Total to pay $7.45bn for Maersk Oil

Total has agreed to buy $7.45bn of mature oil exploration and production assets from Danish conglomerate AP Moller-Maersk, boosting the French oil group’s presence in the North Sea and rebalancing its portfolio in geopolitically stable countries. The deal highlights the impetus to consolidation in the European oil and gas industry, with companies managing the effects of lower oil prices by reducing their portfolios or seeking economies of scale.

Other deals have included the sale of French utility Engie’s exploration and production assets to Neptune, a private equity backed company, and Shell’s decision to sell North Sea assets to Chrysaor, another private equity backed group.

Total said 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. The purchase price includes $2.5bn of existing debt. Maersk Oil’s business is focused on the British, Norwegian and Danish North Sea, including an 8.4 per cent stake in Johan Sverdrup, the biggest North Sea find for decades.

It lost its stake in a huge oilfield in Qatar to Total last year. Maersk Oil had production last year of about 313,000 barrels of oil equivalent. The acquisition, which is expected to increase Total’s cash flow and earnings per share, “will enhance Total’s competitiveness” through “synergies” and will contribute to its “continuous balancing of country risks of its portfolio,” the company said. “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,” Total chief executive Patrick Pouyanné said in the statement.

Reporting forecast-beating second-quarter earnings last month, Total signalled it was ready to make acquisitions and invest in new projects while global assets were still cheap. About 46 per cent of its oil and gas production originates from the Middle East and Africa.

For Maersk, the sale is the first step in the Danish group’s move to break itself up and is likely to be the biggest single transaction. It is separating out all its energy-related businesses — which also include drilling rig and oil tanker units — to concentrate on transport and logistics, as the world’s largest container shipping line. It gave itself a two-year deadline last September to achieve the break-up through sales, stock market listings, or mergers.