Total SA (TOT) , Royal Dutch Shell Plc (RDS.B)  and Eni SpA (E) are the top picks in the oil sector ahead of second quarter earnings season according to Goldman Sachs analysts.

The trio are best positioned to benefit from increased production as they ramp up output following the "flawless execution" of recent projects, the investment bank said in its reporting preview dated July 12.

"Total remains our preferred stock in the sector as it offers the most attractive combination of CF (cash flow) generation (6.5% 2017-19 FCF yield), high growth (c.5% production CAGR to 2020E) and high return on new investment opportunities on the back of ongoing cost discipline and better execution," wrote analysts Michelle Della Vigna, David Chreng, Peter Hackworth and Duncan Milligan.

Italy's Eni also won praise, and a "buy" recommendation, for its ongoing transformation into a higher return business "driven by exploration success, disposals and project start ups." Shell was also handed a "buy" rating on the expectation it would continue to focus on capital efficiency that should deliver a free cash flow turnaround "to support a 7% 2017 dividend yield.

Total shares traded Thursday at €43.02 ($48.92), marginally lower than their Wednesday close and 35% below Goldman Sach's 12-month target price of €58. Eni stock was unchanged at €13.19, leaving it 29% below the analysts' target price of €17. Shell was down 1% Thursday at 2,071 pence ($26.77), a 20% discount to its target of 2,490 pence.

Oil majors second quarter earnings are likely to show a sharp quarter-on-quarter dip in the second quarter after oil prices fell 7% lower. The year-on-year comparison should prove rosier though with oil prices averaging about 8% higher compared to the second quarter of 2016.

Global benchmark Brent Crude futures for delivery in September traded Thursday at $47.31, down nearly 1%. U.S. benchmark West Texas Intermediate futures for delivery in August were at $45.13, down 0.8%.

Refining margins at the integrated oil companies are likely to prove a highlight over the second quarter. Goldman expects average refining margins to have improved about 21% year-on-year, though warned that Petrochemical margins probably deteriorated, led by a 25% margin decline in the U.S.

Total and Shell are due to release their second quarter results on July 27, a day ahead of Eni. 

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