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TOTAL (TOT) Q1 Earnings Miss Estimates, Volatile Price Hurts

Zacks Equity Research

TOTAL S.A. TOT reported first-quarter 2019 operating earnings of $1.02 per share (€0.90 per share), lagging the Zacks Consensus Estimate of $1.09 by 6.4%.

The bottom line also declined 6.4% from the year-ago figure of $1.09 per share (€0.89 per share). This decline was primarily due to softness in the prices of commodities compared with the previous year.

Total Revenues

Total revenues came in at $45.11 billion, up 4.2% from $43.3 billion generated in the year-ago quarter.

TOTAL S.A. Price, Consensus and EPS Surprise

TOTAL S.A. Price, Consensus and EPS Surprise | TOTAL S.A. Quote

Production

Total hydrocarbon production during the first quarter averaged 2,946 thousand barrels of oil equivalent per day, up 9% year over year. The increase was due to higher contribution from Egina in Nigeria, Kaombo North in Angola, Ichthys in Australia, and Yamal LNG in Russia, along with the integration of Maersk Oil, partially offset by natural field decline and deterioration of safety conditions in Venezeula.

In the reported quarter, liquids production averaged 1,629 thousand barrels per day, increasing 10% from the year-ago period.

Gas production during the quarter was 7,321 thousand cubic feet per day, up 10% year over year. Increased production in Asia-Pacific, Middle East and North Africa, and Europe and Central Asia East was partially offset by soft production from Africa and Americas.

Realized Price

In the first quarter, realized price for Brent was down 6% to $63.1 per barrel from $66.8 in the year-ago period. Average realized liquid price decreased 2% to $58.7 per barrel from the year-ago level of $60.

Realized gas prices decreased 6% from the prior-year quarter to $4.5 per thousand Btu.

Highlights of the Release

Operating income was $3,413 million, up 1% from the year-ago period. Higher contribution from Integrated Gas, Renewable & Power, and Refining & Chemicals segments boosted its operating income.

Interest expenses in the reported quarter were $561 million compared with $390 million in the year-ago period.

Segment Details

Exploration & Production’s operating income was $1,722 million compared with $1,817 million in first-quarter 2018. The year-over-year decline was due to weaker price environment and increase in exploration expenses.

Integrated Gas, Renewable & Power’s operating income was $592 million compared with $481 million in the year-ago quarter, primarily due to a solid increase in LNG sales.
 
Refining & Chemicals’ operating income was $756 million compared with $720 million in the year-ago quarter.

Marketing & Services’ operating income was $343 million compared with $367 million in first-quarter 2018.
 
Sale & Purchase of Assets

In first-quarter 2019, TOTAL acquired assets worth $669 million, primarily comprising the acquisition of 10% interest in the Arctic LNG 2 project in Russia.

During the quarter, the company sold assets worth $363 million, primarily including the sale of the Group’s interest in the Hazira terminal in India and polystyrene activity in China.

Financial Update

Cash and cash equivalents as of Mar 31, 2019 were $25.4 billion compared with $27.9 billion at the end of 2018. Net debt-to-capital ratio was 19.8% at the end of the quarter, up from 15.1% in the comparable period of 2018.

TOTAL repurchased 6.2 million shares worth $350 million during first-quarter 2019. Further, it has plans to repurchase shares worth $5 billion over the 2018-2020 time frame.

2019 Guidance

TOTAL’s 2019 upstream production is expected to increase 9% from a year ago. It expects the startup of lara 1 in Brazil, Kaombo South in Angola, Culzean in the U.K., Johan Sverdrup in Norway and the ones already started in 2018 to boost production levels.

In 2019, it aims to invest in the range of $15-$16 billion and is targeting cost reduction of $4.7 billion.

Zacks Rank

Currently, TOTAL carries a Zacks Rank #3 (Hold).
 
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases

Royal Dutch Shell PLC RDS.A is expected to report first-quarter 2019 earnings on May 2. The Zacks Consensus Estimate for the quarter is pegged at $1.05 per share.

EOG Resources Inc. EOG is expected to report first-quarter 2019 earnings on May 2. The Zacks Consensus Estimate for the quarter to be reported is pegged at $1.02 per share.

Occidental Petroleum Corporation OXY is expected to report first-quarter 2019 earnings on May 6. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at 72 cents per share.

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