Integrated oil and gas company, TOTAL S.A. (TOT) continues to leverage its strong financial position and expand its operation globally through acquisitions. TOTAL acquired 22.5% interest in Elgin Franklin Oil and Gas (“EFOG”) for €590 million ($792.3 million), thereby gaining 100% control.
Per the acquisition, the company will get to control GDF SUEZ’s share in the Elgin/Franklin field, swelling its stake in the two fields in the North Sea to 46.2% from the previous level of 35.8%.
The Elgin/ Franklin fields are situated in United Kingdom's North Sea. The major share of the field is owned by TOTAL (EFOG 100%), commanding 46.2% and Enersis S.A. (ENI) holding 21.8%, along with six other operators whose interest ranges from 14.1% to 2.2%.
The company’s production from its entire European exposure totaled 474 thousand barrels of oil equivalent (kboe) per day in the third quarter. We believe this additional interest in Elgin/Franklin fields, which presently produce 140 kboe per day, will boost TOTAL’s total production from Europe.
The company continues to prudently acquire and dispose assets to align its resources with its long-term business strategy. In the third quarter 2011, TOTAL made acquisitions worth $620 million. The investments were made to acquire a 25% interest in the Tempa Rossa Project in Italy and a 40% interest in exploration blocks in Kenya.
We believe increasing the stake in the two North Sea fields is a well thought out move from TOTAL. The two fields have an estimated reserve of 60 million cubic meters of condensate and 50 billion cubic metres of gas and are expected to remain productive till 2022. This will allow TOTAL to cater to the increasing demand of these regions.
Besides acquiring interest in different producing fields, the company also follows an aggressive exploration regimen. In November, the company found new oil fields in offshore Nigeria, which aided the company to replenish its diminishing reserves from continuous production.
TOTAL S.A. currently retains a Zacks # 3 Rank, which translates into a short-term Hold rating.
France-based TOTAL is one of the largest publicly traded, globally integrated oil and gas companies based on production volumes, proved reserves and market capitalization. The company has exploration and production operations across five continents.
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