SA News • Tue, Nov. 25
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- Total kept the damage limited as its profit fell at a slower rate than the oil price.
- No real surprises here as one simply can’t expect a lower oil price to lead to higher revenues and profits.
- I’d be interested in Total if it dips again, unless I don’t like the strategy of the newly-appointed CEO.
Total: The Strategy Set By Christophe De Margerie To Continue
- TOT reported another solid quarter.
- The new CEO repeated the strategic targets of the group.
- After a period of heavy investment, TOT’s new projects should deliver a significant boost in both production and cash flow and in turn free cash flow.
Total: Story Remains One Of The Most Compelling In The European Sector
- 2014 was the low point for Total in terms of production and cash flow.
- The company is set to start a transformational period of three years where it will deliver significant growth in both production and cash flow.
- An elevated yield and urgency on part of management to improve results make TOT a compelling investment opportunity.
- Total is rumored to have hired Scotiabank to explore a sale of its 17% stake in the Tahiti oil field.
- This is unexpected, although Total had said before it is looking to divest more assets, so I shouldn’t be too surprised.
- The investment thesis doesn’t change for now, unless Total receives much more/less than anticipated.
Update: Total Starts Plan B In Its Exploration Efforts
- Total has convinced Murphy Oil’s Kevin McLachlan to join the company as VP Exploration.
- As the past few years were disastrous for the exploration division, something had to be done and a shake up isn’t really a surprise.
- The investment thesis remains unchanged, but I might change my opinion should Total buy some interesting projects to expand its portfolio.
- Total is in talks with Rubis to sell its 50% stake in the SARA refinery on Martinique.
- This could have been expected, as Total is looking to raise $10B by selling assets next year.
- As Total is a large conglomerate, the investment thesis would not be impacted by the sale of half a small refinery.
Update: Total Will Not Meet Its 2017 Production Target
- Total’s updated guidance is pointing in the direction of a 7% lower production rate, but it reiterates the free cash flow guidance.
- This was unexpected, as I was actually counting on the production increase towards 3 million barrels per day.
- The investment thesis should remain unchanged as long as the company will generate $15B per year in free cash flow.
- Total has received an offer to sell its adhesive subsidiary for $2.25B.
- This shouldn't come as a surprise, as Total has previously announced it was looking to divest some assets.
- The investment thesis doesn't change for now, but I'll have to have a closer look at the lower production expectations.
- French oil major Total has recently updated its cash flow and production outlook through 2017, which wasn't encouraging.
- The company's turnaround has been hit by project delays and asset sales.
- Is it time to give up on this company?
- Morgan Stanley analysts suggest that Total is the global “top pick” as it offers an attractive combination of free cash flow growth and dividend yield.
- The company described 2012-14 as a transition phase that will lead to a better phase during 2015-17 in which the company’s free cash flows are projected to increase.
- As a part of its transition phase, the company introduced a $15 billion to $20 billion asset sale program throughout 2012-14 anticipating an enhancement in free cash flows.
- The upstream projects would offer highly competitive returns and strengthen Total’s position as an industry leader in deep offshore and LNG.
- To enhance its operating cash flows, Total is also working on reducing its capital expenditures and cutting its operating costs.
- TOT has underperformed the wider European oil sector in the last few months.
- Weak cash flow numbers reported in 1H14 played a major role in this underperformance.
- However, 2Q14 was the low point for TOT both in terms of cash flow and production, and both are expected to improve from here on.
First Half Of 2014: Total S.A. Leading The Oil Giants
- Total's 2014 record is better than its peers.
- The dividend yield is attractive, and I believe distributions will grow.
- The company's mid-term outlook is promising.
- We pitch two companies from the oil and gas sector, Chevron and Total, against one another in the latest installment of our Head-To-Head series.
- The article focuses on the relative strengths and weaknesses of Chevron and Total based on business performance and sustainability/dividends/forecasts.
- It ends with discussion of the current valuations of the two companies, and details whether Chevron represents good relative value at current price levels.
Total SA's Ambitious Goals Are A Good News/Bad News Proposition
- Total SA has ambitious goals to increase production, trim spending, improve the downstream ops, and generate substantially better returns in the coming years.
- Total starts this plan with good reserves, solid production costs, and meaningful technical expertise, but a heavy reliance on complex projects does increase execution risks.
- A DCF-based valuation isn't so compelling, but Total scores more favorably on EV/EBITDA.
Total: Increasing Production Volumes And Cutting Costs
- Production volumes are expected to increase by 4% Y/Y.
- Capex at the same time is expected to fall by approximately 8% in 2014.
- Launched a new cost cutting program throughout the company.
Why Total Is Likely To Continue Outperforming Exxon And Chevron
- While capital expenses have greatly escalated for the oil companies in the last few years, Total seems to be better positioned than Exxon and Chevron.
- As Total provides detailed figures for its projected 30% increase in oil production by 2017 and its recent record is on track, it is likely to accomplish its goal.
