Total SA, Europe's third-largest oil company, said first-quarter profit rose 18 percent, boosted by record crude and higher natural gas prices.

Net income climbed to 3.6 billion euros ($5.6 billion), from 3.05 billion euros a year earlier, the Paris-based company said today in a statement. Excluding one-time items, changes in inventories and the value of a stake in drugmaker Sanofi-Aventis SA, profit beat analysts' estimates.

Total's profit increase lagged behind European competitors Royal Dutch Shell Plc and BP Plc, which posted jumps of 25 percent and 63 percent, respectively. Total was hurt by the U.S. currency's 8.2 percent slide during the first quarter, which reduced dollar-denominated earnings when converted into euros.

"Net income was at the higher end of expectations," Chicuong Dang, a Paris-based analyst at Richelieu Finance, which oversees about $6.4 billion, said by phone. "Production was as expected but refining and petrochemicals came in lower."

Total fell 21 cents, or 0.4 percent, to 54.30 euros in Paris. The shares are down 4.5 percent since the beginning of the year.

Output

Oil and gas production was 2.426 million barrels of oil equivalent a day, compared with 2.431 million barrels a day a year earlier. Adjusted profit was 3.25 billion euros, beating the 3.24 billion-euro median estimate of nine analysts surveyed by Bloomberg News.

Output from new fields in Angola and the Middle East was countered by the shutdown of the North Sea Elgin-Franklin deposits, Total said.

U.S. oil futures breached $100 a barrel for the first time in January and averaged $97.82 during the first quarter, up 68 percent from a year earlier. Gas jumped 22 percent on average.

Still, Total and other oil companies such as Royal Dutch Shell and BP are being squeezed by contracts giving resource- rich nations a bigger share of output when crude prices rise.

Projects in Qatar, the U.K. and Congo "set the stage for the group to report significant production growth in 2008," Total said Feb. 13. Chief Executive Officer Christophe de Margerie has pledged to raise production by an average 4 percent a year until 2010.

"We'll clearly have production growth this year," Chief Financial Officer Robert Castaigne said on a conference call today. Total is "extremely cautious" about specific annual output targets since they have been missed in the past, he said.

'Optimistic'

Castaigne said he's "optimistic" about reaching a target to raise production by an average 4 percent a year until 2010 based on oil at $60 a barrel. "If it is $100 a barrel, this should be about 3 percent a year," he said.

Total is a shareholder in Dolphin Energy Ltd. along with Occidental Petroleum Corp. and Abu Dhabi, which operates a pipeline allowing the export of gas to the United Arab Emirates from Qatar's offshore North Dome field.

Total is also counting on its Jura gas and condensate discovery off the northeastern coast of Scotland to raise output this year. The North Sea well will start production "within a few weeks," Castaigne said.

Capital expenditure will rise 19 percent this year to a record $19 billion, the company said. About a quarter of the increase is related to the euro-dollar exchange rate and about half to higher project costs, de Margerie has said.

Total's reserve-replacement rate was 78 percent last year, excluding acquisitions and divestments in Venezuela. Proven and probable reserves were 20 billion barrels of oil equivalent at the end of 2007.