Published: Mon, August 21, 2017
Markets | By Lucia Cruz

Maersk to sell oil, gas business to Total

Maersk to sell oil, gas business to Total

By selling to Total, we ensure a continued Danish stronghold in the North Sea based on Maersk Oil's leading position within technology development and its track record as a lean, efficient and trusted partner.

"We had the feeling that on the North Sea, we had to go a step further to be more competitive", Pouyanne said on a call with reporters. Total and other big oil companies say they have reduced their costs enough to generate cash at prices at current levels around $50 a barrel, giving them flexibility to grow with acquisitions.

Total will gain about one billion boe in proven and estimated reserves, more than 80 per cent of it under the North Sea, it said.

Total will maintain Maersk Oil's strong position in the North Sea with Copenhagen and Esbjerg bases and with Denmark being the operating hub for Total's combined operations in Denmark, Norway and the Netherlands.

The takeover is the latest example of consolidation in the North Sea and comes as the industry continues to grapple with the prolonged weakness in crude prices that began three years ago.

Maersk lost out to Total in June, when the French company won a 30 per cent stake in a 25-year agreement to operate Qatar's largest offshore field, Al Shaheen, which is currenlty run by Maersk and whose license expires this year.

Under the terms of the deal, AP Moller Maersk will get $4.95bn in Total shares with Total acquiring $2.5b of Maersk Oil's debt.

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Total is pleased to announce that the Boards of Total and A.P. Møller – Mærsk have both approved the acquisition of 100% of the equity of the E&P company Maersk Oil & Gas A/S (Maersk Oil), a wholly owned subsidiary of A.P. Møller – Mærsk A/S, by Total in a share and debt transaction.

"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.

Maersk will retain an interest in the sector through 97.5 million shares in the French energy group, equal to approximately 3.76% of Total.

The deal will also see Total take over operatorship and 31.2% ownership of the DUC producing assets in Denmark.

The deal with Total is expected to be completed sometime in early 2018 - pending approval from the competition authority.

The transaction is expected to close in the first quarter 2018.

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