the market. Oil prices stood at $37.68 at the end of Jun 28, 2020, much lower than the Dec 31, 2019 level of $61.06 per barrel.
TOTAL along with global oil majors ExxonMobil XOM and Chevron Corporation CVX, among others, has decided to cut down 2020 oil production to counter the challenges posed by the drop in demand and falling oil prices.
In the past three months, shares of the company have gained 5.4%, underperforming the industry’s 6.3% growth.
TOTAL currently has a Zacks #3 Rank (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
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