TOTAL Focused on Offshore Angola - Analyst Blog

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Integrated oil and gas company TOTAL S.A. ( TOT ) decided to expand its presence in Angola through the three production sharing agreement struck with the state owned oil company Sonangal.

Per the agreement, the company will survey and carry out exploration & drilling on three blocks - 40, 25 and 39 - in Kwanza Basin, offshore Angola.

Block 40 will be operated by TOTAL with a 50% working interest while Sonangal and Statoil ASA ( STO ) with corresponding stakes of 30% and 20% are the other players. Block 25 will be operated by TOTAL, and partnered by Sonangal, Statoil and BP Plc. ( BP ) with respective working interest of 35%, 30%, 20% and 15%. TOTAL will be a partner in the third block 39 with 15% working interest alongside Sonangal (30%), and operated by Statoil with a 55% stake.

We believe the earlier successes in the Pazflor field offshore Angola have encouraged the company to move ahead with further exploration in deepwater Angola. The Kwanza Basin also holds promise as there is a geological similarity with the petroleum-rich Santos and Campos Basins in Brazil. This feature increases the possibility of finding big reserves of oil and natural gas.

The very fact that TOTAL acts as an operator in two of the three deepwater blocks under development point to the oil major's competence in these challenging drilling operations. TOTAL can moreover leverage its already sound position off the coast of Angola to explore pre-salt deposits in these blocks.

African exposure continues to be the prime contributor to the company's total production. In the most recent quarter, TOTAL's hydrocarbon production averaged 2,319 thousand barrels of oil equivalent (kboe) per day, of which 623 kboe/d or 26.9% came from its African production hubs.

We believe TOTAL's drilling success emanates from its aggressive worldwide exploration strategy. We expect the company's African safari to prove to be positive catalysts in the years to come.

TOTAL S.A. currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

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 spanning five continents.

BP PLC ( BP ): Free Stock Analysis Report

STATOIL ASA-ADR ( STO ): Free Stock Analysis Report

TOTAL FINA SA ( TOT ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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