Total to take over Maersk Kenya oil stake in global deal

What you need to know:

Assets of Maersk Oil will be sold for $7.45 billion (about Sh768 billion) in a global deal.
Total, with a significant stake in Uganda oil, said the acquisition would bolster its position in Kenya.
In 2015 Maersk Oil acquired 25 per cent of the promising northern Kenya exploration licences from Africa Oil Corporation.

French oil giant Total will acquire Maersk Oil significant northern Kenya upstream assets, solidifying its regional petroleum interests.

The assets of Maersk Oil, a unit of the Danish shipping giant A.P. Moller-Maersk, will be sold for $7.45 billion (about Sh768 billion) in a global deal.

Total, with a significant stake in Uganda oil, said the acquisition would bolster its position in Kenya. The deal is also expected to bolster Total’s operations in Kazakhstan, the Gulf of Mexico and Algeria, it added.

“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,” chief executive Patrick Pouyanne said in a statement.

In 2015 Maersk Oil acquired 25 per cent of the promising northern Kenya exploration licences from Africa Oil Corporation.

The deal brought in Maersk as a partner in blocks 10BB, 13T and 10BA where it would own 25 per cent interest, scaling down Africa Oil stake to 25 per cent while Tullow retained a 50 per cent interest. At completion, Africa Oil received $427 million (Sh44 billion) from Maersk.

READ: Maersk Oil to focus on Kenya after Qatar contract loss

On Monday, the company said the Maersk Oil buyout would make Total the second-largest operator in the North Sea, with substantial operations in Britain, Norway and Denmark.

Total will pay for the company with $4.95 billion (about Sh510 billion) in Total shares, while taking on $2.5 billion (about Sh257 billion) of Maersk Oil debt.

The boards of both companies have approved the deal.

Mr Pouyanne said that once completed in the first quarter of 2018, the deal would generate some $400 million (about Sh41.2 billion) in cost savings each year, which would help immediately increase the combined group’s cash flow and earnings a share.