Published: Tue, August 22, 2017
Money | By Oscar Reynolds

Total buys Maersk Oil for $7.45 Billion

Total buys Maersk Oil for $7.45 Billion

Total has swooped for Maersk Oil and Gas in a $7.45bn stock and debt transaction.

It will see Total seize control of Maersk Oil's assets in the UK's sector of the North Sea, including the Culzean gas field.

"With Maersk Oil's technical and operating competencies and Total's experience and strong financial position, we have an exceptional opportunity to boost the combined competitive position in several core upstream regions and deliver growth, value creation and career opportunities".

"Investors should however think of these as high-margin low-priced barrels" that will recoup costs even if the price of oil falls to $30 per barrel from its current level around $50.

The deal ranks among the largest that a super-major has done since oil prices crashed in 2014.

Maersk has a 8.44 percent stake in the giant Johan Sverdrup project led by Norway's Statoil (STL.OL) which is expected to start pumping 440,000 barrels per day in 2019, rising to 660,000 bpd by 2022.

Mr Brenac said that Total got a a good price for Maersk, with this deal representing a very conservative amount for the value.

Maersk, one of the biggest shipping companies in the world, is looking to streamline operations as it deals with fallout in both the oil/gas and shipping industries. BP Plc has offloaded assets including a $1.7 billion stake in a Chinese petrochemical venture and Shell exited its Irish venture for $1.2 billion. The transaction is "timely and opportune" with Brent crude, the worldwide benchmark, trading at about $52 a barrel, he said.

The Danish business will also bring in some 1 billion barrels of oil equivalent in proven and probable reserves, the bulk of them in the North Sea. The company, with operations in the U.S., Kazakhstan, Algeria, Qatar, and Kurdistan, besides the North Sea, said its average daily production stood at 284,000 barrels of oil equivalent daily.

Pouyanne said that Total had proposed a deal to Maersk as an alternative to floating the business.

There is still cause for caution. "This deal demonstrates Total's purchasing power and free cash flow", said Mr Brenac. "At the end of the day, we will have the opportunity to do some rationalization", Pouyanne said.

The deal illustrates Total's strategy of using a strong balance sheet to acquire attractive assets from competitors having emerged from the prolonged oil downturn stronger than some of its rivals. Meanwhile, Total shares were down 0.64% to change hands at €42.39. That will make the Danish company the second-largest investor in the French giant, according to data compiled by Bloomberg.

"For Total, the deal is first and foremost about consolidation in the North Sea".

The takeover of Maersk Oil requires Total employee representatives' shareholders' and regulatory approval.

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