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Total to Buy Maersk's Oil and Gas Business for $4.95 Billion

Total to Buy Maersk's Oil and Gas Business for $4.95 Billion

Total SA has agreed to buy the oil and gas unit of A.P. Moller-Maersk A/S for $4.95 billion, another sign that the pace of deals in the energy sector is accelerating after a long downturn.

The Maersk assets will boost the French giant's business in the North Sea, adding to deals earlier this year that expanded its presence in Uganda and Brazil.

Maersk Oil will be sold to French competitor Total in a deal which values the oil company at Dollars 7.45 billion, states Maersk Group in a press release. 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.

Pouyanne also added that Maersk Oil will "create a leading worldwide operator in the North West European offshore region, making Denmark a regional anchor point for Total's North Sea business". Today, the company said in its presentation about the deal with Total that "it has been seeking sustainable structural solutions for its energy-related businesses that will enable it to separate them from the group" and that this is a "major first step in this separation agenda". The latter's parent, AP Moller-Maersk will receive $4.95bn in the form of Total shares, representing a 3.75% stake in the French major, and Total will also assume $2.5bn of Maersk Oil's debt.

Consultancy Wood Mackenzie (Woodmac) said the transaction was the biggest North Sea-weighted deal since Statoil merged with Norsk Hydro in 2006.

In addition, the acquisition allows Total to gain a stronger position in the U.S. Gulf of Mexico, where the two now jointly develop hydrocarbons in the Wilcox Formation, and strengthen its position in Algeria. As part of the deal, which is expected to be completed in the first three months of 2018, the France-based company will also take over all decommissioning obligations now amounting to $2.9bn.

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FILE - In this October 23, 2013, file photo of A.P. Moller-Maersk's oil rig in the North Sea named Halfdan.

"In the U.K.in particular, we have two operations of similar size". The deal is expected to close in the first quarter of 2018 and take effect on July 1, Total said.

As a outcome of the transaction Maersk Oil will be classified as held-for-sale and discontinued operations in the Interim Report Q3 2017 for APMM.

It added the financial guidance for 2017 remains unchanged except for the effect of the reclassification of Maersk Oil.

"It will further shift Total's weighting towards OECD regions, a core strategic driver for the company as it looks to balance the portfolio away from areas of high above ground risk", said a WoodMac director Valentina Kretzschmar.

Maersk is now developing the Culzean gas field which is expected to start production in 2019 and which could supply up to 5 percent of Britain's gas demand.

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