TotalEnergies SE TTE announced that its subsidiary, TotalEnergies EP Nigeria, has signed a sale and purchase agreement with Chappal Energies for the sale of its 10% interest in the SPDC JV licenses in Nigeria.
The transaction will be concluded for a consideration of $860 million. It will be closed subject to customary conditions, including regulatory approvals.
Details of the Deal
SPDC JV, an unincorporated joint venture among Nigerian National Petroleum Corporation Ltd (55%), Shell Petroleum Development Company of Nigeria (30%, operator), TotalEnergies EP Nigeria (10%) and NAOC (5%), holds 18 licenses in the Niger Delta.
TotalEnergies EP Nigeria will sell its 10% participating interest and all its rights and obligations in 15 licenses of SPDC JV, which is producing mainly oil, to Chappal Energies. In 2023, TTE's share of production from these licenses amounted to about 14,000 barrels equivalent per day (boe/d).
In addition, TotalEnergies EP Nigeria will give Chappal Energies its 10% participating interest in the three other SPDC JV licenses, namely OML 23, OML 28, and OML 77, which produce primarily gas. The TTE subsidiary will still own the full economic interest in these licenses, which currently supply 40% of Nigeria's liquefied natural gas.
Acquisitions & Divestitures in Oil and Energy Space
TotalEnergies continues with its strategic acquisitions in high-potential areas. It also sells non-core assets to achieve its long-term objective of improving production by focusing on the promising hydrocarbon-producing regions of the world.
The aforementioned deal is in line with TTE's plan to focus on its most promising assets and aggressively manage its portfolio by monetizing its older holdings. In June 2024, the company signed an agreement to sell its entire interest in West of Shetland assets in the United Kingdom to The Prax Group. During the same month, TTE also signed an agreement with Hibiscus Petroleum Berhad to sell its subsidiary, TotalEnergies EP (Brunei) B.V., for $259 million.
In first-quarter 2024, TTE acquired and sold assets worth $1.07 billion and $1.57 billion, respectively. The strategic acquisition should help the company in further expanding its multi-energy assets across the globe.
Along with TTE, other oil and gas companies like Petrobras PBR, BP plc BP and Murphy Oil Corporation MUR are also divesting non-core assets and making strategic acquisitions to further expand operations and benefit from core operations.
In April 2024, Petrobras announced a significant divestment move. The company sold its entire stake in the Cherne and Bagre fields, located in the shallow waters of Brazil’s Campos basin, to Perenco Petróleo e Gás do Brasil Ltda for $10 million. This divestment aligns with Petrobras’ overarching strategy of optimizing its portfolio and directing investments toward assets that better resonate with its long-term objectives.
PBR’s long-term (three to five year) earnings growth rate is 26.94%. The Zacks Consensus Estimate for 2024 earnings per share (EPS) indicates a year-over-year decrease of 17.2%.
BP is focused on selling its non-core assets to streamline its operations, lower debt burden and fund investments in sustainable energy projects. This year, the British energy giant anticipates to generate $2-$3 billion from divestments and other proceeds. Alongside first-quarter results, BP posted that it has realized $18.2 billion from divestment and other proceeds since the second quarter of 2020. The energy major is confident about its ability to achieve its goal of $25 billion from divestment and other proceeds between the latter half of 2020 and 2025.
BP’s long-term earnings growth rate is 4%. The Zacks Consensus Estimate for 2024 sales indicates a year-over-year increase of 12.6%.
In 2023, Murphy Oil’s subsidiary closed the divestment of certain non-core-operated Kaybob Duvernay assets and all of its non-operated Placid Montney assets in Canada. The company received cash proceeds of nearly $104 million. MUR is focused on utilizing the proceeds from its non-core asset divestitures in new businesses.
The Zacks Consensus Estimate for MUR’s 2024 sales indicates a year-over-year decrease of 2.5%. It delivered an average earnings surprise of 3.3% in the last four quarters.
Price Performance
In the past six months, shares of TotalEnergies have risen 7.2% compared with the industry’s 5.1% growth.
Image Source: Zacks Investment Research
Zacks Rank
The company currently 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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