How Is Total’s Upstream Segment Performing?



Upstream segment

Total SA (TOT) produced 2.5 MMboepd (million barrels of oil equivalent per day) in 1Q16 from its worldwide operations. Of the total production, 1.7 MMboepd, or 68%, is from operations outside Europe and Central Asia.

Article continues below advertisement

Total’s product mix and realizations

In 1Q16, liquids accounted for 1.3 MMbpd, or 52%, of the total production. The remainder was contributed by natural gas. Of Total’s peers, ExxonMobil (XOM), BP Plc (BP), and Royal Dutch Shell (RDS.A) had respective production mixes with liquids comprising 59%, 53%, and 53%.

If you are looking for exposure to integrated sector stocks, you can consider the iShares North American Natural Resources ETF (IGE). The ETF has ~22% exposure to the sector.

Oil and natural gas prices have fallen sharply in the past few quarters. TOT’s average liquids realizations fell to $31 per barrel in 1Q16 from $49.50 per barrel in 1Q15. Similarly, TOT’s natural gas realizations fell from $5.40 per MMBtu in 1Q15 to $3.50 per MMBtu in 1Q16. Due to the fall in liquids as well as natural gas realizations, TOT’s average hydrocarbon realizations fell from $41.80 per boe in 1Q15 to $26.40 per boe in 1Q16.

Upstream portfolio

In 1Q16, Total SA (TOT) noted a 4% surge in hydrocarbon production compared to 1Q15. This was attributed to new project startups and ramp-ups in the quarter. In 1Q16, Total started production at its Laggan-Tormore and Vega Pleyade fields that have 90 MBoepd (thousand barrels of oil equivalent per day) and 70 MBoepd of production capacity, respectively.

Total SA has proved reserves of 11.6 billion boe on December 31, 2015, which implies more than 13 years of reserve life based on the 2015 average production rate. These reserves could provide a solid foundation for growth in its upstream portfolio in the years to come. Plus, TOT’s reserve replacement ratio stood at 107% in 2015.

TOT expects to raise its production by 4% in 2016 over 2015. TOT has five projects expected to start production in 2016. One of these, Laggan-Tormore, has already started production. Plus, Angola LNG and Incahuasi are expected to start up by mid-2016 and Kashagan by the end of 2016.


More From Market Realist