Total Backs Out Of Buying Occidental Assets

Total will no longer pursue the acquisition of Occidental’s assets in Ghana, the French supermajor said on Monday, after a snag in the sale of assets in Algeria as part of the Occidental-Anadarko deal last year.

When Occidental Petroleum completed one of the largest oil mergers and acquisitions (M&A) of the past few years, buying Anadarko Petroleum and assuming its debt in a transaction valued at a total of US$55 billion, Occidental had signed a binding agreement to sell Anadarko’s assets in Algeria, Ghana, Mozambique, and South Africa to Total for US$8.8 billion.

Since the completion of the Occidental-Anadarko deal, on which the African asset sales were contingent, Occidental and Total have completed the deals under which Total bought Anadarko’s assets in Mozambique and South Africa.

But the sale in Algeria has fallen through, Total said today.

“Occidental has informed Total that, as part of an understanding with the Algerian authorities on the transfer of Anadarko’s interests to Occidental, Occidental would not be in a position to sell its interests in Algeria,” the French supermajor said in a statement.

Since the sale of the Ghana assets was contingent on the completion of the sale of the Algerian assets, Total is now discontinuing plans to acquire Anadarko’s assets in Ghana.

“This decision not to pursue the completion of the purchase of the Ghana assets consolidates the Group’s efforts in the control of its net investments this year and provides financial flexibility to face the uncertainties and opportunities linked to the current environment,” Patrick Pouyanné, Total’s chairman and chief executive officer, said.  

The collapsed deal for the Algerian assets means preserving cash for Total in times of high uncertainty. But it is another blow to Occidental, which was relying on the sales of Anadarko’s African assets to receive a total of US$8.8 billion that could partially reduce the huge debt it had accumulated to buy Anadarko in what analysts now see as an ill-timed decision to pursue such a huge and leveraged transaction.

By Tsvetana Paraskova for Oilprice.com

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