Total Reports Higher Than Expected Sales and Earnings

  French energy and chemical company Total SA (NYSE: TOT – $51.70)p reported first quarter adjusted earnings of $1.01 per share, up from $0.68 per share a year earlier, and above the $0.95 per share consensus of analysts. Revenues rose to $36.09 billion from $27.52 billion, which beat a single Street estimate for $33.91 billion. Looking ahead, Total maintained its Upstream production growth target of over 4% for 2017. The company continues to reduce its break-even point by cutting costs in line with the $3.5 billion savings target for the year and benefiting from project start-ups. The Upstream group also intends to take advantage of opportunities offered by the current oil cycle. Total is therefore launching new projects in a favorable cost environment and acquiring resources under attractive conditions, as demonstrated recently in Brazil and Uganda. Total maintains its production growth objective of more than 4% in 2017. Production will benefit in the second quarter from the ramp up of projects recently started, including Moho Nord, but will be affected by seasonal maintenance as well as the full implementation of OPEC quotas. From July, production will benefit from the entry into the Al Shaheen concession in Qatar.

       In the Downstream, refining margins remain favorable going into the second quarter. Maintenance operations are planned at Leuna and Normandy, as well as at the petrochemical facilities of the Antwerp integrated platform. Cash flow will benefit from production growth and cost reductions, while organic investments, excluding resource acquisitions, are expected to be $14 to $15 billion in 2017, as previously indicated. This income choice boasts worthwhile investment attributes, such as solid capital gains potential over the 3- to 5-year stretch and a current dividend yield of 5.2%, that more than doubles that of the market.

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