Image Source: Total SA investor presentation.

For the past several quarters, the one integrated oil and gas company that has stood out as the most resilient during oil's decline has been Total (NYSE:TOT). The company's new production sources, and a focus on improved refining and marketing operations, has allowed Total to weather the storm of low oil prices rather well.

This quarter was a reflection of these efforts as the company posted some of the best results among its Big Oil peers. Let's take a quick look at the numbers, what the comapny has in store for 2016, and whether it has the legs to keep outpacing its peers. 

Total's results: The raw numbers

Results (in millions, except per share figures) Q4 2015 Q3 2015 Q4 2014
Sales $37,749 $40,580 $52,511
EBITDA $3,751 $4,643 $3,759
Net Income (adjusted for non-cash charges) $2,075 $2,756 $2,801
EPS (adjusted for non-cash charges) $0.88 $1.17 $1.22

Source: Total earnings release.

Like so many others in this space, Total saw some robust results from its downstream operations. Unlike its peers, though, Total didn't need to cover up for as much weakness in its upstream production. While most of its peers saw upstream income decline by 75% or more, Total saw a 53% decline in the quarter. Here's how the company's earnings broke down by business segment.

Image Source: Total SA earnings release, author's chart.

What happened with Total this past quarter

  • The board of directors approved a dividend of 2.44 euros per share, which is the same as last year's payment aside from any foreign exchange fluctuations. 
  • In addition to its current dividend policy, Total is offering shareholders the option to take dividends in the form of newly issued shares instead of cash. Investors who choose to take a scrip dividend instead of cash will get a 10% market premium.
  • Total was able to offset the declines in oil prices with a 9% increase in total production throughout the year. The largest gains in production came from new oil production in the Middle East, where it started a concession contract with the Abu Dhabi Onshore Oil Company (ADCO). 
  • The company completed $2.2 billion in divestments, as it's part of the Fort Hills oil sands project, as well as farming out part of its Laggain-Tomore project in the North Sea.
  • Started shipping its first LNG cargoes from its Gladstone LNG project in Australia.
  • Ended 2015 with a reserve replacement ratio of 107%.
  • Net debt-to-equity ratio fell from 31% in 2014 to 28% in 2015.

What management had to say
Compared to what other oil executives have had to say this past quarter, Total CEO Patrick Pouyanne's statements seemed almost chipper. Then again, when your business has been able to hold up as well as Total's has during this downturn, he has a right to be positive: 

Hydrocarbon prices fell sharply in 2015 with Brent decreasing by around 50%. In this context, Total Generated adjusted net results of $10.5 billion, ac decrease of 18% compared to 2014, the best performance among the majors. This resilience in a degraded environment demonstrates the effectiveness of the Group's integrated model and the full mobilization of its teams. Discipline on spending was reinforced in 2015. The cost-reduction program allowed us to save $1.5 billion, exceeding the objective of $1.2 billion. Organic Capex was $23 billion, a decrease close to 15% compared to 2014.

These results confirm the success of the Group's strategy to further decrease its breakeven and capitalize on its market position. 

Looking forward
For 2016, the company is expecting a lot more of the same. Total capital expenditures are expected to decline for the second year in a row, to about $19 billion from $23 billion in 2015. Management is also predicting a reduction of $2.4 billion in operational costs compared to initial 2015 cost estimates.

At the same time, Total expects to increase production by another 4% in 2016 as several more projects either come online, or ramp up to full capacity. Based on its current projections, Total expects to be cash-flow breakeven in 2016 if the average cost of a barrel of oil is in the $45-per-barrel range, one of the lower numbers among the integrated majors.

10-second takeaway
Total is proving to be much more resilient than what many on Wall Street probably were expecting. The addition of several highly profitable production sources, such as the ADCO concession contract, are helping keep upstream earnings from going up in flames, while refining and marketing are producing improving results. Total's shares may be going down with the rest of the oil industry, but its business fundamentals suggest it is possibly the best positioned for a recovery once that recovery comes.