Occidental Petroleum announced that, in connection with its proposal to acquire Anadarko Petroleum, it has entered into a binding agreement to sell Anadarko’s Algeria, Ghana, Mozambique and South Africa assets to Total for US$8.8 billion.
The sale is contingent upon Oxy's bid for Anadarko being successful. The acquisition of Anadarko and approvals by the relevant authorities is expected to close in 2020.
The assets to be sold to Total represent 6 per cent of the expected net production and 7 per cent of the cash flow after capital expenditures of Occidental in 2020 pro forma for the acquisition of Anadarko.
Oxy said that the proceeds of the sale of these high quality non-strategic assets covers a portion of the cash consideration to fund the proposed acquisition of Anadarko. The sale fast-tracks the divestiture plan previously described by Occidental, delivering on the majority of the $10 to $15 billion of planned asset sales. It also reduces the overall integration demands of the acquisition.
“We are pleased to have secured this agreement with Total. The $8.8 billion value to be received for Africa represents an attractive value based on our extensive evaluation over the last 18 months. Given our long history of working together productively, I am confident we can execute this sale quickly and efficiently,” said Occidental President and CEO Vicki Hollub.
“If completed, the acquisition of Anadarko by Occidental offers us the opportunity to acquire a world class portfolio of assets in Africa, further enhancing our position as the leading IOC on the continent. We would be able to leverage our expertise in LNG by operating a major project in Mozambique and in Deepwater in Ghana and we would become operator of major Algerian oil assets where we are already a partner. We would also be able to generate value through adding volumes to our growing LNG portfolio where we are already the 2nd largest private player,” said Patrick Pouyanne, Chairman and CEO Total.
Wood Mackenzie research director Nicholas Browne comments on what this means for Total: "The potential acquisition of Anadarko's stake in Mozambique LNG is representative of Total's ambitious and aggressive expansion of its LNG position. It acquired Engie's LNG business in 2018 and has a plethora of pre-FID opportunities which it is aiming to sanction within the next two years. Total also has stakes in Russia's Arctic LNG-2, Papua LNG, Nigeria's NLNG 7, the Cameron LNG expansion and Tellurian, which is developing the Driftwood project in the US. It is seeking to participate in the Qatari megatrain expansion. Finally, Total recently signed a preliminary contract for LNG from Costa Azul in Mexico, in addition to an additional offtake contract from Tellurian."