TOTAL SA Competes with Asian Oil Prices with Cheaper LNG

Total S.A. is trying to produce Liquefied Natural Gas (LNG) in countries like the Middle East and Africa to offer the commodity in markets in Asia where it is priced closer to crude oil, leading to the best profits in the industry for the company, according to Senior Research Analyst Oswald Clint of Sanford C. Bernstein & Co., LLC.

Clint expressed his admiration for Total, the French-based and New York listed oil firm. He said that the company has an estimated annual growth figure of 4.9 percent in the coming four years. That rate is almost at the top of the largest European firms. The Senior Research Analyst particularly likes Total’s move of producing gas and aiming to sell it in a market that values the product nearly as high as crude oil, namely Asia.

Aside from LNGĀ  production, the company is also involved in deepwater oil exploration and production in Africa which currently generates a positive flow of cash. Current oil prices are not anticipated to dramatically rise, making Total a preferred company because of its (reserves) volume growth.

At present, Total can produce high profits and make plenty of upfront cash flow. As such, analysts like Clint are expecting strong revenues from the company. Moreover, it is a stock that presently has a high dividend return of 6 percent.

By: Chris Termeer