22/08/2017 – News / Total / Maersk / Oil & Gas
Total acquires Maersk Oil in $7.45bn share and debt transaction
Total has confirmed acquisition of 100 per cent of the equity of the E&P company Maersk Oil & Gas A/S (Maersk Oil) – a wholly owned subsidiary of A.P. Møller – Mærsk A/S – in a share and debt transaction.
Commenting on the transaction, Patrick Pouyanne, Chairman and CEO said the transaction delivered on “an exceptional opportunity” for Total to acquire, via an equity transaction, a company with high quality assets that provide “an excellent fit” with many of the French oil major’s core regions. “The combination of Maersk Oil’s North Western Europe businesses with our existing portfolio will position Total as the second operator in the North Sea with strong production profiles in UK, Norway and Denmark, thus increasing exposure to conventional assets in OECD countries. Internationally, in the US Gulf of Mexico, Algeria, East Africa, Kazakhstan and Angola, there is an excellent fit between Total and Maersk Oil’s businesses allowing for value accretion through commercial, operating and financial synergies,” he enthused.
“We are also very pleased that we will have a new anchor point in Denmark, which will host our North Sea Business Unit and supervise our operations in Denmark, Norway and the Netherlands,” Mr Pouyanne continued. “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.”
Under the agreed terms, A.P. Møller – Maersk will receive a consideration of US$4.95bn in Total shares and Total will assume US$2.5bn of Maersk Oil’s debt. Total will issue to A.P. Møller – Maersk A/S, 97.5 million of shares, based on the average Total share price on the 20 business days prior to the date of signing (21st August) which will represent 3.75 per cent of the enlarged share capital of Total. Underpinning this share-based partnership, subject to Total shareholders’ approval, Total has also offered the possibility of a seat on its Board of Directors to A.P. Møller Holding A/S, the main shareholder of A.P. Møller – Mærsk.
The proposed transaction is subject to the applicable legally required consultation and notification processes for employee representatives and to approvals by the relevant regulatory authorities. The transaction is expected to close in first quarter 2018 and has an effective date of 1st July 2017.
Major boost to Total’s upstream business
The combination with Maersk Oil is expected to offer Total an exceptional overlap of upstream businesses globally to enhance Total’s competitiveness and value in several core areas. Specifically the transaction will bring Total around 1 billion boe of 2P/2C reserves – 85 per cent of which are in OECD countries (more than 80 per cent in the North Sea), helping Total’s continuous to balance out the country risks of its portfolio.
The new deal will also deliver an additional 160 kboe/d of mainly liquids production in 2018, acquired at an average price of 46 k$/boepd, offering high margins with an estimated free cash flow break-even of less than US$30 per barrel and growing to more than 200 kboe/d by the early 2020s to further strengthen Total’s production growth outlook.
On top of that, Total expects to generate operational, commercial and financial savings amounting to more than US$400m per year, in particular by the combination of assets of Total and Maersk Oil in North Sea.
“By adding such a portfolio of growing conventional offshore North Sea assets, we confirm our strategy for value creation of, on the one hand, playing to our core strengths in order to grow further and, on the other hand, to constantly seek to lower our break-even by delivering significant synergies,” concluded Mr Pouyanné. “This transaction will deepen and accelerate this strategy significantly, as Total will become a 3 Mboe/d major by 2019 to the benefit of all Total shareholders.”