Integrated oil and gas company TOTAL S.A. (TO:TOT) reported third-quarter 2016 operating earnings of 84 cents per share (€0.76 per share), lagging the Zacks Consensus Estimate of 85 cents by a penny.
Moreover, third-quarter operating earnings plunged 28% from the year-ago tally of $1.17 per share (€1.06 per share).
Total Revenue
Total revenue in the reported quarter came in at $37.41 billion, down 8% from $40.58 billion in the year-ago quarter. Reported revenues also surpassed the Zacks Consensus Estimate of $35.4 billion by 5.5%.
Production
Total hydrocarbon production during the third quarter of 2016 averaged 2,443 thousand barrels of oil equivalent (kboe) per day, up 4% year over year. The increase was primarily driven by new project startups, partially offset by the security situation in Nigeria and forest fires in Canada.
In the third quarter, liquids production averaged 1,290 thousand barrels per day, up 4%. Higher liquid production in Europe, Central Asia and America drove the overall output level, which was partially offset by lower production in the Asia-Pacific region.
Gas production during the quarter was 6,286 thousand cubic feet per day, up 5% year over year. Soft performance in Africa was more than offset by an increase in production in the Asia-Pacific, Europe, Central Asia and America.
Realized Price
In third-quarter 2016, the realized price for Brent was down 9% to $45.90 per barrel from $50.50 in the year-ago quarter. The average realized liquid price dropped 6% to $41.4 per barrel from the year-ago level of $44.0.
Realized gas prices tumbled 23% year over year in third-quarter 2016 to $3.45 per Mbtu.
Realized hydrocarbon prices fell 11% to $32.4 per boe from $36.6 in third-quarter 2015.
Sale & Purchase of Assets
In the third quarter of 2016, TOTAL acquired assets worth $1,018 million, primarily comprising the buyouts of Saft and Lampiris. On the other hand, the company sold assets worth $91 million during the same period.
Financial Update
Cash and cash equivalents as of Sep 30, 2016 were $24.80 billion compared with $25.86 billion as of Sep 30, 2015.
The net debt-to-equity ratio was 30.6% at the end of third-quarter 2016, up from 26.6% at the end of third-quarter 2015.
2016 Guidance
TOTAL expects production from the Upstream segment startups to drive its full-year performance. The company’s production level is expected to increase more than 4% in 2016, having attained 4.5% growth in the first half of the year.
TOTAL continues to work on cost management initiatives and targets cost savings of $4 billion in 2018.
A Peer Release
Exxon Mobil Corp. (NYSE:XOM) reported third-quarter earnings of 63 cents, while the Zacks Consensus Estimate was 60 cents.
Upcoming Releases
BP plc (NYSE:BP) is expected to report third-quarter earnings on Nov 1. The Zacks Consensus Estimate is pegged at 22 cents.
Royal Dutch Shell (LON:RDSa) RDS.A is expected to report third-quarter earnings on Nov 1. The Zacks Consensus Estimate is pegged at 54 cents.
Our View
TOTAL reported mixed results for the third quarter of 2016, wherein its earnings missed the Zacks Consensus Estimate but revenues topped the same. Amid the ongoing weakness in commodity prices, TOTAL has successfully lowered operating expenses, as per management’s plans, and is on track to exceed its cost savings target of $2.7 billion for 2016.
Meanwhile, thanks to its startups, TOTAL was able to boost its upstream output by 4% on a year-over-year basis.
Going forward, the company will continue to benefit from its upstream startups and cost management initiatives. Strategic acquisitions and asset divestures will strengthen its portfolio. TOTAL’s initiatives to increase its clean energy assets through acquisitions will also diversify its operations.
TOTAL currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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