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TOTAL (TOT) Q3 Earnings & Revenues Beat on High Production
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TOTAL S.A. reported third-quarter 2018 operating earnings of $1.47 per share (€1.26 per share), beating the Zacks Consensus Estimate of $1.31 by 12.2%.
The bottom line improved 42.0% from the year-ago figure of $1.04 (€0.88 per share). This upswing is due to solid operational performance, improvement in commodity prices and new project ramp ups, boosting its production.
Total Revenues
Total revenues came in at $45.48 billion, up 49.0% from $30.62 billion generated in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $36.18 billion by 25.7%.
Total hydrocarbon production during the third quarter averaged 2,804 thousand barrels of oil equivalent per day, up 9% year over year. The increase was due to higher contribution from Kashagan, Moho Nord, Fort Hills, Edradour-Glenlivet, Yamal LNG and the integration of Maersk Oil, partially offset by natural field decline and PSC price effect.
In the reported quarter, liquids production averaged 1,611 thousand barrels per day, increasing 16% from the year-ago period.
Gas production during the quarter was 6,557 thousand cubic feet per day, up 2% year over year. Increased production in Africa, Europe and Middle East was partially offset by soft production from the Asia-Pacific region and Americas.
Realized Price
In the third quarter, realized price for Brent was up 44% to $75.2 per barrel from $52.1 in the year-ago quarter. Average realized liquid price improved 42% to $69.5 per barrel from the year-ago level of $48.9.
Realized gas prices in the quarter improved 22% from the prior-year quarter to $4.96 per thousand Btu.
Realized hydrocarbon prices increased 45% to $55.4 per barrel of oil equivalent from $38.1 in third-quarter 2017.
Highlights of the Release
Operating income was $4,548 million, up 49% from the year-ago period. Higher contribution from Exploration & Production, and Gas, Renewable & Power segments boosted the operating income.
Adjusted net income in the reported quarter was $3,957 million, up 45% from the year-ago quarter.
Interest expenses in the reported quarter were $536 million compared with $368 million in the year-ago period.
Segment Details
Exploration & Production’s operating income was $2,864 million compared with $1,439 million in third-quarter 2017. The year-over-year increase was due to production growth, cost reduction and an increase in average realized hydrocarbon price.
Gas, Renewable & Power’s operating income was $272 million compared with $97 million in third-quarter 2017. The year-over-year improvement was due to strong performance from LNG and gas/power trading.
Refining & Chemicals’ operating income was $938 million compared with $1,020 million in the year-ago quarter.
Marketing & Services’ operating income was $474 million compared with $506 million in third-quarter 2017.
Sale & Purchase of Assets
In the first nine months of 2018, TOTAL acquired assets worth $7,964 million, primarily comprising the acquisition of interest in deep-water offshore fields in Lara and Lapa in Brazil, two new 40-year concessions in offshore Abu Dhabi, 16.3% interest in the Waha field in Libya, offshore assets from Cobalt in the Gulf of Mexico and Engie’s LNG business, Direct Energie.
In the first nine months of 2018, the company sold assets worth $3,071 million, comprising mainly the sale of Martin Linge field in Norway, an interest in the Fort Hills project in Canada, a stake in marketing activities in Italy, SunPower’s sale of its interest in 8point3, Joslyn in Canada and Rabi in Gabon.
Financial Update
Cash and cash equivalents as of Sep 30, 2018 were $25.25 billion compared with $28.58 billion on Sep 30, 2017. Net debt-to-equity ratio was 22.4% at the end of the quarter, up from 17.7% at the end of third-quarter 2017.
The company intends to buy back shares worth $1.5B in 2018 and repurchase shares valued at $5B over the 2018-2020 time frame.
2018 Guidance
TOTAL’s upstream production is expected to increase 8% in 2018, and improve in the range of 6-7% in the 2017-2020 time frame. The company expects that the startup of new trains, namely Yamal LNG in Russia, Egina in Nigeria, Tempa Rossa in Italy and Ichthys LNG in Australia, will continue to boost production.
It aims to invest $16B in 2018 and is implementing a 10% increase in dividend rate.
Our View
TOTAL’s earnings and revenues in the reported quarter surpassed the Zacks Consensus Estimate, courtesy of improvement in commodity prices, as well as strong contribution from new upstream projects. In addition, strategic acquisitions strengthen its portfolio and help expand operation.
Th company is utilizing its strong cash-flow generating capacity to strengthen balance sheet and repurchase outstanding shares, which is positively impacting earnings.
Exxon Mobil Corporation (XOM - Free Report) is expected to release third-quarter earnings on Nov 2. The Zacks Consensus Estimate is pegged at $1.21.
Chevron Corporation (CVX - Free Report) is anticipated to report third-quarter earnings on Nov 2. The Zacks Consensus Estimate stands at $2.06.
BP plc (BP - Free Report) is expected to announce third-quarter earnings on Oct 30. The Zacks Consensus Estimate is pegged at 86 cents.
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TOTAL (TOT) Q3 Earnings & Revenues Beat on High Production
TOTAL S.A. reported third-quarter 2018 operating earnings of $1.47 per share (€1.26 per share), beating the Zacks Consensus Estimate of $1.31 by 12.2%.
