Total Share Discussion Threads

[grupo] 27/11/2018 10:53

Total S.A. - Key Takeaways From The Third Quarter 2018
Nov. 26, 2018 2:57 PM ET|
7 comments
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About: TOTAL S.A. (TOT), Includes: BP, CVX, RDS.A, RDS.B, XOM
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Summary

Total S.A. reported third-quarter 2018 earnings diluted of $1.47 per share. Total revenues came in at $48.40 billion, up 30.5% from $37.082 billion generated in the year-ago quarter.

The trend is definitely on the downside with successive low highs and low lows, and this bearish process must run its course a little further in my opinion.

I recommend accumulating the stock on any weakness.

Source: Steelguru/Wcom
Investment Thesis

Total S.A. (TOT) is one of the most active "integrated" oil supermajors with operations involving the integration of most aspects of the value-oil chain, from exploration to marketing and of course retail. Total S.A. has a worldwide presence, and the chart below describes Total's oil-equivalent production per region :

To illustrate this basic concept that fundamentally differentiates a "big oil" from an exploration and production company, I broke down the company's revenues for the first nine months of 2018 into four segments seen in the graph below:

With a market capitalization of $169 billion, Total S.A. is considered at the same level as the other four "big oils" - Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), BP Plc (NYSE:BP), and Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B).

My recent articles published about the 3Q'18 oil supermajors:

Exxon Mobil - Key takeaways of the 3Q'18. Click here to read.
Chevron Corp. - Key takeaways of the 3Q'18. Click here to read.
BP Plc - Key takeaways of the 3Q'18. Click here to read.
Royal Dutch Shell - Key takeaways of the 3Q'18. Click here to read.

Therefore, Total S.A. should be among the first oil stocks held as a long-term oil investment in your portfolio. Total S.A. belongs to the "dividend aristocrats," with more than 25 years of consecutive dividend increases.

However, I have said it many times before, I firmly believe that it is always vital to trade a part of your long-term position and to profit plainly from the inherent vulnerability of the market and high-volatility of the oil and gas prices. This strategy often creates the silver lining between investing and success.

Patrick de La Chevardière, the CFO, said in the conference call:

"We are consistently delivering excellent results. Thanks to production growth, cost reduction, capital discipline, the quarterly results confirm this consistency. We are increasing production faster than our peers through organic investments and countercyclical acquisitions. So we are well positioned to fully capture the benefit of higher commodity prices. The quarterly result confirms that with 8.6% growth. And we are on the forefront developing a profitable low-carbon electricity business, fueled by natural gas and renewables to strengthen and diversify the company for the long term."

Chart TOT data by YCharts

Total S.A. Balance Sheet and Production in 3Q 2018: The Raw Numbers
TOTAL S.A. 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18

Revenues (minus Excise Taxes)

in $ Billion
36.96 39.27 34.90 32.29 27.52 31.71 31.82 36.87 36.09 34.48 37.08 41.44 43.29 46.10 48.40
Net Income in $ Billion 2.66 2.97 1.08 -1.63 1.61 2.09 1.95 0.55 2.85 2.04 2.72 1.02 2.64 3.72 3.96
EBITDA in $ Billion 8.18 7.95 5.28 4.97 4.58 6.08 5.80 6.03 8.46 5.77 7.39 7.71 7.68 9.71 10.34
Profit margin % 7.2% 7.6% 3.1% 0 5.8% 6.6% 6.1% 1.5% 7.9% 5.9% 7.3% 2.5% 6.1% 8.1% 8.2%
EPS diluted in $/share 1.16 1.29 0.45 -0.73 0.67 0.50 0.79 0.19 1.13 0.79 1.06 0.37 0.99 1.38 1.47
Cash from operations in $ Billion 4.39 4.73 5.99 4.84 1.88 1.13 4.74 7.02 4.70 4.64 4.36 8.62 2.08 6.25 5.74
Capital Expenditures in $ Billion 7.96 5.99 5.27 5.92 4.15 0.25 4.12 5.74 2.68 3.32 3.10 4.66 5.67 3.51 3.35
Free Cash Flow in $ Billion -3.57 -1.26 0.72 -1.08 -2.27 0.876 0.62 1.28 2.02 1.32 1.26 3.95 -3.58 2.73 2.38
Total Cash $ Billion 27.52 29.76 29.31 29.46 24.01 24.67 26.56 29.14 31.50 32.34 31.16 36.58 32.38 30.08 28.81
Long-term Debt in $ Billion 55.43 56.48 56.17 56.95 54.00 55.46 57.83 56.99 55.60 54.62 51.43 52.44 55.17 54.02 56.26
Dividend per share DPS (Nasdaq.com) in $ 0.635 0.564 0.567 0.657 0.58 0.559 0.567 0.575 0.578 0.552 0.543 0.584 0.639 0.716 0.62
Shares outstanding (diluted) in Billion 2.30 2.30 2.40 2.33 2.40 2.43 2.47 2.43 2.52 2.58 2.57 2.76 2.64 2.70 2.67
Oil Production 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18
Oil Equivalent Production in K Boep/d 2395 2299 2342 2352 2479 2424 2443 2462 2569 2500 2581 2613 2703 2717 2804
Global liquid price ($/Boe) - - - - 26.4 33.0 32.4 35.6 37.9 35.5 38.2 43.3 47.3 54.3 55.4

