Total sells €565m pool of North Sea oil assets

French energy giant Total is to sell a pool of its North Sea oil assets for $635m (€565m). The assets, which were acquired in 2017 as part of its deal with Maersk Oil, and will be sold to a group controlled by Petrogas E&P in Oman, and NEO E&P, which is owned by Hitecvision, a private equity investor.

Located off the coast of Aberdeen, the asset pool includes the Balloch, Dumbarton, Lochranza and Drumtochty fields, as well as majority stakes in Affleck, Flyndre and Cawdor. The deal also includes some smaller shares in fields operated by China's Cnooc including 32% of Golden Eagle, 5% of Scott and 2% of Telford.

The total combined production of the assets stands at around 25,000 barrels per day. It is expected that the deal will close before the end of the year.

Arnaud Breuillac, in charge of exploration and production at Total said of the deal: “This transaction is consistent with our portfolio management strategy, aiming at lowering our break-even point by optimising capital allocation and divesting high technical costs assets. Our primary objective is to maintain the organic break-even before dividend below $30 per barrel.” 

Major energy firms have been looking to sell off older fields in recent years to smaller companies. Production has been falling and it is believed that the smaller firms have the agility to squeeze out more value from the ageing fields.

A senior partner at Hitecvision, John Knight, said that the deal should boost the production of Petrogas NEO to 100,000 barrels a day over the next few years. “This is the first step in creating a large new E&P company in the UK,” he said. “We are reinvesting in these assets and stretching life out to the 2040s”.

While Total and other large energy firms are being selective about North Sea opportunities, it has reaffirmed its commitment to the region, which provides what is effectively a balance to the riskier production in other regions such as Russia or Africa.

There has been a revival of late in UK North Sea oil production after a peak in the late 1990s, as companies have become more efficient.

In April, Chrysaor purchased the operations of ConocoPhillips in a $2.7bn deal.

In May, Ithaca Energy purchased $2bn of North Sea assets from Chevron.

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