Total Oil: Time to Thank Thierry Desmarest

In the 12 years that Mr. Thierry Desmarest was chief executive officer, buy-recommended Total
(TOT) delivered a total return of 17% a year, according to Bloomberg, highest among mega cap oil companies along with buy-recommended ExxonMobil (XOM).

We appreciate Mr. Desmarest’s graciousness in regular meetings with U.S. analysts during those years. The new CEO, Mr. Christophe de Margerie, former head of exploration and production and an important contributor to Total’s success, promised 5% per year oil and gas volume growth through 2010 in the company’s presentation of 2006 results to investors on February 14.

Our estimate of net present value [NPV] of $80 a share depends first on crude oil production (44%), second on refined products (28%) and third on natural gas (28%). The futures quote for oil over the next six-years currently at $62 a barrel supports NPV and may resume an uptrend later in 2007.

Reported results for the fourth quarter of 2006 continue a high level of cash generation. Trading above its 200-day average price, TOT has a full weighting in our illustrative energy portfolio concentrated on real assets that promise a high return providing clean fuel for global growth.

Originally published on February 15, 2006

TOT 1-yr chart