TOTAL (TOT) Q3 Earnings Beat Estimates, Brent Price Hurts

TOTAL S.A. TOT reported third-quarter 2019 operating earnings of $1.13 per share (€1.01 per share), beating the Zacks Consensus Estimate of 99 cents by 14.1%.

However, the bottom line declined 23.1% from the year-ago figure of $1.47 per share (€1.26 per share). This decline was primarily due to softness in the prices of commodities compared with the previous year.

Total Revenues

Total revenues came in at $48.59 billion, down 11.2% from $54.71 billion generated in the year-ago quarter.

TOTAL S.A. Price, Consensus and EPS Surprise

TOTAL S.A. Price, Consensus and EPS Surprise

TOTAL S.A. price-consensus-eps-surprise-chart | TOTAL S.A. Quote

Production

Total hydrocarbon production during the third quarter averaged 3,040 thousand barrels of oil equivalent per day, up 8% year over year. The increase was due to higher contribution from Egina in Nigeria, Kaombo in Angola, Ichthys in Australia, Culzean in United kingdom and Yamal LNG in Russia.

In the reported quarter, liquids production averaged 1,720 thousand barrels per day, increasing 7% from the year-ago period.

Gas production during the quarter was 7,399 thousand cubic feet per day, up 13% year over year. Increased production in Asia-Pacific, Middle East and North Africa, and Europe and Central Asia East was partially offset by soft output from Africa and Americas.

Realized Price

In the third quarter, realized price for Brent was down 18% to $62 per barrel from $75.2 in the year-ago period. Moreover, average realized liquid price decreased 16% to $58 per barrel from the year-ago figure of $68.8.

Also, realized gas prices decreased 31% from the prior-year quarter to $3.48 per thousand British thermal units.

Substantial decline in hydrocarbon prices did not allow the company to enjoy full benefits from increase in total production.
 
Highlights of the Release

Operating income was $3,673 million, down 19% from the year-ago period. Lower contribution from Integrated Gas, Renewable & Power, Exploration & Production, and Marketing & Services segments significantly affected its operating income.

Interest expenses in the reported quarter were $598 million compared with $599 million in the year-ago period.

Segment Details

Exploration & Production’s operating income was $1,734 million compared with $2,439 million in third-quarter 2018.

Integrated Gas, Renewable & Power’s operating income was $574 million compared with $697 million in the year-ago quarter.

Refining & Chemicals’ operating income was $952 million compared with $938 million in the year-ago quarter.

Marketing & Services’ operating income was $413 million compared with $474 million in third-quarter 2018.
 
Sale & Purchase of Assets

In third-quarter 2019, TOTAL acquired $4,429 million worth of assets, comprising Anadarko’s interest in Mozambique LNG.

During the quarter, the company sold $1,007 million worth of assets, including the LNG portfolio in the United States.

Financial Update

Cash and cash equivalents as of Sep 30, 2019 were $27.5 billion compared with $27.9 billion at the end of 2018. Net debt-to-capital ratio was 21.1% at the end of the quarter, up from 18.3% in the comparable period of 2018.

TOTAL repurchased 8 million shares during third-quarter 2019. The company repurchased 21.7 million shares in the first nine months of 2019 for $1.15 billion. Further, it has plans to repurchase shares worth $1.5 billion in 2019, which is part of the $5-billion buyback program for the 2018-2020 time frame.

2019 Guidance

TOTAL expects 2019 upstream production to improve 9% from the year-ago level. The start-up of new projects since the beginning of the year including operations of Kaombo South in Angola, Culzean in the U.K. and Johan Sverdrup in Norway, and upcoming operations at lara 1 in Brazil will contribute to production growth.

The company has been engaged in cost-saving initiatives and aims to cut costs to the tune of $0.5 billion in 2019, resulting in cumulative cost savings of $4.7 billion by the end of 2019. TOTAL continues to sell non-core assets and plans to vend assets worth $5 billion within the 2019-2020 time frame.

Zacks Rank

Currently, TOTAL carries a Zacks Rank #5 (Strong Sell).
 
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Royal Dutch Shell PLC RDS.A is slated to report third-quarter 2019 earnings on Oct 31. The Zacks Consensus Estimate for the quarter is pegged at 98 cents.

Occidental Petroleum Corporation OXY is scheduled to report third-quarter 2019 earnings on Nov 4. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at 41 cents.

EOG Resources Inc. EOG is set to report third-quarter 2019 earnings on Nov 6. The Zacks Consensus Estimate for the quarter to be reported is pegged at $1.14.

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