TOTAL S.A. TOT announced that its biggest refining and petrochemical complex, Saudi Aramco Total Refining and Petrochemical (SATORP), has been officially inaugurated on Nov 29 by King Salman bin Abdulaziz Al Saud of Saudi Arabia and Patrick Pouyanné. This state-of-the-art complex was created by combining the expertise of both TOTAL and Saudi Aramco. TOTAL holds a 37.5% interest in this complex. The companies took three years to build the SATORP complex.
Details of SATORP
SATORP is one of the largest and most advanced refining and petrochemicals platforms. This refining complex has the capability to produce high-value products from a grade of crude that is particularly difficult to process.
The refining complex can process up to 400,000 barrels of crude oil a day with an annual output of 10 million metric tons of diesel and four million metric tons of gasoline.
To process high-sulfur heavy crude oil, the facility utilizes two distillate hydrocrackers to convert heavy petroleum fractions into lighter, ultra-low-sulfur products, a fluid catalytic cracking unit that produces a wide variety of products, including very light hydrocarbons such as propylene and liquefied petroleum gas (LPG) and a coking unit (coking refers to a thermal process used to convert heavy fractions into light petroleum products and coke).
Rising Crude Oil Production
Per a recent release from the U.S. Energy Information Administration (EIA), global crude oil production will increase 1.3% year over year to 97.43 million barrels per day in 2017 and consumption of the fuel will grow nearly 1.6% year over year to 96.92 million barrels per day in 2017.
We believe that the expected increase in crude oil production will boost demand for refining services. Saudi Arabia, being the largest oil producer within the OPEC and the world's largest oil exporter, will be able to make full utilization of the services of SATORP.
Over the last one year, TOTAL has been underperforming the Oil and Gas international Integrated industry. Over the last one year, the company’s shares have lost 1.9%, compared with the Zacks Categorized industry’s 3.2% gain.
The underperformance is perhaps due to the ongoing weakness in oil and gas prices, because of which, despite a 4% increase in production in the first nine months of 2016, TOTAL’s revenues were down 16%.
Zacks Rank & Key Picks
TOTAL currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include Braskem S.A. BAK, Suncor Energy SU and Royal Dutch Shell RDS.A. Braskem and Suncor sport a Zacks Rank #1 (Strong Buy), while Royal Dutch caries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Braskem’s earnings surpassed the Zacks Consensus Estimate by 107.8% in the preceding quarter. Moreover, its 2016 estimates improved 48.2% in the last 60 days to $3.22.
Suncor Energy’s earnings surpassed the Zacks Consensus Estimate by 300.0% in the prior quarter. Moreover, its 2016 estimated loss narrowed to 14 cents from 56 cents in the last 60 days.
Royal Dutch Shell’s earnings surpassed the Zacks Consensus Estimate by 29.6% in the last reported quarter. Moreover, its 2016 estimates improved 11.8% in the last 60 days to $1.99.
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