Integrated oil and gas company TOTAL S.A. (TOT) reported first-quarter 2014 operating earnings of $1.46 per share (€1.07 per share), in line with the Zacks Consensus Estimate. However, earnings were 10.0% lower than the year-ago figure of $1.63 per share (€1.23 per share).
The year-over-year decline in European refining margins impacted the company’s earnings.
Total Revenue
Total revenue was $60.69 billion, down 5% from $63.56 billion in the year-ago quarter.
Production and Reserve
Total hydrocarbon production averaged 2,179 thousand barrels of oil equivalent (kboe) per day, decreasing 6% from the year-ago quarter. The decline was primarily attributable to portfolio changes and security issues in Nigeria and Libya, which totally offset the benefits derived from new startups.
In the reported quarter, liquids production averaged 1,031 thousand barrels (MBbls) per day, down 14% from the prior-year quarter. Liquid production got a beating in the Middle East, Africa, South America and Asia-Pacific, which pulled down the overall output.
Gas production was 6,268 thousand cubic feet (Mcf) per day, up 2% year over year. Strong performance from the Africa, North America and Asia-Pacific regions more than offset the drop in gas production in the Middle East and South America.
Realized Price
In first-quarter 2014, the realized price for Brent decreased 4% to $108.2 per barrel from $112.6 per barrel in the prior-year quarter. The average realized liquid price fell 4% to $102.1 per barrel from $106.7 per barrel in first-quarter 2013.
Realized gas prices dropped 3% year over year to $7.06 per Mbtu. Realized hydrocarbon prices in first-quarter 2014 decreased to $73.4 per barrel of oil equivalents (boe) from $77.4 per boe in first-quarter 2013.
Financial Update
Cash and cash equivalents as of Mar 31, 2014, were $22.78 billion versus $17.17 billion as of Mar 31, 2013.
The net debt-to-equity ratio was 23.5% at the end of first-quarter 2014 versus 25.9% at the end of first-quarter 2013. This indicates that the company has lowered its debt burden over the past twelve months.
TOTAL’s cash flow from operation in first-quarter 2014 was $53.38 billion, up 8.6% from $49.13 billion in first-quarter 2013. The increase was primarily due to higher net income.
Sale and Purchase of Assets
TOTAL acquired assets worth $299 million during the quarter. The investments were made to carry on the Utica gas and condensate field in the U.S. and the acquisition of marketing assets in Egypt.
TOTAL disposed assets worth $1.47 billion which comprised the sale of the Angola block 15/06 and partial IPO interest in Gaztransport & Technigaz.
TOTAL’s net investment in first-quarter 2014 was $4 billion, down 39.4% from $6.6 billion in the first quarter of 2013.
Other Company Releases
Statoil ASA (STO) reported first quarter earnings of 82 cents per share, 32.3% above the Zacks Consensus Estimate.
BP plc (BP) reported first quarter earnings of $1.04, missing the Zacks Consensus Estimate by 5.4%.
Our View
TOTAL’s performance in the reported quarter was impacted by a decline in production as well as lower prices of the products sold.
The company has scheduled the start-up of various upstream and downstream projects in the second quarter, which will boost performance in the forthcoming quarters. However, the prevailing security issues in Libya and Nigeria are a concern as liquid production from Africa decreased 8% year over year.
TOTAL currently holds a Zacks Rank #3 (Hold). Another industry heavyweight ExxonMobil Corp. (XOM) is slated to release its first quarter earnings on May 1, 2014. The Zacks Consensus Estimate is pegged at $1.88 per share.
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