Total SA, the French oil major is expected to have reached a binding agreement with Occidental to buy the African assets of Anadarko, which comprises of proven and probable reserves of 1.2 billion barrels of oil equivalent with LPG accounting for more than two-thirds. The $8.8 billion purchase will give Total access to Anadarko’s assets in Ghana, Mozambique, Algeria, and South Africa, propelling it as the second largest producer of natural gas after Royal Dutch Shell. The company currently holds about 10-percent of the natural gas market compared to Shell’s 20-percent. According to Total, the deal would result in positive cash flow from next year even if oil prices plunge to $50 a barrel, while the assets would generate more than a billion dollars a year in FCF from 2025. The company is also eyeing a portfolio comprising of a larger percentage of gas and lower oil as it shifts to cleaner fuels on the back of increasing demand, expected to rise at an annual pace of 1.6 percent until 2022.
Shares of Total SA are down more than 5-percent this month compared to the two odd percent decline in Euronext NV.