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TOTAL Boosts Operation in GOM, Becomes North Platte Operator


TOTAL S.A. TOT made full utilization of its financial strength to acquire several assets in the Gulf of Mexico (GOM) region from the Cobalt International Energy’s bankruptcy auction sale. TOTAL made an offer of $300 million to acquire 20% interest in the North Platte discovery, 20% stake in Anchor discovery and operation rights in 13 offshore exploration blocks.

The U.S. Bankruptcy Court has approved the above transfer of rights to TOTAL on Apr 5, 2018. Thanks to this decision, TOTAL‘s interest in the North Platte discovery moves up to 60%, making it the operator of the discovery, with Statoil ASA STO holding the remaining 40%.

In the Anchor discovery, TOTAL increases its interest to 32.5%. This discovery is being operated by Chevron Corporation CVX, holding 55% interest.

TOTAL’s Operation in the United States

TOTAL has been expanding its operation in the United States since 1957 and had produced 123,000 barrels of oil equivalent per day in 2017 from its U.S. operations.

TOTAL’s U.S. exploration and production operation holds a very important position in its global combined liquids and gas production mix. TOTAL at present targets to increase its 2018 upstream production by 6% from 2017 levels, and higher production volumes from the United States will help the company meet its production targets.

Mini Recovery in Oil Prices

Crude Oil is presently trading in the average price of $65 per barrel since the beginning of 2018, nearly $20 per barrel higher than a record low in 2016. Even with the mini recovery in prices, crude oil prices are still far away from the average highs in excess of $100 per barrel achieved in 2012.

The oil majors have toiled hard in the difficult times to remain financially viable. The oil companies tried to lower the cost of production by moving production toward low-cost regions, divesting non-core assets and lowering workforce when it became absolutely necessary. The trying times are not yet over for some and oil companies like Devon Energy DVN are trying to cut down workforce to boost returns. (Read more: Devon Energy to Boost Returns by Reducing Workforce)

Price Movement

In a year’s time, TOTAL’s shares have returned 22.1% compared with the industry’s rally of 19.2%.

Zacks Rank

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

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