Integrated oil and gas company TOTAL S.A. (TOT) announced that its unit Total E&P Philippines B.V. acquired a 75% interest in the offshore Block SC56, located in the Sulu Sea, from Mitra Energy (Philippines SC-56) Limited (“Mitra”). The acquisition expanded TOTAL’s footprint in the Asia-Pacific region and conformed to its operational strategy of widening its presence in new potential plays.
The block covers a total area of around 1660.24 sq mile (4,300 sq km), in water depths ranging from 656 ft to 9840 ft (200 meters to 3,000 meters). Mitra will retain a 25% interest in SC56. The Malaysian partner will also be entrusted with the initial work of re-processing of existing data and the 3D acquisition of an additional 193 sq mile (500 sq km).
Although TOTAL did not divulge the financial consideration of the deal, we expect the company to make full use of its strong financial position. Cash and cash equivalents of TOTAL as of June 30, 2012, were $18.85 billion.
Asia-Pacific is one the fastest growing markets and has a considerable potential for future growth. In July this year, the company acquired an additional interest in the Ichthys liquefied natural gas (“LNG”) project from its Japanese partner INPEX CORPORATION. The increasing demand for LNG in Asia has led TOTAL to increase its stake in Ichthys. Earlier, in April, the company started operations in the Greater Bongkot South (GBS) gas and condensate field in the Gulf of Thailand, jointly with two other operators.
Hydrocarbon production from the Asia-Pacific region during the second quarter of 2012 averaged 213 thousand barrels of oil equivalent (kboe) per day, decreasing 12% year over year while liquids production during the quarter averaged 25 thousand barrels (MBbls) per day, decreasing 11% year over year.
We believe these new initiatives undertaken lately will help TOTAL to improve its production profile from this region. The Zacks Consensus Estimate for the full year 2012 is $6.75 per share.
TOTAL S.A. currently retains a Zacks #3 Rank (short-term Hold rating). Numbering among its competitors in the global arena is BP Plc. (BP).
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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