Wednesday, October 22, 2014

Total's Turnaround Hits A Speed Bump

This article was originally published by Seeking Alpha on September 22, 2014.

By Sarfaraz A. Khan

Summary: French oil major Total has recently updated its cash flow and production outlook through 2017, which wasn't encouraging. The company's turnaround has been hit by project delays and asset sales. Is it time to give up on this company?

Over the last couple of years, the French energy giant Total S.A (NYSE:TOT) has been eying a turnaround. Since 2010, the company has sold $30 billion of assets and has used the proceeds to fuel its turnaround between 2014 and 2017, a period in which it projected to achieve production and cash flow growth, as opposed to the prior years.

The company's turnaround efforts have not gone as smoothly as it would have liked, partly due to its exposure to less developed parts of the world such as Nigeria, Libya and Kazakhstan, from where it has witnessed production outages.

Production Outlook

As RBC Capital Markets predicted last week, Total has cut its production and cash flow targets for the next year.

Earlier today, Total released its latest production outlook numbers on the backdrop of its annual investor day in which it significantly cut down its growth forecast. The company now expects to grow its production from 2.1 million barrels of oil equivalents a day to 2.3 million barrels by 2015 and 2.8 million barrels by 2017, as opposed to its previous production growth target of 2.6 million barrels by 2015 and 3 million barrels by 2017.

This growth will be powered by project ramp-ups and new start-ups, which will offset …. Read full article at Seeking Alpha.