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Total divests assets in the UK to Petrogas for US$635 mln

Jul 10, 2019
3 min read
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Total has signed an agreement to divest several UK non-core assets to Petrogas, the exploration and production arm of the Oman-based conglomerate MB Holding and Norway's HitecVision, for US$635 million.

Petrogas has partnered with Norway-based private equity investor HitecVision.  The deal is the latest example of the Majors divesting non-core UK assets to private equity-backed companies and independents expanding their presence in the UK upstream sector.

Formerly owned by Maersk Oil, these assets are located in the Eastern North Sea and include the fields listed below. The overall consideration for this deal amounts to US$635 million with an effective date of January 1, 2019. The transaction remains subject to approval from the relevant authorities and is expected to close in December 2019.

This transaction is consistent with our portfolio management strategy, aiming at lowering our break-even point by optimising capital allocation and divesting high technical costs assets. Our primary objective is to maintain the organic break-even before dividend below $30 per barrel and high-grading our portfolio will help us achieve this, commented Arnaud Breuillac, President Exploration & Production at Total.

Ross Cassidy, a senior research analyst on Wood Mackenzie’s North Sea team said: “The key asset in the package is the CNOOC- operated Golden Eagle field, which accounts for over half of this year’s expected production and most of the remaining value. The field is expected to produce to 2030. Several of the fields are due to cease production by 2025 and have near-term decommissioning liability. The new operator will no doubt aim to extend the life of these fields with fresh investment.”

Liam Yates, from Wood Mackenzie’s Middle East upstream team talked about MB Holdings, a family-run Omani company.

“This deal transforms its production profile, remaining reserves and value. It has a strategy of expanding overseas and the North Sea is becoming a core area of focus. Petrogas specialises in mature, producing assets where it can leverage its subsurface expertise to increase production. It also operates in Egypt, Denmark, and Germany.”

List of assets included in the transaction

Area

Field

Interest sold

Operator

UK

Dumbarton

100%

TOTAL

Balloch

100%

Lochranza

100%

Drumtochty

100%

Flyndre

65.94%

Affleck

66.67%

Cawdor

60.6%

GoldenEagle

31.56%

CNOOC

Scott

5.16%

Telford

2.36%

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