Source: Company filings and Morningstar
Balance sheet and Production discussion

1 - Revenues (minus excise taxes)

Total S.A. reported third-quarter 2018 earnings diluted of $1.47 per share. Total revenues came in at $48.400 billion, up 30.5% from $37.082 billion generated in the year-ago quarter, and up 5.0 % sequentially.

These solid results were due to solid operational performance, regularly decreasing production costs, improvement in the realized prices of commodities and new project ramp-ups, which heightened production.

Global liquid price in 3Q'18 was $55.4 per Boe and increase of 2.03% sequentially. Interestingly, the chart below shows that oil price realized by Total S.A. has more than doubled since 1Q'16.

2 - 2018 Guidance

The company indicated in the conference call:

"We confirm our guidance for investments in the $16 billion, $17 billion range for 2019, 2020. And in the areas where we are active, we see no signs of cost inflation. As we said in New York last month and during the meeting that we have had other the past few weeks, we have established a trajectory growth for consistently delivering on our strategy. We have moved faster than our peers to increase production, partially through well-timed acquisition and decrease of breakeven. So we are well positioned to capture the benefit of the current price environment."

3 - Free Cash Flow

Total's Free Cash Flow is $5.48 billion ("TTM"), and the company is paying about $6.6 billion in dividend annually. Free Cash Flow for 3Q'18 was $2.38 billion and we can consider an average TTM for 2018 around $8+ billion (1Q'18 negative free cash flow can be considered as a one-time event).

TOT is passing the FCF test.

Below is the dividend history paid according to Nasdaq.com.

Note: Dividend yield is now 4.74%. Total S.A. is an American Deposit Receipt or ADR and comes with foreign withholding taxes that will reduce the dividend paid to an American investor. Total S.A. is not the only one; BP Plc and Shell are similar in this matter.

"An American Depositary Receipt, or ADR, is a certificate issued by an American bank that represents a certain number of shares of foreign stock. From the individual investor's perspective, buying and selling ADRs happens the exact same way we buy and sell regular stocks."

Source: The Motley Fool.

France's withholding rate on dividends paid to U.S. ADR holders is 30%, which reduces the dividend yield paid to 3.304%. While Shell and BP apply a 15% withholding rate.

Furthermore, TOT indicated a share buyback programme in February for $5 billion and bought 1 billion shares through the end of September.

The company said in the conference call:

"We are benefiting from higher prices, and we are sharing this benefit by delivering on the shareholder return policies announced in February. The 2018 interim dividend has been increased by 3.2%, in line with the 10% increase of the full year. We have bought back all of the scrip shares issued this year. And on top of buying back the scrip share, we bought back $1 billion of stock through the end of September as part of the $5 billion buyback announced in February. And we will buy back $1.5 billion this year. We also announced that the strategic priority is maintaining a strong balance sheet with gearing below 20%, and we are delivering here as well. Gearing was 18.3% at the end of the third quarter..."

