France’s Total acquiring Maersk Oil in deal worth $7.45bn

France's Total acquiring Maersk Oil in deal worth $7.45bn

The deal will see shipping and energy giant Maersk take $4.95bn in Total shares and around Total take on around $2.5bn of Maersk Oil’s short-term debt.

Shipping and energy giant AP Moller-Maersk has agreed to sell its oil and gas division to Total in a share and debt deal worth $7.45 billion (£5.79 billion).

The deal, which includes all of its energy-related business, including oil and gas assets and the drilling and tanker units, will see Maersk take $4.95 billion (£3.85 billion) in Total shares and Total will also take on around $2.5 billion of Maersk Oil’s short-term debt.

Total has also agreed to take on all of Maersk’s decommissioning obligations, currently valued at $2.9 billion.

Total said it expects to realise operational, commercial and financial synergies “of more than $400 million” (£301.7 million) per year in particular by the combination of assets of Total and Maersk Oil in North Sea, an area of excellence for both companies”.

Patrick Pouyanné, chairman and chief executive of Total said: “By adding such a portfolio of growing conventional offshore North Sea assets, we confirm our strategy for value creation of, on the one hand, playing to our core strengths in order to grow further and, on the other hand, to constantly seek to lower our break-even by delivering significant synergies.

“This transaction will deepen and accelerate this strategy significantly, as Total will become a 3 Mboe/d major by 2019 to the benefit of all Total shareholders.”

Maersk Oil has producing assets in the UK, Norway, Kazakhstan, the Gulf of Mexico and Algeria and exploration activities ongoing in the Kurdistan Region of Iraq, Kenya, Angola and Brazil.

The deal includes Maersk’s 49.99 per cent stake in the Culzean gas field in the UK North Sea, in which BP holds 32 per cent and JX Nippon holds 18.1 per cent.

Culzean, which was discovered in 2008, is believed to hold around a quarter of billion barrels of oil equivalent, and at its peak, expected in 2020, is expected will produce enough gas to meet five per cent of total UK demand.

AP Moller-Maersk unveiled plans last September to offload its energy division, which employs around 800 staff in Aberdeen, to focus on transport and logistics.

Under the terms of the deal with Total, Maersk will receive 97.5 million shares in Total S.A. with a value of $ 4.95 billion, equating to to approximately 3.76 per cent of Total S.A.

The Danish group said subject to meeting its investment grade objective, it plans to return “a material portion of the value of the received Total S.A. shares” to its shareholders during the course of 2018/19 in the form of extraordinary dividend, share buyback and/or distribution of Total S.A. shares.

Maersk estimates the transaction gain after tax amounts to $2.8 billion (£2.1 billion).

The transaction remains subject to regulatory and other approvals, though both sides expect the deal will complete in Q1 of 2018.

Total’s Pouyanne, said: “This transaction delivers an exceptional opportunity for Total to acquire, via an equity transaction, a company with high quality assets which are an excellent fit with many of Total’s core regions.

“The combination of Maersk Oil’s North Western Europe businesses with our existing portfolio will position Total as the second operator in the North Sea with strong production profiles in UK, Norway and Denmark, thus increasing exposure to conventional assets in OECD countries.

“Internationally, in the US Gulf of Mexico, Algeria, East Africa, Kazakhstan and Angola there is an excellent fit between Total and Maersk Oil’s businesses allowing for value accretion through commercial, operating and financial synergies.”

He added: “We are also very pleased that we will have a new anchor point in Denmark which will host our North Sea Business Unit and supervise our operations in Denmark, Norway and the Netherlands.

“We intend to build on the strong operational and technical competencies of the Maersk Oil teams in the same way we managed to do it in Belgium with the teams of Petrofina in the refining & chemical businesses.”

 

Share