Total (NYSE:TOT) plans to boost capital spending by 16.5% in 2012 as the company looks to generate low-single digit percentage production growth through 2016. This capital will be allocated to various development projects and on exploration prospects in the company's inventory. (To know more about oil and gas, read Oil And Gas Industry Primer.)

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2012 Capital Budget
Total has set a $24 billion capital budget for 2012, with more than 80% dedicated to the company's upstream segment. The company spent an estimated $20.6 billion in 2011. These funds will be used to help meet the company's goal of growing production at an average annual rate of 2.5% from 2010 to 2015.

The company reported average daily production of 2.35 million barrels of oil equivalent (MMBOE) in 2011, down 1% from 2010. The company said that approximately 52% of this production was composed of crude oil and other liquids.

One of Total's major projects is the Pazflor development located offshore Angola. This project started production in August 2011 and has an estimated 590 million barrels of proven and probable reserves. The company expects the productive capacity of Pazflor to peak at 220,000 barrels per day. Other companies that have an ownership interest in the Pazflor development include Statoil (NYSE:STO), Exxon Mobil (NYSE:XOM) and BP (NYSE:BP) with 23.33, 20 and 16.67%, respectively.

Total has budgeted $2.5 billion in 2012 for various exploration prospects across its portfolio. This is a substantial increase over the $2.1 billion spent in 2011. The company has dozens of prospects with the most promising in Bolivia, Norway, French Guiana, Southeast Asia and Angola.

2011 Exploration Success
Total reported several successful exploration wells in 2011, and plans to delineate these discoveries further in 2012. In French Guiana, the company was involved in the Zaedyus exploratory well drilled by operator Tullow Oil. Total has put a preliminary resource estimate on this prospect of 500 million to one billion BOE. Royal Dutch Shell (NYSE:RDS.A, RDS.B) is also involved here and owns a 45% share of this prospect. Tullow Oil plans to drill two more wells here in 2012.

Another major success in 2011 occurred in Bolivia, where Total reported the success of the Aquio-X1001 exploratory well. The company estimates that the potential natural gas and condensate resources here may exceed one billion BOE.

Total also reported exploratory success in the Azerbaijan area of the Caspian Sea. The company drilled the Absheron X-2 well and found 500 feet of net natural gas pay.

LNG Project
Total is also setting up the company for growth past 2015 and will generate some of this growth from the Ichthys liquefied natural gas (LNG) project in Australia. It owns 24% of this project, which is being developed in partnership with INPEX CORPORATION. Construction is expected to begin on this project in 2012, with the first production at the end of 2016.

The Bottom Line
Total's production decline in 2011 disappointed many investors and seemed to confirm that the major oil and gas companies are incapable of any growth. However, Total does have a significant inventory of development projects and exploration prospects that may yet generate the growth that investors yearn for. (For additional reading, check out A Guide To Investing In Oil Markets.)

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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.