4 - Net Debt

Total cash as of September 30, 2018, was approximately $28.81 billion compared with $31.16 billion the same quarter a year ago. Total net debt is now $27.46 billion with a net debt to EBITDA ("TTM") ratio of 0.78, which is excellent.

Total S.A. has also continued to fortify its balance sheet, ending the third quarter with a net debt to capital ratio of 16.5%, slightly lower than a year ago at 16.6%.

5 - Oil Equivalent Production

Total hydrocarbon production during the third quarter averaged 2,804K Boe/d, up from 2,581K Boep/d the same quarter last year. Production increased by 8.6% from a year ago due to the acquisition of Maersk Oil and the ramp-up of new projects, such as Yamal LNG, Moho Nord, and Fort Hills.

Reminder: On August 21, 2017, Total acquired Maersk Oil for $7.45 billion in a share and debt transaction. The deal closed on March 8, 2018.

Liquids production averaged 1,611K Boe/d, or an increase of 15.7% from the year-ago period. Gas production during the quarter was 6,557 MCf/d, up 2% year over year.

6 - 50/50 JV with Adani in India and other recent acquisitions.

On October 17, 2018, Total S.A. announced that it joined forces with Indian private Adani Group to expand in natural gas and fuel retail activities in India.

"Total, the world’s second largest LNG private player, and Adani, the largest infrastructure conglomerate in India, will serve the fast growing gas demand of the Indian market. The companies will jointly develop various regasification LNG terminals, including Dhamra LNG, on the East coast of India."

The company said in the conference call:

"Last week, we announced a 50-50 JV with Adani, a private group in India, to develop a variety of energy offers in the rapidly developing Indian market. First, we plan to develop LNG regas terminals for this JV will benefit our GRP segment. In addition, we will get the license from the JV to build a retail network of 1,500 stations over 10 years."

On July 6, 2018, Total S.A. completed the acquisition of 73% of Direct Energie.
On July also Total S.A. closed the $1.5 billion deal for Engie's upstream LNG business.

Conclusion and Technical Analysis

The bottom line is that Total S.A. is a very well-managed oil supermajor with a strong balance sheet, which pays an attractive and safe dividend. Then, why has Total S.A.'s stock fallen so steeply since October?

The main reason is quite simple to comprehend and doesn't necessitate any extra knowledge.

TOT trades in direct correlation with oil prices which are the main component of its business model and oil prices have entered a bearish spell that will have to run its painful course. Yes, there will be some ups on the way, but the trend is down.

Saudi Arabia is producing a whopping 11 million barrel of oil per day, and Permian production is expected to surge next year.

According to the EIA, the US total production of oil (oil and gas) could reach 17.4 million barrel equivalent per day next year. I do not mention here Russia and other producers such as Libya; I think you get the picture. On the other side, we learn that China's gasoline exports are dropping to a 13-month low.

It translates to high volatility and uncertainty that tend to push oil prices lower and even lower than it should be if the market were logical.

Technical Analysis

TOT was forming a steep descending wedge pattern, also called a falling wedge, with line resistance at $57 and line support at $54.50. Unfortunately, TOT experienced a decisive breakout of the resistance last Friday (with the Brent oil price tumbling to $52+), which suggests that the stock will fall further before stabilizing at lower support.

The trend is definitely on the downside with successive low highs and low lows, and this bearish process must run its course a little further in my opinion.

The next lower line support that seems appropriate is $52 (I recommend buying at this level assuming stabilization of the price of oil) which is the February low point.

TOT may need to go down to this level (double bottom) before finding enough strength to reverse its trend. On the upside, I see now a line resistance at $56 (I recommend selling part of your position here).

Author's note: Do not forget to follow me on the oil sector. Thank you for your support, I appreciate it. If you find value in this article and would like to encourage such continued efforts, please click the "Like" button below as a vote of support. Thanks!

