Total S.A. Offers Nice Stock Appreciation Prospects

Buy-recommended Total S.A. (TOT) offers unlevered appreciation potential of 55% to a McDep Ratio of 1.0 and levered appreciation potential of 69% to Net Present Value (NPV) of $90 a share. During the first quarter, according to results released today, the company generated cash from oil and gas production of about $26 a barrel of oil equivalent as the difference between price of about $39 and cash operating costs of about $13.

Unlevered cash flow (Ebitda) exceeded our expectations from three months ago. As a result, margins may, but not necessarily, be less robust in the next few quarters. By latest disclosures, oil and gas reserves, weighted by development, are concentrated 35% in Africa.

Our valuation capitalizes cash flow at unlevered multiples (PV/Ebitda) related to reserve life (Adjusted R/P) for natural gas and oil, and to an industry multiple for downstream. Pointing to expected oil price recovery, futures prices for the next six years averaged near $71 a barrel recently. The euro oil champion is performing well as it offers a 5.7% dividend yield to go with share price appreciation prospects.

Originally published on May 6, 2009.

Comments

[prairiedog555:]

I know this is illogical, but I have a hard time investing in France. They seem so untrustworthy. I would much rather invest in E.
Look at charts and dividend return.
Full disclosure: I am Italian, but the charts do prove this out.

Jun 09 09:19 AM