Estimated net income: 2,051 million euros
Estimated net income before special items: 1,675 million euros, +37%
Proved oil and gas reserves increase by 15%

Paris, February 3, 2000 - Pierre Vaillaud, Chairman and CEO of Elf Aquitaine,presented the Group’s estimated consolidated results to the Board of Directors of Elf Aquitaine during their meeting held yesterday, February 2. The definitive audited results will be presented to the Board at their meeting on March 28, 2000.

• Pierre Vaillaud’s comments
• Principal 1999 preliminary results
• Results by sector
• Upstream
• Downstream
• Chemicals
•  1999 Preliminary Results Slides (1.25 Mb)

"In contrasting market conditions, favorable in the upstream sector, depressed in the downstream sector and mediocre in the basic chemicals sector, the Group’s results showed a strong increase.

Estimated net income before special items increased by 37% to 1,675 million euros, compared to 1,222 million euros in 1998. Including special items, estimated net income was 2,051 million euros compared to 540 million euros in 1998.

The merger between Sanofi and Synthélabo was successfully concluded on May 18,1999. From this date the Group’s share in Sanofi-Synthelabo results is no longer consolidated but treated on an equity basis, thus changing the reporting method of this item in the Group’s accounts.

Thanks to the efforts of all personnel during the year, 1999 estimated operating income before special items for the three operating sectors (excluding Sanofi) - upstream, downstream, and chemicals - increased by 53% to 3,211 million euros.

The improvement in our cost structure continued and reached a record figure of 390 million euros before tax for the three operating sectors.

In 1999, numerous discoveries were made and significant contracts were concluded. Elf’s teams continued to undertake and take part in their projects with the objective of profitable growth."

Estimated earnings per share, calculated using the average number of shares in circulation in 1999, of 251.2 million shares, is 8.16 euros, an increase of 285%.
Estimated earnings per share before special items is 6.67 euros, an increase of 39%.

*Figures are not comparable due to reporting Sanofi-Synthélabo on an equity basis as from May 18, 1999.

1. Special items in 1999 net income: Upstream - provision for voluntary early retirement (-124 million euros), Downstream - adjustment in life of intangible assets (-150 million euros), Chemicals - provision related to installation closures and the depreciation of assets (-191 million euros). Gain on dilution of Sanofi (+1,057million euros) and corporate expenses (-216 million euros).

2. Special items in 1998 net income: Upstream - FAS 121 write-down of assets (-694 million euros), net gain on the sale of assets (+91 million euros), Downstream - provision for depreciation of crude and finished goods inventories (-79 million euros).

In 1999, estimated operating income before special items in the Upstream Division amounted to 2,223 million euros, an increase of 115% compared to 1998. The following elements account for this increase:

• Strong improvement in market conditions with the exception of gas prices: the average price of Brent per barrel was $17.97 in 1999, compared to $12.74 in 1998, an increase of 41%. In addition, the average parity between the US dollar and the euro appreciated by about 4% in 1999, compared to 1998 (1 euro = $1.066 on an average compared to $1.11 in 1998).
  

However, European gas prices decreased on an average by about 19% for the year due to the delayed effect of the price of oil on the formulas used in gas pricing.

• Daily oil and gas production decreased from 1,003,000 barrels of oil equivalent (boe) in 1998, to 953,000 boe in 1999, a decrease of 5%. This reduction is essentially due to difficulties arising on different non-operated fields, in particular in Nigeria (the result of community disturbances in the association operated by Shell and a reduction of production quotas). The bringing on-stream of other fields in Congo, Brunei, Nigeria, the Netherlands, and in the Gulf of Mexico (production start-up of Virgo at the end of 1999) reduced the effects of the declines in production from mature fields and the sale of certain non-strategic assets.

Proved reserves increased by 15% to 4,199 million barrels at December 31, 1999, against 3,639 million barrels at December 31, 1998, after taking into account the new discoveries during the period and the revision of reserve estimates of fields currently in production or under development. Liquids account for 72% of these reserves and gas 28%.

• Continued cost cutting and self-help measures amounted to a record 210 million euros before taxes. These actions contributed to a reduction of the FAS69 technical cost to $7.20 per boe in 1999 from $7.80 per boe in 1998.

European refining margins on Brent fell by more than 38% to $1.60 per barrel, compared to $2.60 per barrel in 1998. The appreciation of the parity between the dollar and the euro only slightly compensated for this drop in the margin expressed in euros.

In this depressed environment, the Downstream Division succeeded in stabilizing its estimated operating income before special items at 481 million euros. This good result is due to the combined effects of gains in productivity, which contributed about 100 million euros to operating income in 1999 and to the Leuna refinery’s improved performance.

In 1999, quantities processed at the five main refineries amounted to 623,000 barrels per day compared to 657,000 barrels per day in 1998. This was primarily due to the scheduled maintenance shutdowns carried out on certain units. Quantities sold amounted to 1,049,000 barrels per day compared to 1,035,000 barrels per day in 1998.

Estimated operating income before special items for the Chemicals Division amounted to 507 million euros, a decrease of about 13% compared to 1998.

The difficulties experienced concern basic chemicals, which suffered from difficult market conditions in petrochemicals – particularly in the second and third quarters of 1999 – and the weak fertilizers markets in Europe.

However, improved economic conditions in the western and far-eastern economies contributed to the increase in earnings from fine and industrial chemicals (essentially fluorochemicals and peroxide products) and from performance products (principally adhesives and acrylic polymers).

In addition, continued cost reduction added about 80 million euros to the operating income of this sector in 1999.

Maintaining a healthy cash flow level and reducing capital expenditures

*Sanofi was consolidated until May 18, 1999; Sanofi-Synthélabo has been treated on an equity basis since that date.

In 1999, funds generated from operations were 4,174 million euros excluding Sanofi, (4,374 million euros, consolidated figure including Sanofi) against 4,126 million euros excluding Sanofi (4,611 million euros, consolidated figure including Sanofi) in 1998.

Exploration expenditures increased to 575 million euros in 1999, due in part to the exceptional effort in acquiring new acreages, compared to 491 million euros in 1998.

Capital expenditures, including exploration, amounted to 3,521 million euros excluding Sanofi (3,680 million euros, consolidated figure including Sanofi) compared to 3,993 million euros in 1998 excluding Sanofi (4,355 million euros consolidated figure including Sanofi).

Proceeds from asset sales totaled 232 million euros excluding Sanofi (262 million euros, consolidated figure including Sanofi) against 291 million euros in 1998 excluding Sanofi (391 million euros including Sanofi).

At the end of December 1999, the number of shares in circulation was 249.8 million compared to 252.47 million on December 31, 1998.

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Since October 28, 1999, Totalfina (NYSE : TOT) holds approximately 95% of the share capital of Elf Aquitaine. The combination of the two companies is conditional upon the approval of the European Commission, which is expected mid-February 2000.
This document may contain forward-looking statements with respect to the financial condition, results of operations, business, strategy and plans of the Elf Group. In particular, statements using the words " expects ", " anticipates ", and similar expressions, and statements with regards to management goals and objectives, expected or targeted production data, or trends in results of operations or margins are forward-looking in nature. Such statements are based on a number of assumptions that could ultimately prove inaccurate, and are subject to a number of risk factors, including currency fluctuations, the price of petroleum products, the ability to realize cost reductions and operating efficiencies without unduly disrupting business operations, environmental regulatory considerations and general economic and business conditions. The Group does not assume any obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise. Further information on factors which could affect the company’s financial results is provided in documents filed with the Commission des Opérations de Bourse and the US Securities and Exchange Commission.