Maersk to sell oil, gas business to Total

Aug 21, 2017, 20:32
Maersk to sell oil, gas business to Total

It will see French firm Total take control Denmark's Maersk's assets in the United Kingdom sector of the North Sea, including the Culzean gas field. "Some of Maersk North Sea technology can be useful in the Middle East, such as the tools for drilling and extracting from chalk areas", he said.

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 also assume almost $3 billion in expected costs for decommissioning oil rigs in the North Sea. Crude oil prices remain stuck at about $50 a barrel - half the level three years ago - and some notable traders see the the outlook for 2018 weakening. That will make the Danish company the second-largest investor in the French giant, according to data compiled by Bloomberg.

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French supermajor Total said Monday it would become the second-largest operator in northwest Europe through a deal to acquire Danish producer Maersk Oil. As part of the deal, which is expected to be completed in the first three months of 2018, the France-based company will also take over all decommissioning obligations now amounting to $2.9bn. Building on Maersk Oil's high safety standards, strong technological leadership, operational excellence and strong Danish heritage, we will intensify and accelerate the push to optimise and extend the Danish oil and gas production.

This deal "is in line with our announced strategy to take advantage of the current market conditions and of our stronger balance sheet to add new resources at attractive conditions", Total Chief Executive Patrick Pouyanne said. There is no lock-up on the shares it will own in Total. Total will thus pay a 3-percent interest rate of enterprise value from June 30 2017 until the deal is closed.

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Total's shares were down 0.06 per cent in evening trading while Maersk shares traded up by 2.89 per cent. It will also take over all decommissioning obligations, worth around $2.9 billion. Maersk shares were up around 3.4%.

The oil division of A.P. Moller-Maersk grew out of the split from the company previous year and it started 2017 by saying it was working to improve its efficiency under the reorganization by cutting about 160 positions.

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The deal is subject to regulatory approval and a consultation process with Total's employees. Total will update its company-wide cost-savings plan in mid-September, said Pouyanne.

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