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TOTAL (TOT) Beats Q3 Earnings, to Lower 2017 Costs by $3.6B
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Integrated oil and gas company, TOTAL S.A. reported third-quarter 2017 operating earnings of $1.04 per share (€0.88 per share), beating the Zacks Consensus Estimate of 99 cents by 5%.
Operating earnings jumped 23% from the year-ago figure of 84 cents per share (€0.76 per share). The year-over-year rise in earnings was due to good operational performance, steadily decreasing breakeven production costs, improvement in the realized prices of commodities and new projects ramp ups, boosting production.
Total Revenues
Total revenues in the reported quarter came in at $43.04 billion, up 15.1% from $37.41 billion in the year-ago quarter.
Production
Total hydrocarbon production during the third quarter averaged 2,581 thousand barrels of oil equivalent (kboe) per day, up 6% year over year. The increase was due to higher contribution from Kashagan, Moho Nord, Incahuasi, Surmont, Edradour-Glenlivet and Angola LNG, partially offset by natural field decline and OPEC quotas. Improved security condition in Libya and Nigeria also boosted production.
In the reported quarter, liquids production averaged 1,392 thousand barrels per day, increasing 8% from the year-ago period.
Gas production during the quarter was 6,427 thousand cubic feet per day, up 2% year over year. Soft performance in Asia Pacific, Europe & Central Asia, was more than offset by an increase in production in Africa and the Americas.
Realized Price
In the third quarter, the realized price for Brent was up 14% to $52.1 per barrel from $45.9 in the year-ago quarter. The average realized liquid price improved 18% to $48.9 per barrel from the year-ago level of $41.4.
Realized gas prices in the quarter improved 17% year over year to $4.05 per thousand Btu (Mbtu).
Realized hydrocarbon prices increased 18% to $38.2 per barrels of oil equivalent (boe) from $32.4 in third-quarter 2016.
Highlights of the Release
Operating income in the reported quarter was $3,062 million, up 31% from the year-ago period. Higher contribution from Exploration & Production and Marketing & Services segments boosted the operating income.
Adjusted net income in the reported quarter was $2,674 million, up 29% from the year-ago quarter.
Despite the impact of Hurricane Harvey on its American operations, favorable refining margins resulted in 18% sequential growth of its Downstream business.
The cost reduction initiatives will result in savings in excess of $3.6 billion in 2017.Through its ongoing initiatives to lower operating costs, TOTAL aims to reduce costs by $5 billion by 2020.
Segment Details
Exploration & Production’s operating income was $1,439 million compared with $781 million in third-quarter 2016. The year-over-year increase was due to production growth, cost reductions and an increase in the average realized hydrocarbon price.
Gas, Renewable & Power’s operating income was $97 million compared with $191 million in third-quarter 2016. The year-over-year decline was primarily due to weakness in the solar market.
Refining & Chemicals operating income was $1,020 million compared with $916 million in the year-ago quarter.
Marketing & Services operating income was $506 million compared with $444 million in third-quarter 2016. The year-over-year increase was due to strong marketing margins in Africa.
Sale & Purchase of Assets
In the reported quarter, TOTAL acquired assets worth $513 million, primarily comprising the resources for Elk-Antelope in Papua New Guinea.
The company sold assets worth $202 million during the same period, primarily its LPG activities in Germany.
Financial Update
Cash and cash equivalents as of Sep 30, 2017 were $28.58 billion compared with $24.80 billion as of Sep 30, 2016.
Net debt-to-equity ratio was 18% at the end of the quarter, down from 30.6% at the end of third-quarter 2016.
2017 Guidance
TOTAL expects production from the upstream segment to improve 5% year over year.
The company continues to work on cost management initiatives and expects to generate cost savings of $3.6 billion in 2017.
Our View
TOTAL surpassed the Zacks Consensus Estimate in the reported quarter, thanks to its strong operational performance, cost control and start-ups of new upstream projects. The company also benefited from recovery of commodity prices compared with the year-ago period.
TOTAL’s decision to acquire Maersk Oil for $7.45 billion will further strengthen its position globally as an oil and gas operator.
Going forward, the company will continue to benefit from upstream startups and cost management initiatives. Strategic acquisitions and asset divestures will further strengthen the portfolio.
Royal Dutch Shell PLC is scheduled to release third-quarter 2017 earnings on Nov 2. The Zacks Consensus Estimate for the quarter is 83 cents, up a penny in the last 60 days.
BP plc (BP - Free Report) is scheduled to release third-quarter 2017 earnings on Oct 31. The Zacks Consensus Estimate for the quarter is 48 cents, up 29.7% in the last 60 days.
