Total: new rebound of 5%

Total: in great shape!

Total extends its catch-up movement, up 5% to 37 euros on Thursday. The title of the major oil thus limits its delay to 28% since January 1 on the Paris Stock Exchange … The group takes advantage of the jump in Brent prices to more than $ 27 today, while black gold prices have just suffered the worst quarter in their history with a collapse of 2/3 in the space of 3 months on the crude market.

Donald Trump said he expected last night that Russia and Saudi Arabia will reach an agreement on oil production in the coming days to end the price war between Moscow and Riyadh which him “ravaged” the global oil industry.

“I think they will settle this in the next few days (…) They both know what to do,” said Donald Trump at a White House press conference. “Around the world, the oil industry has been devastated,” said the American president, while crude oil prices have reached an 18-year high … He added that he wants the oil industry to return to “as she was before “. Russia and Saudi Arabia will eventually conclude a deal “at some point,” said Donald Trump, “because it is a very bad situation for Russia, very bad for Saudi Arabia.”

Earlier, Russian President Vladimir Putin called on oil-producing and consuming countries to “find a solution” in the face of the collapse in prices.

Global demand for oil has plummeted from 20% to 25% in recent weeks due to the Covid-19 crisis, experts say. Despite this, the price war between Saudi Arabia and Russia is increasing the supply of crude oil in markets where stocks are overflowing. Thus, the American stocks published Wednesday for the week ended March 27, showed a surge of 13.8 million barrels to 469.2 mb, against a consensus of +3.3 mb.

Action plan

Despite its financial and operational solidity, the Total group announced an action plan to be implemented immediately in the context of oil prices of around $ 30 per barrel. Total will thus realize organic Capex savings of more than $ 3 billion, or more than 20%, so that the 2020 net investments will be less than $ 15 billion. These savings relate mainly to flexible short cycle Capex which can be contractually arbitrated with a very short delay …

Management will also save $ 800 million in 2020 on operating costs compared to 2019 instead of the $ 300 million previously announced, and will suspend its share buyback program: the company had announced the buyout of 2 G $ in 2020 in an environment at $ 60 / b; it bought back $ 550 million in the first two months.

On the front of the latest analysts’ notes, the Berenberg broker is now targeting a target price of 35 euros, against 60 euros previously. Bernstein had previously moved from ‘neutral’ to ‘outperformance’ by targeting a price of 38 euros …

© Reuters


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