Tuesday, September 24, 2013

Total Gains 2% as Barclays Upgrades on Lower Capital Spending

Shares of French oil giant Total (TOT) have gained 1.9% t $58.27 this morning after Barclays upgraded the stock to Equal Weight from Underweight.

Associated Press

Barclays’ Lydia Rainforth and team explain their reasoning:

Total's Capital Markets Day presentation did enough to convince us that it can control capex more than we had previously anticipated. In doing so, it also set out a more credible path to returning the company to cash flow neutrality post both capex and dividends potentially as soon as 2015. There remain challenges to delivering the 2017 operating cashflow aspiration, as evidenced by an implicit reduction in prior cashflow assumptions over the 2015-2017 period, but the coming 12 months should see Total show both improved production and cashflow with the start up of a number of key projects scheduled. It is this combination of improved operational momentum we forecast for Total together with much better visibility on capex and free cash flow, which drives our upgrade on the stock to Equal Weight…

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Total’s strength comes as U.S oil majors have stalled today. Exxon Mobil (XOM) has ticked down 0.1% to $87.69 , Chevron (CVX) has fallen o.4% to $125.07 and ConocoPhillips (COP) has dropped 0.3% to $70.35.

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