Maersk Buys $845 million of Africa Oil Corp. assets
AP Moeller-Maersk will buy $845 million worth of Africa Oil Corp.'s shares to revive a declining energy unit in the North Sea.
According to Bloomberg Business, Maersk will buy the African oil company's onshore exploration license in Kenya, and two more in Ethiopia. The Copenhagen-based company announced Monday that it would pay an upfront $365 million to buy the asset, and would pay an additional $480 million in the future depending on the Lokichar Project's performance. It will cover a total area of 100,000 square kilometers. Tullow Oil owns four of the blocks.
The Irish Times reported that Tullow oil shares gained 17 percent in London after Maersk bought Africa Oil shares. This is the biggest gain the company had since November 3. Meanwhile, Africa oil shares went up 48 percent in the Stockholm trading. This is the company's biggest gain since May 2012.
"Maersk Oil is committed to pursuing profitable growth by focusing on expanding within our core geographies. In addition we are rebuilding the exploration business with new acreage positions and pre-development discoveries to balance the risk profile in our portfolio. This agreement with Africa Oil is an example of this," said Maersk Oil CEO Jakob Thomasen in the company's website. "As part of the Maersk Group, we are in a position, where we can take advantage of opportunities arising in current market conditions. This investment adds to an already attractive non-operated onshore portfolio for Maersk Oil that includes our 25 year presence in Algeria. This is an important driver of long term value."
Maersk Oil removed 12 percent of its workers across the world to cut cost. It reported an 86 percent decrease in their third-quarter profit last week due to the fall of energy prices. Maersk in Denmark, the parent company of the oil firm, said it will spend more money for the growth of the oil unit. On November 9, Maersk's shares increased by 2.5 percent in Copenhagen.