Maersk Oil sold to France's Total

Aug 21, 2017, 20:30
Maersk Oil sold to France's Total

The addition of Maersk Oils world class assets, including the operated United Kingdom gas field Culzean (49.99% Working Interest), close to the Elgin-Franklin hub operated by Total, and its stake in the giant Johan Sverdrup oil development (8.44% Working Interest) in Norway will bolster Totals production profile in these countries.

Freshfields Bruckhaus Deringer and Davis Polk & Wardwell are among the law firms advising on Total's $7.45bn (£5.79bn) acquisition of Maersk Oil.

Shares in Total initially fell, but by afternoon were up 0.3 percent at 42.76 euros per share while Paris's CAC 40 index was down 0.3 percent. Total will pay Møller $4.95 billion in Total shares - about 98 million shares, or 4 percent of Total - and assume $2.5 billion of Maersk Oil's debt. It will make the French oil company northwest Europe's second-largest offshore operator.

The sale in Moller-Maersk has been the first move in the company splitting up, with the sale of the oil and gas division likely to be the biggest transaction.

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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.

Total said the deal gives it around 1bn barrels of oil equivalent 2P/2C reserves to Total, 85% of which are in OECD countries (80% in the North Sea).

Total chief executive Patrick Pouyanné said "I welcome Maersk Oil to the Total family".

This acquisition will boost the oil giant's position among its competitors.

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In the USA, where small shale-oil producers have proved remarkably resilient to low oil prices, the sector has experienced a flurry of deals.

Total said it would acquire assets that could generate free cash flow even if crude oil prices drop below $30 per barrel. It will also take over all decommissioning obligations, worth around $2.9 billion.

Total will issue to Maersk 97.5 million shares, representing 3.75 percent of its enlarged share capital.

According to Maersk, the deal is subject to regulatory approval from relevant authorities and is expected to take place during the first quarter of 2018. Total will update its company-wide cost-savings plan in mid-September, said Pouyanne.

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