- Based on Total's projection, we calculated that its earnings per share will increase by about 30% in 2017, which means a compounded annual return of 12% till 2017.
- Given the above and the great difficulties Exxon and Chevron are having in replenishing their oil reserves, Total is likely to continue outperforming Exxon and Chevron.
Total Is A Solid Income Investment After Year-End Results
Tue, Nov. 25, 1:01 PM
- Total (TOT -1.2%) will face trial in France over claims of corruption related to Iranian contracts dating from the 1990s and early 2000s, the Paris prosecutor’s office says.
- TOT agreed last year to pay $398M to settle U.S. criminal and civil allegations that it had paid ~$60M in bribes to win oil and gas contracts in Iran; at the time, the Paris prosecutor recommended that TOT and its now-deceased CEO Christophe de Margerie be brought to trial.
- The company is now facing trial in France for similar issues; TOT last year said it hoped the U.S. fine would draw a line under the issue and that it had “not committed any offense under applicable French law."
Mon, Nov. 24, 12:29 PM
- Societe Generale analysts believe there is a real possibility of even lower oil prices, and if that occurs the firm recommends “bottom fishing” in European oil majors.
- The sector offers more sustainable dividends than in the last oil price crash, as well as stronger balance sheets and liquidity, and reasonable valuations after the recent correction, the firm says, noting that in the 2009 crash, only the three supermajors in Europe - Royal Dutch Shell (RDS.A, RDS.B), BP and Total (NYSE:TOT) - maintained dividends unchanged, while the other six all cut them.
Fri, Nov. 21, 12:59 PM| Comment!
Thu, Nov. 20, 5:58 PM
- It’s time for the medium-term investor to start buying the biggest of big oil companies, HSBC says, as the market seems to have capitulated on the sector.
- HSBC views BP and Total (NYSE:TOT) as clearly the cheapest of the oil supermajors, with share price discounts to sum-of-the-parts valuation for BG Group (OTCPK:BRGXF, OTCQX:BRGYY), Statoil (NYSE:STO) and Repsol (OTCQX:REPYY, OTCPK:REPYF); Exxon Mobil (NYSE:XOM) still trades at small premium to the SoP valuation, and the firm likes Chevron (NYSE:CVX), which was penalized in its valuation by its ongoing capital intensity in 2017.
- The stocks also offer average prospective dividend yields of 5%-plus for 2015, and the dividends look robust as they are supported by strong balance sheets, more active asset disposal programs, and strong new project cash margins.
Thu, Nov. 20, 8:11 AM
- Royal Dutch Shell (RDS.A, RDS.B) says it has sold its stake in a set of oil wells and processing plants in Nigeria’s Niger Delta to locally owned Newcross Exploration for ~$600M.
- Shell says it sold its 30% stake in Oil Mining Lease 24, along with smaller shares owned by Total (NYSE:TOT) and Eni (NYSE:E).
- Shell has struggled in the area with oil theft and other security issues.
Thu, Nov. 13, 3:20 PM
- U.S. crude oil prices break below $75/bbl for the first time in more than three years, brushing aside an IEA report showing a surprise 1.735M barrel inventory drawdown as well as remarks by the Saudi oil minister dismissing talk of an oil price war among producers.
- West Texas crude settled today at $74.21/bbl, -3.9% and breaking below an important support level; during the past three years, futures have tested but not broken through that level three times.
- Brent crude recently was trading below $78, -3%.
- Global oil majors are all lower: COP -1.9%, BP -1.4%, CVX -1.4%, XOM -1.1%, TOT -0.9%, RDS.A -0.7%.
- Oil services companies and offshore drillers suffer even sharper drops: SDRL -4.4%, SLB -4.2%, HAL -3.9%, BHI -3.9%, RIG -3.8%, DO -3.5%, NBL -2.9%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, XOP, ERY, DIG, BNO, UGA, DTO, DBO, DUG, XES, IYE, IEO, CRUD, IXC, IEZ, PXE, USL, UWTI, IPW, FENY, PXJ, UHN, DWTI, DNO, RYE, FXN, SZO, GNAT, OLO, DDG, FILL, OLEM, TWTI
Mon, Nov. 10, 12:44 PM
- All BP (BP -0.1%) projects now underway will go ahead with oil at $80/bbl, CEO Robert Dudley says at an oil conference in Abu Dhabi.
- Dudley says BP has sanctioned or approved projects based on an $80 oil price for "three or four years, so there isn’t any project that we’re working on today, particularly those big capital projects, that we have any different view of."
- Total (TOT +0.6%) also can proceed with its projects at $80, according to its E&P chief Arnaud Breuillac.
Tue, Nov. 4, 8:59 AM
- Stocks in European energy companies are hit hard following Saudi Arabia's move yesterday to cut prices for crude sold in the U.S., sending oil prices tumbling.
