PARIS (Reuters) - French energy giant Total TOTF.PA will sell about $5 billion of assets, mostly from its exploration and production business as it sharpens its focus on low-breakeven projects that can weather weak oil prices, it said on Thursday.

FILE PHOTO: The logo of French oil and gas company Total is seen above a petrol station in Cape Town, South Africa February 7, 2019. REUTERS/Mike Hutchings/File Photo

The announcement followed a 19% drop in second-quarter adjusted net profit to $2.9 billion, which it attributed to unfavorable market factors including low oil prices, sharp declines in gas and sliding refining margins.

Chief Executive Patrick Pouyanne pointed to continuing volatility in markets.

Though Brent crude averaged $69 a barrel in the second quarter, up 9% on the previous three months, natural gas prices fell 36% in Europe and 26% in Asia, he said.

The company has been on an acquisitions spree as Pouyanne has overseen its expansion in gas and electricity in particular and said it is now preparing for the future by focusing on core strengths in the gas and deep offshore segments.

Though gas prices tumbled, Total said operating cash flow before working capital changes in its gas, renewables and power business surged 42% thanks to 8% production growth and a 10% increase in liquefied natural gas (LNG) sales.

Total’s Paris-listed shares were down 1.6% by 1405 GMT.

ASSET SALE

Total said its strategy would be complemented by the sale of assets that only break even at high oil and gas prices, such as the recent disposal of mature assets in the British North Sea.

Its organic pre-dividend breakeven is below $25 a barrel, while the organic post-dividend breakeven - which would allow it to pay dividends and carry out investments - is below $50 a barrel.

“This active portfolio management policy will continue with the sale of $5 billion in assets over the 2019-20 period, the majority coming from Exploration and Production,” Pouyanne said.

Pouyanne told analysts that $3 billion of the divestment would come from the exploration and production segment, with the company also reducing its stake in some renewable energy projects. He declined to give details.

The quarterly results were in line with market expectations, analysts said.

“The announcement of the asset sales may help to offset some uncertainty around the recent growth and M&A strategy, demonstrating some ongoing discipline around the balance sheet and upstream portfolio,” said Henry Tarr, an analyst at Barenberg, which rates Total a “buy”.

Total’s 2019 organic investment target was held at about $14 billion and Pouyanne said the company would provide an update in September on its capital investment guidance of $16 billion to $18 billion for the 2019-2023 period.

Norwegian rival Equinor said on Thursday that it intends to cut 2019 spending.

Total added that the global oil environment remained volatile at the start of the third quarter, with uncertainty over demand growth.

Its European refining margins, while still volatile, increased early in the third quarter and its downstream business should benefit from restarting the Grandpuits and Leuna refineries in France and Germany respectively.

Total said it expects oil and gas output growth to surpass 9% this year.

It rewarded shareholders by increasing its second interim dividend by 3.1% from last year to 0.66 euros per share, in line with a targeted 10% increase for 2018-2020, with Pouyanne telling analysts that the company would continue to increase its dividend after 2020.