ADRs of French energy giant Total SA (NYSE: TOT – $62.95) reported first quarter adjusted earnings of $1.09 per share, up from $1.01 a year earlier but three cents below the consensus of analysts. Revenues rose to $43.29 billion from $36.09 billion in the year-ago quarter but missed the $43.94 billion average estimate. The company said the global environment remains volatile with continued uncertainty around the evolution of global supply even as Brent crude has averaged at about $70 per barrel since the start of the second quarter. Total’s organic break-even level continues to decrease, which is now targeted at $25 per barrel for this year. The company expects an investment level of $15 billion to $17 billion for 2018.
Production projects and acquisitions ought to help growth, long-term. No doubt, Total will likely keep up the pace of projects and acquisitions, especially considering the health of its balance sheet and strong cash flow. Major successes were achieved by obtaining two new 40-year concessions in offshore Abu Dhabi; acquiring a 16% interest in the Waha onshore concession in Libya; growing its position in the deep-offshore Gulf of Mexico, following the giant discovery of Ballymore in January; and concluding the A.P. Moller-Maersk deal. In the Downstream segment, the company is pursuing its growth in petrochemicals with the finalization of a joint venture with NOVA and Borealis in the United States and by signing an agreement in principle to build a giant petrochemical complex integrated into the SATORP refinery in Saudi Arabia. In line with the shareholder return policy announced in February, Total is raising the first 2018 quarterly dividend to an annual rate of $3.04, yielding 4.8%. Shares of high-quality Total, closing in on a 52-week high, can be retained in a well-diversified income account for further total returns.