Braskem S.A. (BAK - Free Report) is scheduled to release third-quarter 2017 earnings on Nov 9. The Zacks Consensus Estimate for the quarter is 51 cents, down 37.8% in the last 60 days.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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TOTAL (TOT) Beats Q3 Earnings, to Lower 2017 Costs by $3.6B
Integrated oil and gas company, TOTAL S.A. reported third-quarter 2017 operating earnings of $1.04 per share (€0.88 per share), beating the Zacks Consensus Estimate of 99 cents by 5%.
Operating earnings jumped 23% from the year-ago figure of 84 cents per share (€0.76 per share). The year-over-year rise in earnings was due to good operational performance, steadily decreasing breakeven production costs, improvement in the realized prices of commodities and new projects ramp ups, boosting production.
Total Revenues
Total revenues in the reported quarter came in at $43.04 billion, up 15.1% from $37.41 billion in the year-ago quarter.
Production
Total hydrocarbon production during the third quarter averaged 2,581 thousand barrels of oil equivalent (kboe) per day, up 6% year over year. The increase was due to higher contribution from Kashagan, Moho Nord, Incahuasi, Surmont, Edradour-Glenlivet and Angola LNG, partially offset by natural field decline and OPEC quotas. Improved security condition in Libya and Nigeria also boosted production.
In the reported quarter, liquids production averaged 1,392 thousand barrels per day, increasing 8% from the year-ago period.
Gas production during the quarter was 6,427 thousand cubic feet per day, up 2% year over year. Soft performance in Asia Pacific, Europe & Central Asia, was more than offset by an increase in production in Africa and the Americas.
Realized Price
In the third quarter, the realized price for Brent was up 14% to $52.1 per barrel from $45.9 in the year-ago quarter. The average realized liquid price improved 18% to $48.9 per barrel from the year-ago level of $41.4.
Realized gas prices in the quarter improved 17% year over year to $4.05 per thousand Btu (Mbtu).
Realized hydrocarbon prices increased 18% to $38.2 per barrels of oil equivalent (boe) from $32.4 in third-quarter 2016.
Highlights of the Release
Operating income in the reported quarter was $3,062 million, up 31% from the year-ago period. Higher contribution from Exploration & Production and Marketing & Services segments boosted the operating income.
Adjusted net income in the reported quarter was $2,674 million, up 29% from the year-ago quarter.
Despite the impact of Hurricane Harvey on its American operations, favorable refining margins resulted in 18% sequential growth of its Downstream business.
The cost reduction initiatives will result in savings in excess of $3.6 billion in 2017.Through its ongoing initiatives to lower operating costs, TOTAL aims to reduce costs by $5 billion by 2020.
Segment Details
Exploration & Production’s operating income was $1,439 million compared with $781 million in third-quarter 2016. The year-over-year increase was due to production growth, cost reductions and an increase in the average realized hydrocarbon price.
Gas, Renewable & Power’s operating income was $97 million compared with $191 million in third-quarter 2016. The year-over-year decline was primarily due to weakness in the solar market.
Refining & Chemicals operating income was $1,020 million compared with $916 million in the year-ago quarter.
Marketing & Services operating income was $506 million compared with $444 million in third-quarter 2016. The year-over-year increase was due to strong marketing margins in Africa.
Sale & Purchase of Assets
In the reported quarter, TOTAL acquired assets worth $513 million, primarily comprising the resources for Elk-Antelope in Papua New Guinea.
The company sold assets worth $202 million during the same period, primarily its LPG activities in Germany.
Financial Update
Cash and cash equivalents as of Sep 30, 2017 were $28.58 billion compared with $24.80 billion as of Sep 30, 2016.
Net debt-to-equity ratio was 18% at the end of the quarter, down from 30.6% at the end of third-quarter 2016.
2017 Guidance
TOTAL expects production from the upstream segment to improve 5% year over year.
The company continues to work on cost management initiatives and expects to generate cost savings of $3.6 billion in 2017.
Our View
TOTAL surpassed the Zacks Consensus Estimate in the reported quarter, thanks to its strong operational performance, cost control and start-ups of new upstream projects. The company also benefited from recovery of commodity prices compared with the year-ago period.
TOTAL’s decision to acquire Maersk Oil for $7.45 billion will further strengthen its position globally as an oil and gas operator.
Going forward, the company will continue to benefit from upstream startups and cost management initiatives. Strategic acquisitions and asset divestures will further strengthen the portfolio.
TOTAL currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Peer Releases
Royal Dutch Shell PLC is scheduled to release third-quarter 2017 earnings on Nov 2. The Zacks Consensus Estimate for the quarter is 83 cents, up a penny in the last 60 days.
BP plc (BP - Free Report) is scheduled to release third-quarter 2017 earnings on Oct 31. The Zacks Consensus Estimate for the quarter is 48 cents, up 29.7% in the last 60 days.
Braskem S.A. (BAK - Free Report) is scheduled to release third-quarter 2017 earnings on Nov 9. The Zacks Consensus Estimate for the quarter is 51 cents, down 37.8% in the last 60 days.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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