At the end of April 2016, the Total Group released its first quarter 2016 results. Despite a decline in oil prices, the company’s adjusted net income exceeded expectations. While Total’s share price is on the rise at the beginning of May 2016, investors are already thinking about the second half of 2016. Will this trend be maintained? Update on the situation of the oil group... Balance sheet for the
first quarter of 2016 at TotalThe
end of April 2016 was marked by the disclosure by the French oil group Total of its results for the first quarter of this year. Even though oil prices have fallen, Total’s adjusted net income remains higher than expected. According to the company’s management, this is mainly due to the policy of reducing costs and increasing production, with adjusted net income of just over $1.60 billion (compared to a forecast of just under $1.15 billion) and sales of nearly $32.85 billion. Daily barrel extraction is estimated at about 2.50 billion barrels per day (compared to a forecast of nearly 2.40). In addition to these rather encouraging results, Total has announced that shareholders will receive an interim dividend. This did not fail to delight investors. Shortly after the announcement, the total share price rose by 1.9%.What we remember from this first quarter of 2016 for the oil group: it has managed to preserve its profitability even on the price of oil, which has reached limits: less than $35 a barrel compared to more than $100 almost two years ago. Speaking on the issue, Total focused on its competitive extraction costs, which are up to half as expensive as those of its competitors, and on the fact that the group has been responsive to the drop in oil prices. Total has therefore implemented a strategy to optimize costs and production. And we can only underline the difference in its situation with BP, its British rival, which has rather catastrophic figures for this first quarter of 2016,
what are the prospects for the second half of 2016?
Shortly before the announcement of the first quarter 2016 results, Total mentioned a new feature that should be implemented in early September 2016. More specifically, it is the introduction of a new activity combining renewable energies, gas and activities focused on energy efficiency. The challenge is to adapt to the phenomenon of climate change while exploiting a new energy sector knowing that this implies a decrease in the share of oil, a change of size that will certainly have an impact on the oil company’s share price. For the time being, the indicators are intended to be positive. But you also need to stay connected to the sector’s financial news, which can change the situation at any time