Total to buy Maersk Oil for $5 billion

File Image a typical offshore North Sea installation

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.

The boards of Total and A.P. Møller-Mærsk, the parent company of Maersk Oil, have approved the purchase. Shares in AP Moller-Maersk closed up 2.9 percent at 13,170 Danish kroner on the Copenhagen Stock Exchange, while Total's share price in Paris ended 0.3 percent higher at 42.78 euros. There is no lock-up on the shares it will own in Total.

French supermajor Total said Monday it would become the second-largest operator in northwest Europe through a deal to acquire Danish producer Maersk Oil.

The deal will help Total bolster its position among the world's largest oil companies, potentially boosting its earnings and cash flow and shoring up its ability to pay dividends. The contract is for Maersk Oil's well abandonment campaign in the Central North Sea and Coretrax will provide wellbore abandonment services including bridge plugs, drillable scrapers, service tools and wellbore clean up fluids.

This will give Total another foot into the North Sea, using Denmark as a regional hub for its operations in the region. It is expected to close in the first quarter of next year.




Total said it should be able to produce more than $400 million per year in cost cuts and "financial synergies" once the companies combine.

"Companies [are] managing the effects of lower oil prices by reducing their portfolios or seeking economies of scale", says the Financial Times. In recent days, prices have been around $50 per barrel. "This deal demonstrates Total's purchasing power and free cash flow", said Mr Brenac.

The deal is subject to regulatory approval from relevant authorities including the Danish energy minister and competition authorities as well as required consultation and notification processes with Total's employee representatives. Total will also take on some $4.9bn worth of decommissioning liabilities.

"This may not be the final word from Total", he said.

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