Total Acquires Maersk Oil for $7.45 Billion in a Share and Debt Transaction
August 21 2017 - 3:07AM
Business Wire
Regulatory News:
Total (Paris:FP) (LSE:TTA) (NYSE:TOT) is pleased to announce
that the Boards of Total and A.P. Møller – Mærsk have both approved
the acquisition of 100% 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, by Total in a share and debt transaction.
Under the agreed terms, A.P. Møller – Maersk will receive a
consideration of $4.95 billion in Total shares and Total will
assume $2.5 billion of Maersk Oil’s debt. Total will issue to A.P.
Møller – Maersk A/S, 97.5 million of shares, based on the average
Total share price on the 20 business days prior to August, 21
(signing date) which will represent 3.75% of the enlarged share
capital of Total. Underpinning this share based partnersip, subject
to Total shareholders’ approval, Total has also offered the
possibility of a seat on its Board of Directors to A.P. Møller
Holding A/S, main shareholder of A.P. Møller – Mærsk.
The proposed transaction is subject to the applicable legally
required consultation and notification processes for employee
representatives and to approvals by the relevant regulatory
authorities. The transaction is expected to close in first quarter
2018 and has an effective date of 1st July 2017.
The combination with Maersk Oil offers Total an exceptional
overlap of upstream businesses globally which will enhance Total’s
competitiveness and value in many core areas, in particular through
some high quality growing assets and through the delivery of
synergies. Specifically the transaction will bring the following
benefits to Total:
- Around 1 billion boe of 2P/2C reserves,
85% of which are in OECD countries (more than 80% in the North
Sea), contributing to Total’s continuous balancing of country risks
of its portfolio to enhance shareholder value
- The addition of 160 kboe/d of mainly
liquids production in 2018, acquired at an average price of 46
k$/boepd, offering high margins with an estimated free cash flow
break-even of less than $30 per barrel and growing to more than 200
kboe/d by the early 2020’s further strengthening Total’s leading
production growth outlook
- Total expects to generate operational,
commercial and financial synergies of more than $400 million per
year, in particular by the combination of assets of Total and
Maersk Oil in North Sea, an area of excellence for both
companies
- The transaction is immediately
accretive to both earnings and cash flow per share underpinning
Total’s dividend profile.
At closing of the transaction, in order that Total’s
shareholders benefit from the accretive impact of the acquisition
of Maersk Oil on earnings and cash flow, the Board of Directors of
Total will consider removing the discount offered on the scrip
dividend.
Commenting on the transaction, Patrick Pouyanne, Chairman and
CEO said, “This transaction delivers an exceptional opportunity for
Total to acquire, via an equity transaction, a company with high
quality assets which are an excellent fit with many of Total’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.
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. 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."
Patrick Pouyanné concluded : “This transaction is immediately
accretive to both cash flow and earnings per share and delivers
further growth over coming years. It is in line with our announced
strategy to take advantage of the current market conditions and of
our stronger balance sheet to add new resources at attractive
conditions. 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. 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.”
Key Themes of Transaction
Acquisition transforms Total’s North West Europe outlook.
- This transaction 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.
- 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.
- 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. Maersk Oil has been the leading operator in
Denmark for almost 50 years. The pooling of Total’s and Maersk
Oil’s technology and operating expertise will optimize the long
term value potential of the DUC assets to the benefit of Denmark
and Total shareholders.
Excellent overlap internationally enhances Total’s regional
businesses.
- The transaction also will strengthen
other core Total regional businesses due to clear complementary
positions between Total and Maersk Oil including:
- consolidating Total’s US Gulf of Mexico
presence with the Maersk Oil interest in the Jack development in
the Wilcox formation
- becoming the second largest IOC in
Algeria by production
- complementing Total’s leading East
Africa position via Maersk Oil’s Kenya assets
- strengthening of Total’s Kazakh
business via addition of operated production
- benefiting of potential upsides in
Angola and Brazil
- pooling of Total and Maersk Oil
geological and operational expertise in Middle East - North Africa
Region.
-- -- --
To listen to Chairman and CEO Patrick Pouyanné’s live webcast at
13:00 today (London time) please log on to total.com or call +44
(0) 20 3427 1909 in Europe or +1 212 444 0896 in the United States
(code: 5091367). For the replay, please visit the website or call
+44 (0) 207 984 7568 in Europe or +1 719 457 0820 in the United
States (code: 5091367).
* * * *
About Total
Total is a global integrated energy producer and provider, a
leading international oil and gas company, and a major player in
solar energy with SunPower and Total Solar. Our
98,000 employees are committed to better energy that is safer,
cleaner, more efficient, more innovative and accessible to as many
people as possible. As a responsible corporate citizen, we focus on
ensuring that our operations in more than 130 countries worldwide
consistently deliver economic, social and environmental benefits.
total.com
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This press release, from which no legal consequences may be
drawn, is for information purposes only. The entities in which
TOTAL S.A. directly or indirectly owns investments are separate
legal entities. TOTAL S.A. has no liability for their acts or
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are sometimes used for convenience where general references are
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“we”, “us” and “our” may also be used to refer to subsidiaries in
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This document may contain forward-looking information and
statements that are based on a number of economic data and
assumptions made in a given economic, competitive and regulatory
environment. They may prove to be inaccurate in the future and are
subject to a number of risk factors. Neither TOTAL S.A. nor any of
its subsidiaries assumes any obligation to update publicly any
forward-looking information or statement, objectives or trends
contained in this document whether as a result of new information,
future events or otherwise.
This press release contains information that was designated as
inside information until its publication as per the definition of
Article 7 of regulation (UE) 596/2014.
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version on businesswire.com: http://www.businesswire.com/news/home/20170821005282/en/
TotalMike SANGSTERNicolas FUMEXKim HOUSEGORomain RICHEMONTTel. :
+ 44 (0)207 719 7962Fax : + 44 (0)207 719 7959orRobert HAMMOND
(U.S.)Tel. : +1 713-483-5070Fax : +1 713-483-5629
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