New Total chief to visit key oil contacts as Q3 profits dip

By Michel Rose PARIS (Reuters) - The new head of Total will embark on a tour to meet crucial contacts at oil-rich countries in the next few weeks and will forge ahead with cost cuts in the face of the falling oil prices that squeezed third-quarter profits. Europe's second-largest oil company elevated former refining head Patrick Pouyanne to the CEO position following the sudden death of its charismatic chief executive Christophe de Margerie earlier this month in a plane crash in Russia. In a statement unveiling a 2 percent drop in net profit in the third quarter on Wednesday, the new CEO said he would carry out de Margerie's plan to reduce capital expenditure and operating costs, aimed at returning more cash to shareholders. "The recent decrease in the price of Brent highlights the importance of the programs we launched to reduce costs and control investments to strengthen the resilience of the group," Pouyanne said. Pouyanne's priority is to build contacts with key oil-producing countries and he will embark on a "mini-roadshow" to meet shareholders in Europe and the United States before the end of the year, Total's finance head said in a call with reporters. "He is going to take up his pilgrim's staff and meet all the important people in our industry abroad," Chief Financial Officer Patrick de La Chevardiere said in the call. De Margerie, the scion of a family of diplomats, had built close relationships with the leaders of oil and gas producing countries such as Qatar, Saudi Arabia and Russia. Russia, which the French oil firm forecast in April would become its biggest source of oil and gas output by 2020, is likely to be high on the list of countries to visit. Total is one of the top foreign investors there with its $27 billion (16.71 billion pounds) Yamal LNG project with Novatek but it faces a cloud over its future since the oil-rich country's relations with the West worsened and triggered sanctions. The CFO said the partners were looking for new funding from Chinese, Russian and European investors for Yamal after the U.S. sanctions made financing in U.S. dollar impossible, and expected to close the deal in the second half of 2015. "We'll try to do it quicker, but if we're reasonable a target of June 2015 is not bad," de La Chevardiere said. OIL PRICE DROP IMPACT In the third quarter, net adjusted profit fell 2 percent to $3.56 billion compared to the same quarter a year ago, hit by the recent drop in oil prices, not quite cancelled out by a sharp increase in refining margins. Oil companies have seen billions wiped off their stock market values as crude prices dropped by 25 percent over the past four months to a four-year low of near $85 a barrel due to slowing global demand and ample supplies. De La Chevardiere said the impact of lower oil prices should start to be felt more strongly in the fourth quarter. A $10 drop in Brent prices translates into a $1.5 billion drop in net profit over a year, he added. Total's oil and gas production also fell 8 percent compared to the same quarter a year ago, to 2.122 million barrels of oil equivalent per day (boepd), mainly due to the expiry of an exploration concession in Abu Dhabi. Output was up compared with the second quarter however, and de La Chevardiere said production was set to reach 2.2 million boepd by the end of the year and stuck to a 2015 production target of 2.3 million boepd. The start-up of the CLOV project in Angola, which reached a production plateau of more than 160,000 barrels earlier than expected, he said, boosted production this quarter and should fully be reflected in the fourth quarter. In the downstream business, the group reported earlier this month a rise in European refining margins to an almost two-year high in the third quarter, thanks to the lower cost of crude oil and a good availability of its ageing refineries, despite still flagging oil demand. That translated into a 70 percent rise in adjusted net profit from the refining and chemicals unit this quarter, only partly offsetting a 10 percent drop from the upstream business and a 16 percent fall in the marketing and services unit -- mainly petrol stations. Third-quarter revenue fell 2 percent year-on-year to $60.36 billion, while adjusted cash flow from operations was down 7 percent to $6.74 billion. The group kept its quarterly dividend at 0.61 euros per share, as in previous quarters this year. (Reporting by Michel Rose; Editing by James Regan and Andrew Callus)