Total to remain among UK’s major players despite £500m asset sale

The Culzean mega-project is one of the assets securing Totals position as a major operator in the UK.
The Culzean mega-project is one of the assets securing Totals position as a major operator in the UK.

Total will remain one of the major players in the UK North Sea despite the proposed sale of a package of assets to Petrogas in a £509m deal.

The lion’s share of production from the French operator comes from three main zones in the UK which will remain under its control.

Last year Total produced 179,000 barrels of oil equivalent per day, mainly from the Alwyn/ Dunbar area in the Northern North Sea, Elgin/Franklin in the Central region and the Laggan-Tormore gas hub West of Shetland.

Analyst firm Wood Mackenzie said this underpins Total’s position as “one of the UK’s top producers in 2019”.

That comes as Total has recently achieved start-up of its massive Culzean development, one of the largest fields  in the North Sea, which is estimated to produce 5% of the UK’s total gas demand.

Total also made the Glendronach gas discovery West of Shetland last year which is estimated to hold nearly 250million barrels of oil equivalent (boe).

That followed Total’s £5.8billion takeover of Maersk Oil, in which it took on a series of assets including operatorship of Culzean.

The Petrogas sale covers assets producing around 25,000 boe per day with more than 30million barrels of remaining reserves.

A map of Total’s current UK assets.

Ross Cassidy, senior research analyst at Wood Mackenzie, said: “The rationalisation of Total’s UK portfolio was expected following its takeover of Maersk in 2017, and is part of Total’s corporate strategy to lower the production costs of its global portfolio.

“However, even with this sale, Total remains one of the UK’s top producers in 2019, with production underpinned by Elgin-Franklin, Laggan-Tormore and Culzean.

“The key asset in the package is the CNOOC- operated Golden Eagle field, which accounts for over half of this year’s expected production and most of the remaining value. The field is expected to produce to 2030.

“Several of the fields are due to cease production by 2025 and have near-term decommissioning liability. The new operator will no doubt aim to extend the life of these fields with fresh investment.”

Total said the deak is consistent with its strategy to optimise its allocation of capital and divest high-cost assets in a bit to lower its breakeven costs below $30 per barrel.

The firm’s UK business employs more than 2,000 and has a base in Westhill, Aberdeenshire.