Big Oil companies are currently offering "value" investing opportunities. While the stock market takes a break today, with oil prices falling back a bit and gas prices easing a very little, oil companies may provide good buying opportunities. Among those that stand a good chance include Total (TOT), the French "supermajor" oil company.
Total has been growing rather steadily in the past few years, thanks to revenue from its "upstream" operations: Oil exploration, oil production, coal mining interests and liquefied natural gas. These upstream operations help out as oil prices trend upward, providing solid income. Upstream projects that have been providing more money to Total include oil fields in Angola and plans to increase its stake in the Canadian heavy oil market with a bid for Synenco. Additionally, Total engages in "downstream" activities that bring in revenue: refining, shipping, trading and marketing. This means that Total can enjoy the revenue from pumping the oil, and then get additional revenue from such practices as shipping it.
Another aspect of Total is its diversification. The company produces fertilizers and petrochemicals and makes specialty chemicals for a variety of markets. Total is also involved in performance polymers and products that are made from petroleum. The fact that Total pumps its own crude for these purposes help cuts costs while providing revenue streams.
Those concerned about Total’s environmental record may want to look twice, as Total has been fined for oil spills in the past, however the company did start a sea turtle conservation project, and the company has introduced a petroleum based fuel called Evolution that is supposed to produce lower emissions and increase fuel efficiency in cars. For some investors, these attempts at reform in environmental practices justify investing in the company. Some may argue, though, that such attempts are "greenwashing" and the harm Total does with its myriad energy and chemical production interests outweighs the good.
Ultimately, it is up to individual investors to decide whether they think Total is a "good" investment (according to whatever standards they use). From a strictly bottom line standard, though, Total looks fairly solid. But this could change if oil prices volatility and tougher environmental standards come into greater prominence.
Disclosure: I do not invest in TOT.
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