Danish shipping company Moller-Maersk has agreed to sell its oil and gas division, Maersk Oil, to Total for $7.45bn in a combined share and debt transaction.
The French oil giant will transfer 97.5m shares
with a value of $4.95bn to Maersk, and will also assume a short term debt of $2.5bn. The deal, which is expected to close in the first quarter of next year, will also see Total take over all decommissioning obligations currently amounting to $2.9bn.
Total's chairman and chief executive officer Patrick Pouyanne said: "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."
The deal is expected to be immediately accretive to both cash flow and earnings per share for Total.
Rebecca O'Keeffe, head of investment at Interactive Investor, said: "The deal announced this morning between Total and Maersk Oil and completion of the Rosneft and Essar Oil deal confirm how Big Oil is having to look to consolidation to achieve access to additional capacity outside the US, having failed to invest in new production over the past few years.
"The collapse in oil prices
from over $100 per barrel in May 2014 to under $30 in January 2016 forced oil companies to cut their spending to the bone and these decisions dramatically reduced future production. However, with a moderate recovery in oil prices and a significant improvement in cash flows, oil majors are on the prowl, looking to buy assets to improve production levels and deliver excess returns and profits."
At 0900 BST, Moller-Maersk shares were up 3.7% to DKK13,260, while Total shares were down 0.5% to 42.34.