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TOTAL (TOT) Q2 Earnings Miss Estimates, Revenues Drop Y/Y

Zacks Equity Research

TOTAL S.A. TOT reported second-quarter 2019 operating earnings of $1.05 per share (€0.94 per share), lagging the Zacks Consensus Estimate of $1.23 by 14.6%.

The bottom line also declined 19.8% from the year-ago figure of $1.31 per share (€1.10 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 $51.24 billion, down 2.5% from $52.54 billion generated in the year-ago quarter.

Production

Total hydrocarbon production during the first quarter averaged 2,957 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.

In the reported quarter, liquids production averaged 1,624 thousand barrels per day, increasing 3% from the year-ago period.

Gas production during the quarter was 7,477 thousand cubic feet per day, up 21% year over year. Increased production in Asia-Pacific, Middle East and North Africa, and Europe and Central Asia East was partially offset by soft output from Africa and Americas.

TOTAL S.A. Price, Consensus and EPS Surprise

TOTAL S.A. Price, Consensus and EPS Surprise

TOTAL S.A. price-consensus-eps-surprise-chart | TOTAL S.A. Quote

Realized Price

In the second quarter, realized price for Brent was down 7% to $68.9 per barrel from $74.4 in the year-ago period. Moreover, average realized liquid price decreased 7% to $63.7 per barrel from the year-ago level of $68.4.

Also, realized gas prices decreased 17% from the prior-year quarter to $3.82 per thousand Btu.

Highlights of the Release

Operating income was $3,413 million, down 14% from the year-ago period. Lower contribution from Integrated Gas, Renewable & Power, and Refining & Chemicals segments significantly impacted its operating income.

Interest expenses in the reported quarter were $568 million compared with $478 million in the year-ago period.

Segment Details

Exploration & Production’s operating income was $2,022 million compared with $2,315 million in second-quarter 2018.

Integrated Gas, Renewable & Power’s operating income was $429 million compared with $565 million in the year-ago quarter.
 
Refining & Chemicals’ operating income was $715 million compared with $821 million in the year-ago quarter.

Marketing & Services’ operating income was $423 million compared with $478 million in second-quarter 2018.
 
Sale & Purchase of Assets

In second-quarter 2019, TOTAL acquired assets worth $614 million, primarily comprising the acquisition of Chevron’s interest in the Danish Underground Consortium in Denmark and joint venture agreement with Saudi Aramco to develop a network of service stations in Saudi Arabia.

During the quarter, the company sold assets worth $212 million, primarily including the sale of the Wepec refinery in China, the Group’s interest in the Hazira terminal in India and polystyrene activity in China.

Financial Update

Cash and cash equivalents as of Jun 30, 2019 were $26.7 billion compared with $26.5 billion at the end of 2018. Net debt-to-capital ratio was 20.6% at the end of the quarter, up from 16.5% in the comparable period of 2018.

TOTAL repurchased 14.9 million shares during second-quarter 2019. Further, it has plans to repurchase shares worth $1.5 billion in 2019, which is part of the $5-billion buyback program for the 2018-2020 time frame.

2019 Guidance

TOTAL’s 2019 upstream production is expected to increase 9% from a year ago. It expects the operations at lara 1 in Brazil, Kaombo South in Angola, Culzean in the U.K. and Johan Sverdrup in Norway to boost production levels. Facilities that started operations in 2018 are also expected to contribute to output growth.

In 2019, it aims to invest in the range of $14-$15 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

Occidental Petroleum Corporation OXY is expected to report second-quarter 2019 earnings on Jul 31. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at 96 cents.

Royal Dutch Shell PLC RDS.A is expected to report second-quarter 2019 earnings on Aug 1. The Zacks Consensus Estimate for the quarter is pegged at $1.22.

EOG Resources Inc. EOG is expected to report second-quarter 2019 earnings on Aug 1. The Zacks Consensus Estimate for the quarter to be reported is pegged at $1.39.

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