March 25, 2002; Boost Present Value for TotalFinaElf


Investors looking for more liquidity in energy investments may need to turn to the Mega Caps.  Fortunately the alternatives are promising.  As a group, the stocks have impressive long-term records and dominate the energy industry, as they own a wide majority of all the energy assets held by publicly traded companies.  Mega Cap Energy stocks are among the safest, yet productive, investments one could expect to have in a diversified portfolio.


In connection with last week's semi-annual presentation by Mr. Thierry Desmarest, Chairman of TotalFinaElf, we update our analysis of the company.  A higher present value of $85 a share leads to a McDep Ratio of 0.90 and a low ratio of debt of 0.15 (see Table L-1, L-2). 


Our valuation takes little account of TOT's 26% ownership of the pharmaceutical company, Sanofi-Synthelabo, worth about 15% of the market cap of TOT.  The continued divestment of drug shares can lend a supportive glow to financial results.  Accounting gains help lower the cost basis of less successful investments.  The cash proceeds have been redeployed to stock repurchase.


In its most important business, oil and gas production, TOT expects to grow volume at a single digit rate.  Its next most important business refining/marketing has been restored to respectable profitability.

March 25, 2002; Meter Reader: Booming Futures