TOTAL S.A. (NYSE:TOT) Q3 2018 Earnings Conference Call Transcript

Oct 26, 2018 • 09:00 am ET


TOTAL S.A. (NYSE:TOT) Q3 2018 Earnings Conference Call Transcript


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Good day, and welcome to Total's Third Quarter 2018 Results Presentation. Today's presentation is being recorded. At this time, I would like to turn the conference over to Patrick de La Chevardiere, CFO. Please go ahead, sir.

Patrick de La Chevardiere

Hello. Patrick de la Chevardiere here. We presented our strategy and outlook in New York last month, and we have met with many of you since then. So I think the story should be well known by now.

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 counter cyclical 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 and the quarterly results reflect this with the acquisitions of Direct Energie and two gas-fired power plants.

Our year-to-date results show the significant progress we have made since last year. The group's adjusted net result for the nine months increased by 35% to $10.4 billion. Notably, the contribution from E&P increased by 85%, fueled in part by production growth of 8% and by accretive barrels. Debt-adjusted cash flow, or DACF, increased by 25% to $20 billion. Organic CapEx was $8 billion. So based on our sensitivity of $2.8 billion per year for a $10 per barrel change in Brent, our post-dividend cash flow breakeven is less than $50 per barrel.

Now looking at the third quarter results compared to the second quarter. Brent was flat quarter-to-quarter. But we increased adjusted net income by more than 11% to $4 billion or $1.47 per share, the highest level we have seen since 2012. DACF increased by 10% to $7.5 billion, also a multi-year high. And production continued to grow, up by more than 3% quarter-over-quarter to a new record high of 2.8 million barrels per day in the third quarter. And in the month of September, we reached 2.9 million barrels per day.

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 shares, 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 despite cash outlay of $3.6 billion for the net acquisition in the quarter,