A.P. Moller - Maersk has transferred its shares in Maersk Oil to Total and as consideration received 97.5 million Total shares equalling USD 5.6bn as of 7 March 2018. In addition to the shares, Total has assumed a short-term debt of USD 2.5bn via a debt push down from A.P. Moller - Maersk into Maersk Oil, which will be repaid to A.P. Moller - Maersk shortly after closing. The proceeds will after customary closing adjustments be used to reduce debt in A.P. Moller - Maersk.
The accounting gain for A.P. Moller - Maersk amounts to USD 2.6bn. This reflects a locked box interest and the positive development of the Total S.A. share price up to 7 March 2018 and is reduced by Maersk Oil's net profit realized in the period from 1 July 2017 until closing.
As announced in August, A.P. Moller - Maersk plans, subject to meeting its investment grade objective, to return a material portion of the value of the received Total shares to its shareholders during 2018/2019 in the form of extraordinary dividend, share buyback and/or distribution of Total shares.
Denmark will become a new regional anchor point for Total with strong Copenhagen and Esbjerg bases, which will supervise all of Total's operations in Denmark, Norway and the Netherlands. Moreover, the Copenhagen office will host the Senior Vice President of Total's North Sea and Russia Business Unit. A new Technical centre is to be established in Copenhagen, supplementing Total's existing centres in Paris and Pau. Planned development schedules and investments in strategic and sanctioned projects will be upheld.
"We have today secured a financially strong and focused owner of Maersk Oil with a long-term investment interest in the industry. We are very pleased to see Total's plans to deliver growth, value creation and career opportunities for Maersk Oil's employees, as well as upholding the long-term investment plans, especially in the Danish part of the North Sea. Based on Maersk Oil's leading technology position, and its track record as a lean, efficient and trusted partner, Total has made Denmark a regional anchor point for its North Sea business, hereby ensuring a continued Danish stronghold in the North Sea, close to technology and innovation partners at the Danish technical institutions and in the oil and gas service industry," says Claus V. Hemmingsen, Vice CEO of A.P. Moller - Maersk and CEO of the Energy division.
It is an integral part of A.P. Moller - Maersk's purpose to safeguard the long-term viability of its companies by investing in and building value-creating businesses that have a positive impact on society. This is also a guiding principle in the work to define viable solutions for the oil and oil-related businesses.
As part of the transaction Total will take over all decommissioning liabilities. The Danish Energy Agency's approval of the transfer conditions that A.P. Moller - Maersk assumes secondary liability for the decommissioning costs related to existing Danish offshore facilities corresponding to Maersk Oil's 31.2 % interest in the Danish Underground Consortium, should Total be unable to cover such costs. Maersk Oil's current provision for these decommissioning costs amounts to USD 1.2bn. A.P. Moller - Maersk's secondary liability will be reduced as part of the redevelopment of the Tyra project as well as future decommissioning of other existing facilities.
Maersk Drilling and Maersk Supply Service remain to have viable solutions established. Improved market conditions in the offshore drilling industry, as well as strategic progress in both businesses has raised A.P. Moller - Maersk's confidence in finding structural solutions for both before the end of 2018, why they have been reclassified as discontinued operations.