We may have stumbled across the reason why TOT has not bought IOC or OSH or STOS.
TOT has a cash crisis as it squeezes business operations for $ to fund it's dividends.
Total to slash capex on fears of prolonged slump
Total, the French energy group, is to slash capital spending next year, the first of the oil majors to signal deeper cuts to projects amid fears that the slump in crude prices will be prolonged.
Patrick Pouyanne, chief executive, has told investors in London that investment in oil and gas projects will be reduced as much as 15 per cent in 2016 to $20bn-$21bn, from this year's $23bn-$24bn, writes the FT's energy editor Christopher Adams.
The move follows a fresh slide in Brent crude to new six-and-a-half-year lows below $50 a barrel.
Patrick de la Chevardiere, chief financial officer, told reporters the group would "do everything possible to safeguard the dividend".
The company's cost-cutting would reduce dramatically its so-called "break even" price, at which revenues from oil sales cover expenditure.
It pledged to cover the dividend "fully paid in cash" at $60 a barrel Brent by 2017, and would maintain investor payouts in the meantime by extending a scrip dividend option, under which payments are made in shares.
"This is the cornerstone of everything we are doing," said Mr de la Chevardiere of the commitment to preserve payouts. "Patrick Pouyanne and myself do not want to be the first to cut the dividend."
The comments address growing fears in the markets that big oil companies will struggle to maintain payouts, for which their shares have traditionally been held.
Dividend yields have soared as share prices have tumbled following the collapse on oil prices from more than $115 a barrel in June 2014.
The group, holding an investor day, said it was preparing "to face low oil prices for a long period of time".
"If the oil price rebounds, this will be good for us," said Mr de la Chevardiere.
The company confirmed that it was not considering giving the green light to any new projects currently, while it waited for the prices charged by suppliers for drilling rigs and other equipment and services to fall.
"We see the deflation coming," he said.
The start up of three projects - Ichthys in Australia, Martin Linge in Norway and Tempa Rossa in Italy - has been put back beyond 2017.
The latest cut to capital expenditure, which will take the reduction since 2013 to almost 30 per cent, is an aggressive response to the price collapse.
Analysts say Total is better placed than some of its rivals to wait for industry costs to deflate because it has entered a period of rapid production growth.
The company said its output grew 11 per cent year on year in the first half of 2015 and was expected to rise 6-7 per cent a year between 2014 and 2017, more than many of its rivals.
Five out of eight fields due to start up this year have now begun production, with another three - including its Laggan Tormore project west of Shetlands - expected online before the end of the year.
Capital spending on projects would stabilise at $17bn to $19bn annually between 2017 and 2019, the aim being to increase it at 1-2 per cent a year "in the long term".
Total says it had increased a targeted reduction in operating expenditure, from $2bn to $3bn by 2017.
"The group has demonstrated resilience to lower oil prices in the first half of 2015. Capital discipline, further operating expenditure reduction and growing production will deliver improving cash flows," it said.
The company added that it was shifting the capital more towards its downstream - or refining and marketing - business, projecting this it would account for 25 per cent of capital employed versus 20 per cent now. Oil exploration and production accounts for the greater share.
