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TOTAL to Expand Operation in U.S. with $1.7B Joint Venture
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Integrated oil & gas company, TOTAL S.A. announced that it will form a joint venture with Borealis and Nova with an objective to expand its petrochemical business in the U.S. The joint venture is aimed at building a 1 million ton-per-year ethane steam cracker in Port Arthur, TX. It might also build a 625,000 ton per-year Borstar polyethylene plant. TOTAL will own 50% of the project.
This project will further expand TOTAL’s footprint in the U.S. The company has been operating in the region for nearly six decades. It already has refining and chemical, exploration and production, LNG and renewable operations here. The company has a strong presence in renewable energy generation through majority holding in SunPower Corporation (SPWR - Free Report) .
Details of the JV
The joint venture is expected to become effective from late 2017 and the decision to build the Borstar polyethylene plant will be taken simultaneously.
Meanwhile, the $1.7 billion new ethane steam cracker is scheduled to start in 2020 and will be built alongside TOTAL’s existing 400,000 ton per year polyethylene plant in Bayport, TX. Building the cracker near its existing operation, will allow the company to fully realize the synergies and develop one of the best competitive projects in the U.S.
TOTAL’s cracker project is poised to gain from the abundance of available gas in the U.S., which is primarily due to the fracking technology being used on a larger scale. This shale revolution will provide two competitive advantages for petrochemicals—access to low-cost energy to run the facilities and competitively priced ethane feedstock.
Long term outlook
TOTAL’s long-term outlook is to increase production by an average of 5% per year between 2014 and 2020. The company is geared to achieve its targeted production growth on the back of 12 major start-ups lined up in the 2017–2018 time period.
TOTAL is presently working on optimizing design of capital projects and is also concentrating on their proper execution as well as lowering capital costs. The company plans to invest in the range of $16–$17 billion in 2017 and its per year expenditure in 2018 to 2020 time period could average in the range of $15–$17 billion per year.
Price Movement
In the last twelve months, TOTAL’s shares have returned 9.7%, outperforming the Zacks categorized Oil &Gas Integrated International industry’s increase of 7.1% in the same time frame.
Repsol’s 2017 Zacks Consensus Estimate moved up by 38.1% in the last 60 days to $1.45 per share. The company registered a positive earnings surprise of 104.0% in the fourth quarter.
Royal Dutch Shell’s 2017 Zacks Consensus Estimate moved up by 3.2% in the last 60 days to $3.85 per share.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
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TOTAL to Expand Operation in U.S. with $1.7B Joint Venture
Integrated oil & gas company, TOTAL S.A. announced that it will form a joint venture with Borealis and Nova with an objective to expand its petrochemical business in the U.S. The joint venture is aimed at building a 1 million ton-per-year ethane steam cracker in Port Arthur, TX. It might also build a 625,000 ton per-year Borstar polyethylene plant. TOTAL will own 50% of the project.
This project will further expand TOTAL’s footprint in the U.S. The company has been operating in the region for nearly six decades. It already has refining and chemical, exploration and production, LNG and renewable operations here. The company has a strong presence in renewable energy generation through majority holding in SunPower Corporation (SPWR - Free Report) .
Details of the JV
The joint venture is expected to become effective from late 2017 and the decision to build the Borstar polyethylene plant will be taken simultaneously.
Meanwhile, the $1.7 billion new ethane steam cracker is scheduled to start in 2020 and will be built alongside TOTAL’s existing 400,000 ton per year polyethylene plant in Bayport, TX. Building the cracker near its existing operation, will allow the company to fully realize the synergies and develop one of the best competitive projects in the U.S.
TOTAL’s cracker project is poised to gain from the abundance of available gas in the U.S., which is primarily due to the fracking technology being used on a larger scale. This shale revolution will provide two competitive advantages for petrochemicals—access to low-cost energy to run the facilities and competitively priced ethane feedstock.
Long term outlook
TOTAL’s long-term outlook is to increase production by an average of 5% per year between 2014 and 2020. The company is geared to achieve its targeted production growth on the back of 12 major start-ups lined up in the 2017–2018 time period.
TOTAL is presently working on optimizing design of capital projects and is also concentrating on their proper execution as well as lowering capital costs. The company plans to invest in the range of $16–$17 billion in 2017 and its per year expenditure in 2018 to 2020 time period could average in the range of $15–$17 billion per year.
Price Movement
In the last twelve months, TOTAL’s shares have returned 9.7%, outperforming the Zacks categorized Oil &Gas Integrated International industry’s increase of 7.1% in the same time frame.
Zacks Rank and Top Picks
TOTAL currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Royal Dutch Shell PLC and Repsol SA (REPYY - Free Report) . Both presently have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Repsol’s 2017 Zacks Consensus Estimate moved up by 38.1% in the last 60 days to $1.45 per share. The company registered a positive earnings surprise of 104.0% in the fourth quarter.
Royal Dutch Shell’s 2017 Zacks Consensus Estimate moved up by 3.2% in the last 60 days to $3.85 per share.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>