French oil giant Total is set to acquire its Danish rival Maersk Oil and Gas for $7.45 billion dollars.
Danish Maritime giant Maersk A/S informed on Monday it had entered into an agreement to sell its subsidiary Mærsk Olie og Gas A/S to Total S.A. for $7.45bn in a combined share and debt transaction. This was also confirmed by Total in a separate statement.
Facts & figures
The agreement provides that A.P. Møller – Mærsk will receive the equivalent of $4.95 billion in Total shares equal to approx. 3.76% of Total S.A., and that Total will take over $2.5 billion of Maersk Oil debt.
Total S.A. will pay an interest of 3% p.a. of the enterprise value from June 30, 2017 and until closing of the transaction. They will take over all decommissioning obligations currently amounting to $2.9 billion.
Maersk Oil’s position in the North Sea will be maintained by Total S.A., with Copenhagen and Esbjerg bases and with Denmark being the operating hub for Total S.A.’s combined operations in Denmark, Norway and the Netherlands.
Maersk Oil acquisition is an exceptional opportunity
Patrick Pouyanné, Chairman and Chief Executive Officer of Total said: “This transaction represents an exceptional opportunity for Total to acquire, through a stock transaction, a company with high quality and complementary assets in many key regions where Total is already present. The integration of Maersk Oil’s activities will make Total the second largest operator in the North Sea, benefiting from major positions in the UK, Norway and Denmark, and will increase the share of conventional OECD assets in our portfolio.
Combining the highly complementary international activities of Total and Maersk Oil in the Gulf of Mexico in the United States, Algeria, East Africa, Kazakhstan and Angola will also create value through commercial, operational and financial synergies.”
According to the French company, the deal will make Total the second largest operator in the NW Europe offshore region which is the 7th largest oil and gas producing region globally. Post completion, Total will operate over 500 kboe/d (gross) production in this region.
Strengthening Total’s business
The transaction strengthens Total’s existing North Sea offshore producing business in UK and Norway. The addition of Maersk Oil’s world class assets, including the operated UK 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 Total’s production profile in these countries, Total said.
Furthermore, Total has pointed out that the transaction adds a new production hub with Maersk Oil’s operatorship and 31.2% ownership of the DUC producing assets in Denmark with net production in 2018 estimated at around 60 kboe/d.
Deal expected to be closed early 2018
The transaction is subject to regulatory approval from relevant authorities including the Danish Minister of Energy, Utilities and Climate and competition authorities as well as required consultation and notification processes with Total S.A.’s employee representatives.
Closing is expected to take place during Q1 2018. Calculated as of June 30, 2017, the transaction gain after tax for Maersk A/S amounts to $2.8 billion. The accounting gain will be recorded partly from earnings until closing and the residual at closing.
As a consequence of the transaction Maersk Oil will be classified as held-for-sale and discontinued operations in the Interim Report Q3 2017 for Maersk A/S. Maersk A/Sfinancial guidance for 2017 remains unchanged except for the effect of the reclassification of Maersk Oil, the company said.
Source: Offshore Energy Today – 21 August 2017