The bottom line improved 42.0% from the year-ago figure of $1.04 (€0.88 per share). This upswing is due to solid operational performance, improvement in commodity prices and new project ramp ups, boosting its production.
Total Revenues
Total revenues came in at $45.48 billion, up 49.0% from $30.62 billion generated in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $36.18 billion by 25.7%.
TOTAL S.A. Price, Consensus and EPS Surprise
TOTAL S.A. Price, Consensus and EPS Surprise | TOTAL S.A. Quote
Production Touched New Highs
Total hydrocarbon production during the third quarter averaged 2,804 thousand barrels of oil equivalent per day, up 9% year over year. The increase was due to higher contribution from Kashagan, Moho Nord, Fort Hills, Edradour-Glenlivet, Yamal LNG and the integration of Maersk Oil, partially offset by natural field decline and PSC price effect.
In the reported quarter, liquids production averaged 1,611 thousand barrels per day, increasing 16% from the year-ago period.
Gas production during the quarter was 6,557 thousand cubic feet per day, up 2% year over year. Increased production in Africa, Europe and Middle East was partially offset by soft production from the Asia-Pacific region and Americas.
Realized Price
In the third quarter, realized price for Brent was up 44% to $75.2 per barrel from $52.1 in the year-ago quarter. Average realized liquid price improved 42% to $69.5 per barrel from the year-ago level of $48.9.
Realized gas prices in the quarter improved 22% from the prior-year quarter to $4.96 per thousand Btu.
Realized hydrocarbon prices increased 45% to $55.4 per barrel of oil equivalent from $38.1 in third-quarter 2017.
Highlights of the Release
Operating income was $4,548 million, up 49% from the year-ago period. Higher contribution from Exploration & Production, and Gas, Renewable & Power segments boosted the operating income.
Adjusted net income in the reported quarter was $3,957 million, up 45% from the year-ago quarter.
Interest expenses in the reported quarter were $536 million compared with $368 million in the year-ago period.
Segment Details
Exploration & Production’s operating income was $2,864 million compared with $1,439 million in third-quarter 2017. The year-over-year increase was due to production growth, cost reduction and an increase in average realized hydrocarbon price.
Gas, Renewable & Power’s operating income was $272 million compared with $97 million in third-quarter 2017. The year-over-year improvement was due to strong performance from LNG and gas/power trading.
Refining & Chemicals’ operating income was $938 million compared with $1,020 million in the year-ago quarter.
Marketing & Services’ operating income was $474 million compared with $506 million in third-quarter 2017.
Sale & Purchase of Assets
In the first nine months of 2018, TOTAL acquired assets worth $7,964 million, primarily comprising the acquisition of interest in deep-water offshore fields in Lara and Lapa in Brazil, two new 40-year concessions in offshore Abu Dhabi, 16.3% interest in the Waha field in Libya, offshore assets from Cobalt in the Gulf of Mexico and Engie’s LNG business, Direct Energie.
In the first nine months of 2018, the company sold assets worth $3,071 million, comprising mainly the sale of Martin Linge field in Norway, an interest in the Fort Hills project in Canada, a stake in marketing activities in Italy, SunPower’s sale of its interest in 8point3, Joslyn in Canada and Rabi in Gabon.
Financial Update
Cash and cash equivalents as of Sep 30, 2018 were $25.25 billion compared with $28.58 billion on Sep 30, 2017. Net debt-to-equity ratio was 22.4% at the end of the quarter, up from 17.7% at the end of third-quarter 2017.
The company intends to buy back shares worth $1.5B in 2018 and repurchase shares valued at $5B over the 2018-2020 time frame.
2018 Guidance
TOTAL’s upstream production is expected to increase 8% in 2018, and improve in the range of 6-7% in the 2017-2020 time frame. The company expects that the startup of new trains, namely Yamal LNG in Russia, Egina in Nigeria, Tempa Rossa in Italy and Ichthys LNG in Australia, will continue to boost production.
It aims to invest $16B in 2018 and is implementing a 10% increase in dividend rate.
Our View
TOTAL’s earnings and revenues in the reported quarter surpassed the Zacks Consensus Estimate, courtesy of improvement in commodity prices, as well as strong contribution from new upstream projects. In addition, strategic acquisitions strengthen its portfolio and help expand operation.
Th company is utilizing its strong cash-flow generating capacity to strengthen balance sheet and repurchase outstanding shares, which is positively impacting earnings.
Currently, TOTAL carries a Zacks Rank #3 (Hold). You can see see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Exxon Mobil Corporation (XOM - Free Report) is expected to release third-quarter earnings on Nov 2. The Zacks Consensus Estimate is pegged at $1.21.
Chevron Corporation (CVX - Free Report) is anticipated to report third-quarter earnings on Nov 2. The Zacks Consensus Estimate stands at $2.06.
BP plc (BP - Free Report) is expected to announce third-quarter earnings on Oct 30. The Zacks Consensus Estimate is pegged at 86 cents.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>