Integrated oil and gas company TOTAL S.A. (TOT) announced its growth targets for the next few years and the means to achieve the same. The company expects to achieve a modest 3% yearly production growth target for the 2011-2015 period, taking into account the contributions from its projects in operation and those still in development but scheduled to start operations in the said period.
However, total production in 2011 was down1.3% from the 2010 level. The decline in production was attributable to the political situation in Libya, unfavorable price effect and a general decline net of production increase from new projects. The first half of 2012 showed no respite with production still down 2% year on year because of the very reasons affecting 2011 production.
Nonetheless, TOTAL continues to boast a solid financial position, which enables it to carry out strategic acquisitions, aggressive exploration and drilling operation, enter into partnerships, and develop unconventional acreage having high resource potential. The company expects restructuring of its Refining & Chemicals segment will add an additional $650 million per year to net results by 2015 through improved efficiencies and synergies.
Besides, the company will also continue to hive assets in the range of $15–$20 billion over 2012-14 period, assets which do not feature in its core long-term plans. In the second quarter 2012, TOTAL disposed of assets worth $1.1 billion, comprising mainly the sale of Sanfoli shares.
TOTAL anticipates that the start-up projects will not only add to free cash flow in the period 2012 through 2014 but also expects the uptrend to sustain in the 2015-2017 period. TOTAL’s cash flow from operations in the second quarter 2012 was $7.9 billion (€6.1 billion),up 8% (22.0% in euros) from the comparable period of the previous year.
The company has enhanced shareholder value by increasing its quarterly dividend rate by 3.5% post second quarter earnings release. We expect the company will further increase it dividend rate given its strong operational base.
The Zacks Consensus Estimates for the third quarter and 2012 are $1.80 and $6.87 per share, respectively.
TOTAL S.A. currently retains a Zacks #3 Rank (short-term Hold rating). Numbering among its competitors in the global arena is BP Plc. (BP)
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 spanning five continents. With a market capitalization of $118.1 billion, the company has 96,104 full time employees.
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