Stock performance of integrated energy companies
In 2015, sinking oil prices impacted earnings of integrated energy companies. This reflects on the stock performance of these companies. In the trailing 12 months to February 12, 2016, Total (TOT) saw its stock plunge by 21%. TOT’s peers Chevron (CVX) and BP (BP) fell by 23% and 30%, respectively, during the same period. Royal Dutch Shell (RDS.A) declined sharply by 33%. The Vanguard Energy ETF (VDE) has a 42% exposure to integrated oil and gas companies.
Total’s stock performance
Total’s (TOT) downward spiral started in mid-2014 when oil prices started declining. Amid volatility, the trend continued due to falling oil prices. However, in October 2015, the stock crossed over its 50-day moving average. TOT stayed above the moving average for a brief period and then announced better-than-estimated third quarter results. TOT had sold interest in a few upstream projects as part of its restructuring program.
The stock again resumed its downfall in December 2015 and broke below its 50-day moving average. Recently, Total posted its 4Q15 earnings, higher than Wall Street analysts’ estimates, which led to a marginal rise in the stock price. However, TOT currently trades below its 50-day and 200-day moving averages.
Impact of depressed oil prices on TOT’s 4Q15 earnings
TOT saw a fall in its net adjusted earnings from $2.8 billion in 4Q14 to $2.1 billion in 4Q15 on account of lower earnings from the upstream segment. Net adjusted operating earnings from the upstream segment slumped from $1.6 billion in 4Q14 to $0.75 billion in 4Q15 due to a steep fall in oil prices. TOT’s refining segment’s adjusted net operating income rose from $0.96 billion in 4Q14 to $1 billion in 4Q15 due to better refining margins. Total (TOT) reported diluted EPS of $0.88 in 4Q15.