The Strategist

French Total to buy Maersk Oil for $ 7.45 bln

08/21/2017 - 15:35

French oil and gas company Total is buying Maersk Oil & Gas company, which is a subdivision of the Danish Moller-Maersk. The issue price will be $ 7.45 billion.

Total will take on Maersk Oil's debt obligations of $ 2.5 billion. The deal is scheduled to be closed in the first quarter of next year. Preliminary approval of the relevant regulatory bodies is required.

Purchase of Maersk Oil will allow Total to leverage competitiveness and profitability of the business due to qualitative growth of assets. This acquisition will increase reserves of the French oil and gas company by approximately 1 billion barrels of oil equivalent. More than 80% of them are located in the North Sea.

"This transaction will lead to an immediate increase in cash flow and earnings per share and will ensure further growth over the next years," says Total’s CEO Patrick Pouyanné.

Total expects that the synergistic effect of the transaction will amount to more than $ 400 million per year.

Leading oil companies of the world once again aimed at buying assets over the past year against the backdrop of signs of a recovery in the oil market.

BP announced a number of investments in the last two months of 2016, including allocation of $ 1 billion in partnership with Texas-based Kosmos Energy in Mauritania and Senegal in West Africa, as well as acquisitions in Abu Dhabi and Azerbaijan.

Total and Norwegian Statoil invested in Brazilian deep-water subsalt deposits, while ExxonMobil Corp acquired assets in Papua New Guinea in an attempt to meet the growing demand for liquefied natural gas in Asia.

In July, Total also said that it will invest $ 3.5 billion in Qatari oil field Al-Shahin within five years.

Earlier it was reported that Danish shipping and oil company A.P. Moller-Maersk has fallen victim of weak growth in the world economy and trade in recent years. In 2015, the concern had to devalue its oil assets by $ 2.5 billion. Maersk also stated that it had reduced its dividends for this year to 150 Danish kroner ($ 21.55) compared to dividends of 300 kroner last year.

Moller-Maersk was recently seriously affected by a cryptographic virus called NotPetya. The Danish company’s total loss amounted to $ 300 million. Among the units of Moller-Maersk, the main blow fell on the Maersk Line, engaged in the sea transportation of containers. Maersk Line, APM terminals and Damco, whose systems are connected to partner systems, had to shut down. On June 28, Moller-Maersk restored the IT infrastructure and on June 29 it took orders. From 3 to 9 July, Maersk Line, Damco and APM Terminals were gradually returning to normal operation.