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TOTAL Earnings Shy of a Penny

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Integrated oil and gas company TOTAL S.A. (TOT - Free Report) reported first-quarter 2013 operating earnings of $1.67 per share (€1.26 per share), a penny below the Zacks Consensus Estimate. Operating earnings declined 7% from $1.78 (€1.36 per share) reported in the year-ago period.

The decline in earnings was primarily due to lower contribution from the Upstream segment. Higher technical costs, and lower production and sales due to a less favorable business environment weighed on the performance of this segment.  

Total Revenue

Total revenue at the end of first-quarter 2013 was $63.56 billion (€48.13 billion) against $67.07 billion (€51.16 billion) in the first quarter of 2012. The year-over-year decline in revenue was 5%.


Total hydrocarbon production averaged 2,323 thousand barrels of oil equivalent (kboe) per day, down 2% from the year-ago production. Output during the quarter was negatively impacted by ongoing security conditions in Nigeria, accidents in U.K., normal declines and maintenance outages and sale of assets in U.K., Columbia and Nigeria. The aforesaid negatives were marginally offset by production from new projects.

Liquids production averaged 1,193 thousand barrels (MBbls) per day, down 3% year over year. Lower production in Europe, Africa and South America resulted in the year-over-year downfall.  

Gas production was 6,137 thousand cubic feet (Mcf) per day, down 1% year over year.
Total refinery throughput for the first quarter of 2013 was down 4% year over year to 1,763 MBbls per day. The yearly decline was mainly due to the closure of Donges refinery for maintenance and closure of Normandy refinery for modernization.

Realized Price

The realized price for Brent in the first quarter of 2013 was $112.60 per barrel, down 5.1% from $118.6 per barrel in the first quarter of 2012. The average realized liquid price deceased 7.4% year over year to $106.7 per barrel from $115.20 per barrel a year ago.

Realized gas prices for the reported quarter increased 16% year over year to $7.31per Mbtu from $7.16 Mbtu in the first quarter of 2012. Realized hydrocarbon prices decreased 6% to $77.4 per barrel of oil equivalents (boe) from $82.10 in the first quarter of 2012.

Financial Update

Cash and cash equivalents of TOTAL as of Mar 31, 2013, were $17.18 billion (€13.41 billion) versus $17.78 billion (€13.33 billion) as of March 31, 2012.

The net debt-to-equity ratio was 25.9% on Mar 31, 2013 versus 22.6% on March 31, 2012.

TOTAL’s cash flow from operation in the first quarter 2013 was $4.9 billion (€3.71 billion), down 29% from $6.9 billion (€5.26 billion) in the comparable period last year.

Sale and Purchase of Assets

During first quarter 2013, TOTAL made acquisitions worth $1.23 billion (€0.93 billion). The company expanded by acquiring a 6% additional stake in Ichthys LNG and received exploration permits in Mozambique. In addition the carry agreement in the Utica shale gas and condensate field in the U.S. also widened its operations.

In the reported quarter, TOTAL disposed of assets worth $0.55 billion (€0.42 billion) comprising of the sale of a 49% interest in the Voyageur upgrader project in Canada. The company also decided to hive a few assets in the upcoming quarters, which are expected to generate proceeds of $5 billion.

TOTAL’s net investment in the first quarter of 2013 was $7.1 billion (€5.4 billion), down 26.8% from $5.6 billion (€4.2 billion) in the first quarter of 2012.

Other Company Releases

ExxonMobil Corporation’s (XOM - Free Report) first-quarter 2013 earnings of $2.12 per share surpassed the Zacks Consensus Estimate of $2.03 by 4.4%.

BP plc (BP - Free Report) is slated to release its first quarter earnings on Apr 30. The Zacks Consensus Estimate is $1.05.

Statoil ASA (STO - Free Report) is slated to release its first quarter earnings on May 2. The Zacks Consensus Estimate is 79 cents.

Our Take

TOTAL started off 2013 on a lower-than-expected note, mainly due to lower production and a decline in the realized prices of products sold, except gas. We remind investors that a substantial portion of the company’s production comes from Europe and Africa. The year-over-year decline in production from these two regions lowered the overall production of the company.

The company continues to divest assets and acquire new ones, which hold better prospects. The strong financial position of TOTAL supports its worldwide acquisition and exploration activities.

France-based TOTAL is one of the largest publicly traded, globally integrated oil and gas companies based on production volumes, proved reserves and market capitalization. The company has exploration and production operations across five continents. TOTAL S.A. retains a Zacks Rank #3 (Hold).

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