TOTAL TO BUY MAERSK OIL UNIT
French oil group Total SA has struck a $4.95 billion deal to acquire Danish conglomerate A.P. Moeller-Maersk A/S’s oil unit, report Sarah Kent and Dominic Chopping.
The deal, which would make Total northwest Europe’s second-largest offshore operator, should add 160,000 barrels a day to its production in 2017 and large volumes to its reserve base in the North Sea. The agreement would also have an immediate positive impact on earnings and cash flow per share, Total said.
“The deal is the latest sign of consolidation in the oil-and-gas industry, which is only now coming to grips with a prolonged and pain ful downturn,” Ms. Kent and Mr. Chopping note.
As part of the deal, Total would assume $2.5 billion of Maersk Oil’s debt.
SEMPRA CLINCHES DEAL TO ACQUIRE ONCOR
Sempra Energy outmaneuvered Berkshire Hathaway on Sunday and reached to a deal to buy Oncor for $9.45 billion, report Dana Mattioli and David Benoit.
Berkshire had agreed in July to acquire the Texas-based utility company for $9 billion but faced opposition from powerful activist investor Elliott Management Corp. The hedge fund is expected to support the deal with Sempra.
Oncor’s bankrupt parent company, Energy Future Holdings, had struck two earlier deals to sell Oncor but those were blocked by Texas regulators. Both a regulators and a bankruptcy judge would need to approve the Sempra deal.
The agreement “would be the latest twist in the long-running saga of Energy Future, formerly TXU, which was the biggest buyout in history but ran into trouble with a heavy debt burden. The company has been trying to sell its 80% stake in Oncor, its crown jewel, to pay back creditors,” write Ms. Mattioli and Mr. Benoit.
SMALLER OIL PLAYERS FORGO SHALE
A growing number of small- and mid-sized oil companies are passing on expensive shale drilling projects in favor of conventional wells, reports Lynn Cook.
With crude prices in the U.S. under $50 a barrel, most producers are losing money on each barrel they pump. As a result, some firms are applying newer technologies to vertical wells in old U.S. oil fields, spending less than $1 million as opposed to between $6 million and $8 million for an average shale well.
“As a result, smaller outfits drilling traditional wells in and around California and Oklahoma say they can make the investments work even at $10 to $30 a barrel,” writes Ms. Cook.
Oil prices presented a mixed picture Monday morning, as investors awaited the results of an OPEC meeting today and new data later this week on U.S. inventory levels.
Brent crude, the global benchmark, was down 0.21%, at to $52.60 a barrel in London midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.23%, at $48.62 a barrel.
The Organization of the Petroleum Exporting Countries was set to hold a technical meeting in Vienna Monday to discuss compliance levels with the cartel’s production cut deal.
Investors Monday were also looking ahead to see whether weekly U.S. data on Wednesday would confirm a further drawdown in U.S. crude stocks.