Analysis: Total CEO safe as investors prioritize profits over Iran bribery case

Thu May 30, 2013 11:52am EDT
 
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By Michel Rose and Muriel Boselli

PARIS (Reuters) - The colorful boss of Total (TOTF.PA: Quote) is unlikely to be felled by demands he stand trial over alleged bribes to Iran as Christophe de Margerie enters a crucial phase of his high-stakes turnaround plan for the oil firm, with no clear successors.

De Margerie, nicknamed "Big Moustache" inside the company which appointed him chief executive six years ago, is deep into an exploration plan to drill more wells in difficult-to-reach African and North Sea frontiers in order that Total meet future output goals - and investors want him to stay and make it work.

"They're much more concerned in terms of what the company can do in terms of production, capital expenditures, cashflow," said Iain Reid, an analyst with Jefferies in London and best-rated analyst for Total on Thomson Reuters StarMine.

"(The cases) have been a wrinkle obviously, but all oil companies have legacy legal issues somewhere around the world."

The Iran case came to a head on Wednesday when Total agreed to pay $398 million to settle U.S. criminal and civil allegations that it paid bribes to win oil and gas contracts to Iran. Now a French prosecutor is recommending de Margerie himself go to trial.

But the oil industry has been plagued by corruption accusations for decades and one fund manager who owns Total shares said it was no exception: "This sort of thing seems to be commonplace in the oil industry. I have heard no discussion in the investor community about (de Margerie) stepping down."

Instead, investors are more concerned about how close de Margerie is to fixing Total's undervalued share price.

Currently trading at 39.7 euros, Total's stock is valued at 7.8 times 12-month forward earnings, a 7 percent discount on BP (BP.L: Quote) and Shell (RDSa.L: Quote) and close to a 20 percent discount on average to its global peers.   Continued...

 
French oil company Total CEO Christophe de Margerie delivers a speech during the company's 2012 annual result presentation in Paris February 13, 2013. REUTERS/Philippe Wojazer