TOTAL (TOT) Q3 Earnings Beat Estimates, Production Drops Y/Y

Zacks Equity Research
·4-min read

TOTAL SE TOT reported third-quarter 2020 operating earnings of 29 cents (€0.24) per share, which beat the Zacks Consensus Estimate of 8 cents by 262.5%.

However, the bottom line declined 98.1% from the year-ago figure of $1.13 (€1.01) per share. This year-over-year decline was due to substantial fall in commodity prices and a drop in production.

Total Revenues

Total revenues came in at $33.14 billion, down 31.8% from $48.58 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. Price, Consensus and EPS Surprise

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

Production

Total third-quarter hydrocarbon production averaged 2,715 thousand barrels of oil equivalent per day (kboe/d), down 11% year over year. This was due to fall in gas demand on account of the coronavirus pandemic, a natural decline in production fields and reduction of output from OPEC+ countries, offset by contribution from new startups.

For the reported quarter, liquids production averaged 1,437 thousand barrels per day, down 16% from the year-ago period.

Quarterly gas production was 6,973 thousand cubic feet per day, down 3% year over year due to decreased gas output from all production areas, except the Asia-Pacific region.

Realized Price

Third-quarter realized price for Brent was down 31% to $42.9 per barrel from $62 in the year-ago period. The average realized liquid price was $39.9 per barrel, down 31% from the year-ago figure.

Realized gas prices decreased 27% from the prior-year quarter to $2.52 per thousand British thermal units.

Highlights of the Release

Operating income was $1,459 million, down 60% from the year-ago period. Lower year-over-year contribution from all segments impacted the company’s performance.

Interest expenses for the reported quarter were $547 million, down 8.5% from $598 million in the year-ago period.

In the first nine months of 2020, TOTAL acquired $2.7 billion worth of assets and sold assets valued at $1.1 billion.

Segment Details

Exploration & Production’s operating earnings were $801 million, down 54% year over year.

Integrated Gas, Renewable & Power’s operating income was $285 million, down 50% from $574 million in the year-ago quarter.

Refining & Chemicals’ operating loss was $88 million against operating income of $575 million in the year-ago quarter.

Marketing & Services’ operating income was $461 million, up 70% from $413 million in third-quarter 2019.

Financial Update

Cash and cash equivalents as of Sep 30, 2020 were $30.6 billion compared with $27.4 billion at 2019-end. Net debt to capital was 22% at quarter-end, up from 20.7% at 2019-end.

Due to a sharp drop in third-quarter commodity prices, cash flow of the company decreased roughly 46.9% year over year to $4.35 billion.

2020 Guidance

TOTAL — taking into consideration lower hydrocarbon production in North America, and cash and cash equivalents — expects 2020 production below 290,000 barrels of oil equivalent per day.

Given the unprecedented drop in oil prices and global demand for commodities, the company decided to preserve liquidity by cutting down planned capital expenditure. TOTAL now aims to invest $13 billion in 2020, of which $2 billion will be allotted to renewable and electricity. Management expects that it will be able to lower costs by more than $1 billion in 2020 from 2019 levels through cost-saving initiatives.

Zacks Rank

Currently, TOTAL carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Releases

Royal Dutch Shell RDS.A reported third-quarter earnings of 24 cents against the Zacks Consensus Estimate of a loss of 6 cents.

BP plc BP reported third-quarter earnings of 3 cents against the Zacks Consensus Estimate of a loss of 9 cents.

Eni S.P.A E reported a loss of 10 cents for the third quarter against earnings of 49 cents in the year-ago quarter.

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