Technology

Total has announced that the Boards of Total and A.P. Møller – Mærsk have both approved the acquisition of 100 per cent of the equity of the E&P company Maersk Oil & Gas A/S (Maersk Oil) by Total in a  share and debt transaction  

Under the agreed terms, A.P. Møller – Maersk will receive a consideration of US$4.95bn in Total shares and Total will assume US$2.5bn of Maersk Oil’s debt. Total will issue to A.P. Møller – Maersk A/S, 97.5mn of shares, based on the average Total share price on the 20 business days prior to 21 August which will represent 3.75 per cent of the enlarged share capital of Total.  Underpinning this  share based partnersip, subject to Total shareholders’ approval, Total has also offered the possibility of a seat on its Board of Directors to A.P. Møller Holding A/S, main shareholder of A.P. Møller – Mærsk. 

The proposed transaction is subject to the applicable legally required consultation and notification processes for employee representatives and to approvals by the relevant regulatory authorities. The transaction is expected to close in first quarter 2018 and has an effective date of 1 July 2017. 

The combination with Maersk Oil offers Total an exceptional overlap of upstream businesses globally which will enhance Total’s competitiveness and value in many core areas, in particular through some high quality growing assets and through the delivery of synergies. Specifically the transaction will bring the following benefits to Total:

Around 1bn boe of 2P/2C reserves, 85 per cent of which are in OECD countries (more than 80 per cent in the North Sea), contributing to Total’s continuous balancing of country risks of its portfolio to enhance shareholder value

The addition of 160 kboe/d of mainly liquids production in 2018, acquired at an average price of 46 k$/boepd, offering high margins with an estimated free cash flow break-even of less than $30 per barrel and growing to more than 200 kboe/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 $400 million per year, in particular by the combination of assets of Total and Maersk Oil in 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.

At closing of the transaction, in order that Total’s shareholders benefit from the accretive impact of the acquisition of Maersk Oil on earnings and cash flow, the Board of Directors of Total will consider removing the discount offered on the scrip dividend.

Commenting on the transaction, Patrick Pouyanne, Chairman and CEO said, “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. The combination of Maersk Oil’s North Western Europe businesses with our existing portfolio will position Total as the second operator in the North Sea with strong production profiles in UK, Norway and Denmark, thus increasing exposure to conventional assets in OECD countries.  Internationally, in the US Gulf of Mexico, Algeria, East Africa, Kazakhstan and Angola there is an excellent fit between Total and Maersk Oil’s businesses allowing for value accretion through commercial, operating and financial synergies."

Dr Valentina Kretzschmar, director, corporate service, Wood Mackenzie said: “For Total, the deal is first and foremost about consolidation in the North Sea. Cost synergies should add value, with the North Sea a key area of overlap. The deal will also reduce Totals weighting towards areas of high above ground risk.”

Dr Kretzschmar added: “There are a number of strategic drivers at play here. The acquisition improves Total’s near-term growth outlook – it provides Total with an immediate 6 per cent production increase and strengthen near-term growth.

“It will further shift Total’s weighting towards OECD regions, a core strategic driver for the company as it looks to balance the portfolio away from areas of high above ground risk.”

Lundin Norway and DNV GL have developed the first step in a solution for predicting unplanned shutdowns of Lundin Norway’s Edvard Grieg production platform

Baker Hughes, a GE company, has announced the introduction of its CIRCA™ coiled tubing simulation software, which enables coiled tubing service providers to maximise equipment performance and improve operational efficiency in well interventions

Based on learnings from the field and built and refined over three decades, the software allows coiled tubing providers and operators to build better job models for more predictable results.

Operational guidelines for coiled tubing applications are typically based on experience rather than on hard data. Applying these methods in today’s more complex wells can compromise job performance and even damage downhole equipment. 

The CIRCA software suite validates theoretical models with empirical data from the field to help coiled tubing providers move from experience-dependent operations to data-driven execution. The software delivers valuable insights into the subsurface, such as downhole conditions, flow rates, and safe operating envelopes, enabling operators to calculate outcomes with more certainty to improve job planning and execution.

The CIRCA software suite includes the following applications: CIRCA Complete provides tubing force analysis and wellbore hydraulics monitoring for common applications like milling, setting and retrieving tools and intervening in extended-reach wells; CIRCA Pro uses complex calculations to accurately model solids transport to surface without compromising downhole equipment in more challenging operations like abrasive perforating, cleanouts and multistage plug milling; CIRCA Real-Time optimises jobs in real time using live operational data inside the coiled tubing control cab, accommodating changing well conditions quickly and efficiently.

During a recent extended-reach plug milling and cleanout job in west Texas, the use of standard operating procedures caused the coiled tubing and mill to get stuck downhole. The unplanned downtime tripled the operational time. After finally freeing the mill, the coiled tubing provider fed the well parameters into the CIRCA Pro software application, which has been used to model, plan and execute solids transport on more than 30,000 wells to date. The result has been months of subsequent millout jobs with no instances of stuck coiled tubing. Further, the operator reduced costs by avoiding nonproductive time and the need for intervention/fishing to retrieve tools stuck downhole.

“The CIRCA software suite gives coiled tubing providers the ability to know what will happen on a job before it starts—and the flexibility to make critical corrections when conditions change, all in real time,” said Tayo Akinokun, Vice President, Pressure Pumping at BHGE. “The software brings together the physical aspects of coiled tubing operations with digital models to deliver more predictable and efficient results.”

Indigenous Nigerian energy group Oando has reported increased turnover and profits for the first half of 2017, compared with the same period last year