Total has a couple of significant things going on -- either of which
could benefit the company significantly. One is a three-way round of
talks with Venezuela's state-owned Petroleos de Venezuela SA and China
National Petroleum Corp. The threesome would work to develop about
200,000 barrels a day of heavy crude from Venezuela's Orinoco Basin,
before shipping it to China for final processing at a yet-to-be-built
refinery in Guangdong. There it would be turned into gasoline and other
refined products.
Obviously, Hugo Chavez and his partisans are strapped for cash,
especially in the face of lower crude prices. Also not helping was the
2007 eviction of such western Big Oil companies as ExxonMobil (NYSE: XOM), ConocoPhillips (NYSE: COP), and Chevron (NYSE: CVX), along with Norway's StatoilHydro (NYSE: STO) from the Orinoco region.
Success in the latest three-way deal would supply much-needed funds
for Venezuela. Further, it would likely benefit the relationship
between China and Total at precisely the time when a major Chinese gas
project is under consideration -- one where Total could get involved.
And as if this weren't enough, Total is chasing Canada's UTS Energy
, an Alberta oil-sands developer. Total had bid C$1.30 a share
originally, but earlier this week, Total stepped up its bid for UTS to
C$1.75 a share. The new bid would constitute an offer of about $830
million Canadian (U.S. $676 million). The revised offer will expire on
April 27.
I'm forced to admit to becoming a progressively bigger fan of Total,
and I hope that Fools will give it a prominent position on their watch
lists. In addition to its new initiatives, it operates in nearly 130
countries, has a forward P/E of less than eight times 2010 earnings
estimates, and pays a 5.5% dividend yield. To my way of thinking, those metrics, along with its potential new adventures, make it well worth your Foolish attention.
For related Foolishness:
Answering 2008's Biggest Mystery15 More Reasons to Like ExxonMobilBig Oil Can't Resist the Chavez Charm
© 2009 UCLICK, L.L.C.
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