Total to buy Maersk's North Sea assets in £5.8bn deal
- Author: Wendy Palmer Aug 22, 2017,
Aug 22, 2017, 0:50
Maersk has been the main operator in the Danish North Sea for half a century, establishing and maintaining Denmark's position as self-sufficient within oil and gas.
"In determining the best future ownership structure for Maersk Oil, it has been imperative for us that the capabilities and assets created in Maersk Oil continue to be developed, and that long-term investments are upheld, especially in the Danish part of the North Sea", said Maersk CEO Soeren Skou.
The transaction, expected to close in the first quarter of 2018, is subject to regulatory approval from the Danish Minister of Energy and a consultation process with Total employees.
Under the deal to acquire Maersk, Total could be the second-largest offshore operation in northwest Europe, which is the seventh largest oil and gas producing region in the world. 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. The French company is coming off a strong quarter, with adjusted net income growing by 13 percent from past year to $2.5 billion.
Total said on Monday it would pay for all of Maersk Oil in shares, giving Maersk's parent group a 3.75 per cent stake in the Paris-listed oil company. So far this year, deals in North America have totaled $73.2 billion, more than in all of 2016, according to data from Edinburgh-based consultancy Wood Mackenzie.
Total said the acquisition would bolster its positions in the Gulf of Mexico, Algeria, Kenya and Kazakhstan.
Brent crude, the worldwide oil price benchmark that sets prices in the North Sea region, was down 1.1 per cent to $52.13 a barrel, as traders took profits following a rally at the end of last week. The deal is expected to close in first-quarter 2018 with an effective date of July 1, Total said in an August 21 news release announcing the acquisition. Total will then have $2.5 billion in debt to fund the rest of the deal. "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". "There are 700 staff on both sides in Total UK and Maersk UK with more or less same size of assets", he said in the Reuters article. Maerk has operated Al Shaheen since 1992. Production is expected to start in 2019. It will operate more than 0.5 million BOE/D gross production in the region.