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


Oil Gas Sunset

 

Total Fina SA. (NYSE: $TOT) Missed Forecast EPS Before Open Thursday

$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 Q2 Earnings Forecast

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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