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French major Total SA reported third quarter earnings befoe the open Thursday announcing record production and guiding production higher for the third time this year. All $TOT divisions are performing better than expected.

Oil Gas Sunset

Total Fina SA. (NYSE: $TOT) Reported Before Open Thursday

$1.47 EPS on $48.40 billion in revenue 

Earnings

Total SA (TOT) reported third-quarter net income of $3.96 billion compared to $2.72 billion the previous year. Earnings per share were $1.47 compared to $1.06. Adjusted net income increased by 48% to $4.0 billion. Adjusted net income per share was $1.47, an increase of 42% year-over-year. Third-quarter revenue from sales were $48.40 billion compared to $37.08 billion, a year ago. 

 Total SA (ADR) NYSE: TOT

Market Reaction > $57.84 Weekly Close

Highlights

  • Contribution from E&P increased by 85%, fueled in part by production growth of 8% and by accretive barrels.
  • Debt-adjusted cash flow, or DACF, increased by 25% to $20 billion.
  • Organic CapEx was $8 billion.
  • So based on our sensitivity of $2.8 billion per year for $10 per barrel change in Brent, our post-dividend cash flow breakeven is less than $50 per barrel.
  • Looking at the third quarter results compared to the second quarter. Brent was flat quarter-to-quarter. But we increased adjusted net income by more than 11% to $4 billion or $1.47 per share, the highest level we have seen since 2012.
  • DACF increased by 10% to $7.5 billion, also a multi-year high.
  • Production continued to grow, up by more than 3% quarter-over-quarter to a new record high of 2.8 million barrels per day in the third quarter.
  • In the month of September, we reached 2.9 million barrels per day.
  • The 2018 interim dividend has been increased by 3.2%, in line with the 10% increase of the full year.
  • We have bought back all of the scrip shares issued this year. And on top of buying back the scrip share, we bought back $1 billion of stock through the end of September as part of the $5 billion buyback announced in February. And we will buy back $1.5 billion this year.

We also announced that the strategic priority is maintaining a strong balance sheet with gearing below 20%, and we are delivering here as well. Gearing was 18.3% at the end of the third quarter despite cash outlay of $3.6 billion for the net acquisition in the quarter, comprised mainly of Direct Energie and Engie LNG, plus a bridge in working capital that was partially due to integrating this acquisition into our accounts as well as high crude oil price at the end of September.

Total Fina SA, Q2 Earnings Recap

$1.31 missed $1.35 EPS on $3.55 billion in revenue 

Earnings

Total's Adjusted net income rose to $3.55 billion in the quarter or $1.31 EPS adjusted, from $2.47 billion a year earlier coming in just under the $3.6 billion median estimate. Cost savings will reach $4.2 billion this year -- against a 2014 baseline -- slightly exceeding Total’s previous goal.

 Total SA (ADR) NYSE: TOT

Market Reaction > Pre-market 62.48 +0.20 (0.32%)

Highlights

  • Total SA raised its production target for the second time this year.
  • Return of U.S. sanctions on Iran stalled Total's Iranian gas plans
  • Profit climbed 44 percent last quarter as crude jumped to a three-year high
  • “The upstream is well positioned to take advantage of the increase in oil prices,” Total said Thursday in a statement.
  • “The group, however, resolutely continues to implement programs to improve operational efficiency and to reduce its break-even, so as to remain profitable whatever the context.”
  • Total produced 2.717 million barrels of oil and gas a day in the quarter, setting a record for a second consecutive quarter.
  • Raised production growth outlook for this year to more than 7 percent, having targeted more than 6 percent back in April

Buybacks and Dividends

Total raised its quarterly interim dividend by 3.2 percent, in line with a promise made in February to increase the payout by about 10 percent by 2020.

$TOT has bought back $600 million of stock so far this year as part of a plan to return as much as $5 billion to shareholders over three years. That’s on top of repurchasing any new stock issued as a so-called scrip dividend.  Income from the upstream division almost doubled as oil and gas production climbed, while downstream earnings dropped.

Outlook

Total sees the startup of the Ichthys liquefied natural gas project in Australia, the Kaombo field in Angola and the Egina project in Nigeria driving growth this year.

Its gas, renewables and power unit, whose profit doubled in the quarter, will get a boost from the recent acquisitions of Engie SA’s LNG assets and of Direct Energie SA, while Total is also buying two gas-fired power plants in France and Belgium.

Total SA Earnings Forecasts

What Analysts Will Be Watching

Divestments and production are key focuses for Total as with all the majors. $TOT is preparing to sell up to $1.5 billion in assets in Britain's North Sea, including one-third of its stake in the Laggan-Tormore gas fields. The divestment will include stakes in several smaller fields that Total acquired when it took over A.P. Moller-Maersk's oil-and-gas business in 2017.

Updates on renewable energy are important for the French company. Petróleo Brasileiro S.A. or Petrobras announced last month they have joined with Total S.A. to assess the opportunities related to renewable energy sources in Brazil. The companies, through a memorandum of understanding (MoU), decided to analyze the solar and onshore wind energy segments in the country.

Total SA explores, develops, produces and markets oil and gas. It is also engaged in trading and shipping of crude oil and petroleum products. The company operates through the following business segments: Upstream, Refining & Chemicals and Marketing & Services.

The Upstream segment includes the activities of exploration & production and gas. The Refining & Chemicals segment encompasses refining, petrochemicals and specialty chemicals operations. This segment also includes the activities of trading & shipping. The Marketing & Services segment includes worldwide supply and marketing activities in the oil products and services field as well as the activity of New Energies. The company was founded on March 28, 1924 and is headquartered in Courbevoie, France.

Sources: TradersCommunity, Total

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