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French Oil Giant Total acquires Marathon’s Stake for $450Mn in Libya

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Published on : Mar 05, 2018

French energy company Total S.A. announced on March 2, 2018 that it purchased 16.33 percent stake in the Waha Concessions in Libya by acquiring Marathon Oil Libya Limited, a subsidiary of Marathon Oil Corporation, a U.S.-based petroleum and natural gas company. The sale was closed at a cash valuation of US$450 Mn. The divestiture is aimed at bolstering Total’s presence in Libya and marks Marathon Oil exiting the country with an attractive valuation. On the other hand, the deal will endow Total with resources over 500 mn barrels of oil equivalent (MMboe). As a result, this will ramp up its exploration capacity across the vast stretch of 53.000 km2 of the lucrative Sirte basin. Furthermore, the company can start with an immediate production of 50,000 boed.

Stake in Waha Concessions to Bolster its Presence in the Middle East and North Africa Nations

Acquiring a stake in the Waha Oil Company is in sync with the Total’s strategic push to fortify its current portfolio with highly valued assets acquired at low cost. In addition, the deal will continue to consolidate its presence in the key parts of the Middle East and Africa. Of note, The Waha Concessions, which currently produces 300,000 boed per day (boed/d) stands as a subsidiary of National Oil Corp (NOC), the state-owned oil company of Libya. The production is anticipated to surge to 400,000 boe/d by 2020 end, Total estimates.

Other than NOC, ConocoPhillips and Hess hold significant stake. The oil exploration and production sector in Libya has hit a roadblock post the political upheaval seven years ago, but is now on the road to recovery, thanks to the current rise in installations and the resumption of development oil and gas drilling.

Marathon’s Divestiture Aimed to simplify its Portfolio

According to Waha’s Chairman, the company had intended to boost its output to touch a mark of 375,000 barrels per day (bpd) by the end of this year, but reported facing major bottlenecks owing to crippled infrastructure.

Since 2013, Marathon has staged seven country exits, in a move to simplify the management of its portfolio and the recent divestiture of its non-operated interests in Waha Concessions has been planned long back. Of note, the recent exit also bodes significance, being the second one by a U.S. company from the country.

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