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TOTAL to Explore Offshore Guinea & Further Expand in Africa


TOTAL S.A. TOT announced that it has entered into a Technical Evaluation agreement with National Office of Petroleum of Guinea to explore deepwater of Guinea. The offshore area, designated for exploration, is located off the coast of Guinea Conakry, covering nearly 21,236 square miles (55,000 sq. kilometers).

TOTAL has been operating in Guinea since 1992, involved in marketing petroleum products and refining & chemical operation. The additions of exploration rights adds new dimension to its existing operation in Guinea.

Strategy to Explore African’s Deepwater

TOTAL is currently working on its strategy to further expand its operation in Africa. The company is entering into agreement with state-run oil companies to acquire exploration rights in unexplored deepwater offshore basins.

In May, the company acquired offshore exploration rights of nearly 4,000 square miles (10,357 sq. Km.) and 2,819 square miles (7,300 sq. km.) in Republic of Senegal and Mauritania, respectively. Since these offshore locations are situated beside the new exploration of Guinea, it will enable TOTAL to explore an area in excess of 28,000 square miles in West Africa.

Some of the acquired offshore exploration rights are located near areas that already have proved reserves. This increases the possibility of commercially viable findings in new exploration areas as well.

Growth Drivers

Owing to its high quality exploration and drilling activities in 2016, the company was able to achieve a reserve replacement rate of 136%.

The company has one of the best production growth profiles among the oil super majors, characterized by an upstream portfolio with above industry-average exposure to the faster growing hydrocarbon producing regions of the world.

In August 2017, TOTAL announced that it has entered into an agreement to acquire Maersk Oil & Gas A/S (Maersk Oil) in a share and debt deal. This acquisition is expected to close in the first quarter of 2018. We believe the deal will expand TOTAL’s operation globally and create tougher competition for the super majors like Exxon Mobil Corporation XOM, Chevron Corporation CVX and BP p.l.c. BP.

Zacks Rank

TOTAL S.A. currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price Movement

TOTAL’s shares have rallied 11.1% in the last 12 months, outperforming the industry’s gain of 6.8%.

The company’s strong production portfolio, initiatives to lower operating costs and new projects will further boost its performance.

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