Integrated oil and gas company TOTAL S.A. (TOT) decided to sell a portion of its interest in Tempa Rossa Field, located in the Basilicata region of southern Italy. TOTAL will sell 25% of its interest in this field to Tokyo, Japan based Mitsui & Co. Ltd.’s Italian subsidiary Mitsui E&P Italia A S.r.l.
Even with the disposal of a 25% interest in this field, TOTAL will continue to be the operator with a 50% interest. Another 25% ownership of this field is held by Royal Dutch Shell plc. (RDS.A). The entire reserve is estimated to be 440 million barrels of oil equivalents (boe).
This project presently in the development stage is expected to commence commercial operation from early 2016. The expected production capacity per day is 50,000 barrels of oil, along with 230,000 cubic meters of natural gas and 240 metric tons of LPG.
The entire cost for developing this project is estimated in the vicinity of $2.1 billion (€1.6 billion). TOTAL’s new partner will bear a portion of the development cost of the existing project. We believe such strategic moves will unlock value from TOTAL’s existing asset base and increase financial flexibility.
The present divestment syncs in with TOTAL’s asset disposal strategy for the 2012-2014 period. TOTAL is a global oil and gas major and continues to add, dispose and monetize properties to become more competitive. In 2012, TOTAL disposed of assets worth $5.9 billion (€4.6 billion), and has plans to divest more assets in 2013.
TOTAL S.A. currently retains a Zacks Rank #2 (Buy). We also prefer other Zacks #2 ranked stocks like YPF Sociedad Anonima (YPF) and Statoil ASA (STO).
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.
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