Disclosure: I am/we are long TOT.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

[waldron] 26/11/2018 17:08

Total
48.3 +1.50%


Engie
12.44 +2.89%

Orange
14.89 +1.74%

FTSE 100
7,036 +1.20%
Dow Jones
24,551.42 +1.09%
CAC 40
4,994.98 +0.97%

Brent Crude Oil NYMEX 60.66 +3.16%
Gasoline NYMEX 1.44 +4.30%
Natural Gas NYMEX 4.18 -3.95%


BP
524.8 +2.38%


Shell A
2,363.5 +2.74%

Shell B
2,400 +2.89%

[waldron] 23/11/2018 16:56

Total
47.585 -3.01%


Engie
12.09 -0.45%

Orange
14.635 -0.07%

FTSE 100
6,952.86 -0.11%
Dow Jones
24,403.55 -0.25%
CAC 40
4,946.95 +0.18%

Brent Crude Oil NYMEX 58.83 -6.05%
Gasoline NYMEX 1.38 -6.25%
Natural Gas NYMEX 4.48 +5.88%


BP
512.6 -2.40%


Shell A
2,300.5 -3.48%


Shell B
2,332.5 -3.83%

[waldron] 23/11/2018 11:58

Total
48.595 -0.95%


BP
523 -0.42%


Shell A
2,342 -1.74%


Shell B
2,378 -1.96%


Brent Crude Oil NYMEX 61.03 -2.54%
Gasoline NYMEX 1.43 -3.06%
Natural Gas NYMEX 4.31 +1.79%

[waldron] 22/11/2018 17:03

Total
49.06 -0.71%


Engie
12.145 -1.42%

Orange
14.645 -0.20%

FTSE 100
6,960.32 -1.28%
Dow Jones
24,464.69 +0.00%
CAC 40
4,938.14 -0.75%


THANKSGIVING NOT A NORMAL DAY OR WEEK


Brent Crude Oil NYMEX 62.77 -1.12%
Gasoline NYMEX 1.47 -1.70%
Natural Gas NYMEX 4.21 -5.48%



BP
525.2 -1.04%


Shell A
2,383.5 -1.12%


Shell B
2,425.5 -1.00%

[ariane] 22/11/2018 12:57

PARIS (Agefi-Dow Jones) - The oil group Total has announced the acquisition of a network of 280 service stations in Brazil from the conglomerate Grupo Zema, as well as several petroleum and ethanol storage facilities an undisclosed amount.


This acquisition marks the entry of the French group into the Brazilian market for fuel distribution. Subject to approval of the transaction by the competition authorities the transition to the Total brand of 280 service stations will begin in 2019 and new stations will also be opened on some sites, said the group.


Total has also indicated that it wants to double the number of service stations under its brand within five years, particularly in the South-East and Center-West regions of Brazil.


"This acquisition is fully in line with our development strategy in the major growth markets and in the biofuels sector." Today, entering the retail fuel market, Total also confirms its long-term commitment to Brazil. ", commented Momar Nguer, General Manager Marketing & Services of Total, quoted in a statement.


-Francois Schott, Agefi-Dow Jones; 01 41 27 47 92; [e-mail] ed:


Agefi-Dow Jones The financial newswire


(END) Dow Jones Newswires


November 22, 2018 06:22 ET (11:22 GMT)

[waldron] 21/11/2018 16:54

Total
49.41 +1.12%


Engie
12.32 +1.32%

Orange
14.675 +0.96%

FTSE 100
7,050.23 +1.47%
Dow Jones
24,631.4 +0.68%
CAC 40
4,975.5 +1.03%


Brent Crude Oil NYMEX 64.01 +2.37%
Gasoline NYMEX 1.52 +2.48%
Natural Gas NYMEX 4.51 -0.20%


BP
530.7 +2.25%


Shell A
2,410.5 +2.27%



Shell B
2,450 +2.34%

[waldron] 20/11/2018 16:52

Total
48.865 -1.38%


Engie
12.16 -0.29%

Orange
14.535 -0.92%

FTSE 100
6,947.92 -0.76%
Dow Jones
24,552.62 -1.86%
CAC 40
4,924.89 -1.21%



Brent Crude Oil NYMEX 63.48 -4.96%
Gasoline NYMEX 1.50 -4.75%
Natural Gas NYMEX 4.49 -4.38%



BP
519 -0.71%


Shell A
2,357 -1.57%


Shell B
2,394 -1.72%