Sale of Maersk Oil & Gas to Total approved by Danish government

Sale of Maersk Oil & Gas to Total approved by Danish government

On 2 March 2018, the Danish Energy Agency issued its approval of A.P. Moller-Maersk A/S’s sale of Maersk Oil & Gas A/S to Total. The Danish Energy Agency’s approval of the transfer contains conditions, including that A.P. Moller-Maersk, as seller, assumes a secondary liability for the decommissioning of existing Danish offshore facilities corresponding to Maersk Oil’s 31.2% interest in the Danish Underground Consortium, should Total be unable to cover such costs.
On 21 August 2017, A.P. Moller-Maersk A/S announced the sale of Maersk Oil & Gas A/S to Total for a total US$ 7.45 billion in shares and debt. Under the agreed terms, A.P. Moller-Maersk will receive a consideration of US$ 4.95 billion in Total shares and Total will assume US$ 2.5 billion of Maersk Oil’s debt. Total will issue to Moller-Maersk, 97.5 million Total shares (based on the average Total share price on the 20 business days prior to 21 August 2017) which represents 3.75% of the enlarged share capital of Total.
Total said Maersk Oil brings to Total the following:
• Proved plus probable reserves (2P) and resources (2C) of approximately 1 billion barrels of oil equivalent (boe), 85% of which are in OECD countries (more than 80% in the North Sea).
• The addition of 160,000 boe/d of mainly liquids production in 2018, acquired at an average price of US$ 46,000 per boe/d, offering high margins with an estimated free cash flow break-even of less than US$ 30/barrel and growing to more than 200,000 boe/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 US$ 400 million per year, in particular by the combination of assets of Total and Maersk Oil in the 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.

Maersk Oil production comes from Denmark, UK, Norway, Kazakhstan, US Gulf of Mexico and Algeria. Exploration and development activities are on-going in Angola, Kenya, Brazil, Kurdistan in Iraq and in above producing countries. As at 31 December 2016, Maersk Oil proved plus probable reserves were reported to be 550 MMboe.

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New Treaty to Define Timor Leste & Australian Maritime Boundary

New Treaty to Define Timor Leste & Australian Maritime Boundary

In a press release dated 26 December 2017, Permanent Court of Arbitration on behalf of the Conciliation Commission conducting arbitration into the defining of a maritime boundary between Timor Leste and Australia, said that the two countries and the Greater Sunrise Joint Venture (GSJV) had agreed the signature of a maritime boundary treaty in early March 2018.
On 30 August 2017, the governments of Timor Leste and Australia reached agreement on a Comprehensive Package Agreement regarding maritime boundaries in the Timor Sea. This agreement was formalised into a draft treaty and initialled by each government in October 2017 in The Hague.

Timor Leste Maritime boundary

Timor Leste Maritime boundary



In broad terms, the draft treaty delimits the maritime boundary between Timor Leste and Australia in the Timor Sea and establishes a Special Regime for the area comprising the Greater Sunrise Complex (GSC). The draft treaty also establishes revenue sharing arrangements where the shares of upstream revenue allocated to each country will differ depending on downstream benefits associated with the different development concepts for the GSC.
The GSJV operates the GSC which currently straddles the Australia and Joint Petroleum Development Area (JPDA) boundary in the ratio 79.9:20.1 in favour of Australia. The GSC includes the Sunrise, Sunset and Troubadour Fields. Sunrise was discovered in 1974 which means the discovery and associated fields have been stranded for some 40 years. In 2010, the GSC total contingent resource was independently certified to be 5.13 trillion cubic feet of dry gas and 225.9 million barrels of condensate. The GSC joint venture comprises: Woodside (operator 33.44%), ConocoPhillips (30%), Shell (26.56%), and Osaka Gas (10%).