Deal Insight

Total acquires a 12.09% interest in NOVATEK

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02 March 2011

Total acquires a 12.09% interest in NOVATEK

Report summary

Total and NOVATEK have formed a strategic relationship that will boost Total's mid to long-term growth outlook, and give NOVATEK access to the Majors' global industry experience and know-how. The companies have signed 'Memoranda of Cooperation' covering two separate transactions: 1) Total will acquire a 12.08% stake in NOVATEK for US$4 billion, with plans to increase this to 19.40% within 36 months; 2) Total will gain a 20% stake in Yamal LNG - a proposed greenfield LNG ...

Table of contents

  • Executive summary
  • Transaction details
    • 1) Equity stake in NOVATEK
      • Technical resource base offers upside
    • Domestic gas pricing reform is a key valuation sensitivity
    • Significant hurdles to a 2016 start-up
    • Progress will require a politically backed shift in dynamics
    • Total boosts near-term growth and further expands long-term opportunity set
      • