Major oil and gas companies are clearly suffering as oil prices decline.
While some investors look at this situation as a bargain-in-the-making
on the basis of a never-ending demand for oil around the world, the
truth is a little more nuanced. Oil demand does indeed look solid on an
intermediate-term basis, but many majors are finding that they have to
spend enormous amounts of money to harvest their reserves. Consequently,
today's oil prices do start to change the expected path for project
development and dividend payouts.
Total (NYSE:
TOT) is one of those companies that looks vulnerable to the squeeze play. Not only does Total have a sizable
downstream (refining) business that drags on results, but the
upstream
operations have some questions around them as well. With so much
expected production tied to areas with political risks and/or advanced
technological needs, Total has a has a problem with sub-$90 oil.
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http://stocks.investopedia.com/stock-analysis/2012/Total-Has-More-To-Lose-With-Falling-Oil-Prices-TOT-RDS-E-STO0629.aspx
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