- Seadrill (NYSE:SDRL) sank more than 6% to the bottom of the Stoxx Europe 600 index; BP, Royal Dutch Shell (RDS.A, RDS.B), Total (NYSE:TOT), Statoil (NYSE:STO), Tullow Oil (OTCPK:TUWLF, OTCPK:TUWOY) and BG Group (OTCPK:BRGXF, OTCQX:BRGYY) are all more than 2% lower.
- Oil prices are sharply lower again today, with Brent crude falling to four-year lows near $82/bbl and U.S. crude touching a session low of $75.84, its weakest since Oct. 2011.
Thu, Oct. 30, 6:27 PM
- YPF rose 2.5% today as Argentina lawmakers voted to approve a law revamping regulations on energy investment, which could help the country boost its oil and gas production over the next two decades.
- The package of new laws cuts the minimum investment needed for companies to be exempt from import controls to $250M from $1B.
- Argentina offers considerable energy potential, ranking no. 3 in the world in shale gas reserves and no. 4 in shale oil, yet its refining capacity is limited and it imports energy products.
- Oil majors Total (NYSE:TOT) and Chevron (NYSE:CVX) have invested in Argentina, and Exxon (NYSE:XOM) has talked with YPF about energy exploration opportunities in the country.
Thu, Oct. 30, 2:58 PM
- Total (TOT +1.1%) CEO Patrick Pouyanné says his company is well placed to weather the recent oil price volatility, with new production scheduled to come on stream over the next two years.
- But the new CEO says some areas of the business face more pressure than others, particularly Europe’s refining industry, which has been hit by competition from new and more sophisticated plants in the Middle East and Asia and from U.S. plants that benefit from cheaper feedstock costs.
- Pouyanné also challenges European politicians to fight the U.S. oil export ban, which he says flouts free-trade agreements and puts European and Asian refiners at a disadvantage.
Wed, Oct. 29, 11:28 AM
- Teck Resources' (TCK +2.4%) Q3 earnings tumbled 69% Y/Y, hurt by weak coal prices and a drop in copper production, but results beat analyst expectations, helped in part by improved results from its zinc operations.
- TCK's realized coal sales price in Q3 was US$110/metric ton vs. US$139 in the year-ago period, but unit cash costs in coal were just US$84, consistent with recent quarters, and says all six of its coal mines had positive cash margins.
- Q3 coal production rose 2% Y/Y; coal sales of 6.7M metric tons were the second highest on record for the period and follow record high sales for H1.
- Says construction of the Fort Hills oil sands project in Alberta, which it owns with Suncor (NYSE:SU) and Total (NYSE:TOT), is progressing according to plan and expects first oil as early as Q4 2017; TCK expects its share of Fort Hills' costs this year to total ~C$800M.
Wed, Oct. 29, 9:25 AM
Wed, Oct. 29, 4:46 AM
- Total (NYSE:TOT) says the recent slide in oil prices hit its third quarter earnings and could hurt its results for the rest of the year, as the French oil major recovers from the death last week of chief executive Christophe de Margerie.
- The company posted a 2% fall in quarterly net profit to $3.6B as the average price of the key Brent crude oil benchmark fell by 8% over the period.
- Total warns that earnings will likely decline further in Q4, with oil prices already down 11% since the end of September.
Tue, Oct. 28, 3:59 PM
- Total (TOT +2.9%) earlier today said it agreed to sell a minority stake in the Gina Krog field near Norway and three additional North Sea fields to PGNiG Upstream International for $317M.
- The deal includes an 8% ownership stake in Gina Krog, now under development and scheduled for a 2017 production start; through a subsidiary, TOT will retain a 30% interest in the project expected to produce ~60K barrels of oil and 9M cm/day of natural gas per day, while Statoil (NYSE:STO) is the majority partner with a 58.7% interest.
- Also included are interests in three minor fields in the Norwegian North Sea.
Thu, Oct. 23, 8:57 AM
- BP and GDF Suez (OTCPK:GDFZY) say they have made a significant discovery in the U.K. zone of the central North Sea, without providing specific estimates.
- An exploration well drilled by GDF flowed as much as 5,350 boe/day in test runs.
- The new-found oil patch crosses into a block operated by BP and half owned by Total (NYSE:TOT), and the other block is operated and 50% owned by GDF.
Wed, Oct. 22, 7:41 AM
- Total (NYSE:TOT) names Patrick Pouyanné as its new CEO after the death of former CEO Christophe de Margerie on Monday.
- Pouyanné led TOT's refining and chemicals division since 2012, and has been with the company since 1997.
- TOT also will separate the roles of chairman and CEO, bringing back honorary board chairman and former CEO Thierry Desmarest as Chairman until the end of 2015.
- TOT +1.4% premarket.
TOT vs. ETF Alternatives
Total SA is an integrated oil and gas company. It explores and develops oil and gas properties, liquefied natural gas, petrochemicals and specialty chemicals. It is also engaged in trading and shipping of crude oil and petroleum products.
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