Integrated oil and gas company TOTAL S.A. (TOT) reported second-quarter 2011 operating earnings of $1.78 per share (€1.24 per share), below the Zacks Consensus Estimate of $2.09 per share. Operating earnings in the reported quarter however gained 5.9% from $1.68 per share (€1.32 per share) in the year-ago period.
Total Revenue
Total revenue at the end of second-quarter 2011 was $64.77 billion (€45.0 billion) as against $52.52 billion (€41.33 billion) in the second quarter of 2010. The year-over-year growth in revenue was 23.3% (up 8.9% in euros).
Production and Realized Price
Total hydrocarbon production during the second quarter 2011 averaged 2,311 thousand barrels of oil equivalent (kboe) per day, down 2.0% year over year.Production in the quarter was afflicted by scheduled maintenance outages and disruptions in Libya, partially offset by the positive impact of a change in the portfolio.
Liquids and gas production during the quarter averaged 1,197 thousand barrels (MBbls) per day, down 10% year over year and 6,077 thousand cubic feet (Mcf) per day, up 10% year over year, respectively.
The realized price for Brent was $117 per barrel for the second quarter of 2011, compared with $78.2 per barrel in the year-ago period, reflecting a 49.6% spike. The average realized liquid price shot up by 48% year over year to $110.6 per barrel during the second quarter of 2011. Realized gas prices during the second quarter jumped 37% year over year to $6.60 per Mbtu.
Realized hydrocarbon prices in the second quarter 2011 increased $22.1 per barrel of oil equivalents (boe) to $76.9 boe.
Segmental Update
Net income in the reported quarter rose 11% year over year to $4.17 billion (€2.79 billion) from $3.76 billion (€2.96 billion) in the year-ago quarter largely driven by the Upstream business.
Upstream net income during the quarter was $3.53 billion, up 26.3% from $2.8 billion reported in second quarter 2010, mainly owing to higher hydrocarbon prices.
Downstream net income during the quarter plunged 53.7% to $0.3 billion from $0.6 billion in the year-earlier period.The much lower sales at the segment resulted from scheduled outages at a few of the company’s refineries that affected the throughput by nearly 13% over the prior-year level.
Chemical net income during the quarter was $0.355 billion reflecting a growth of 2% from $0.348 billion reported in the prior-year quarter. The year-over-year growth was due to strong petrochemicals margins in Europe and U.S.
Financial Update
TOTAL's cash and cash equivalents as of June 30, 2011, were €13.38 billion versus €14.83 billion as of June 30, 2010.
The net debt-to-equity ratio was 24.3% as of June 30, 2011, up from 22.7% as of June 30, 2010.
TOTAL's cash flow from operation at the end of second quarter 2011 was $7.3 billion (€5.06 billion) versus $6.28 billion (€4.94 billion) at the end of the prior-year period.
Sale and Purchase of Assets
The company continues to prudently acquire and dispose of assets to attune its resources to its long-term business strategy. In second quarter 2011, net investments of the company, excluding asset sales, were $1.94 billion (€1.28 billion) versus $3.62 billion (€2.84 billion) in the second quarter of 2010.
In the quarter, TOTAL made acquisitions worth $5.76 billion, up from $0.38 billion in second quarter 2010. The investments were made to acquire a 12% interest in OAO Novatek and a 60% stake in SunPower Corporation (SPWRA).
In tandem the company disposed of assets worth $1.78 billion in the reported quarter, up from $0.96 billion of assets sold in the prior-year quarter. The sale during the quarter comprised mainly of shedding its interest in a Cameron E&P subsidiary and a part of the Joslyn project in Canada.
At the Peer
BP Plc (BP), which competes with TOTAL SA, reported second-quarter 2011 earnings of $1.76 per American Depositary Share (ADS), well below the Zacks Consensus Estimate of $1.97 but ahead of the year-earlier profit of $1.57.
BP Plc's total operating revenue for second-quarter 2011 was $101.3 billion, up 37.5% from $73.7 billion reported in the year-ago period.
Our Take
Despite TOTAL's failure to surpass the consensus estimate in the reported quarter, it continues to strengthen its global portfolio through acquisitions and partnerships. The company expanded its operations in Qatar, Poland, Italy and Angola, while selling its UK marketing assets and gas pipelines in Norway.
Strong liquid and gas price realization in the reported quarter helped TOTAL to offset lower volumes by higher revenues.
We also appreciate the company's decision to pay interim dividends to its shareholders beginning this quarter. The company will pay a dividend of €0.57 per share in December 2011.
TOTAL S.A. currently retains a Zacks #3 Rank (short-term Hold rating).
France-based TOTAL is one of the largest publicly traded, globally integrated oil and gas companies based on production volumes, proved reserves and market capitalization. The company has exploration and production operations across five continents.
BP PLC (BP): Free Stock Analysis Report
SUNPOWER CORP-A (SPWRA): Free Stock Analysis Report
TOTAL FINA SA (TOT): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment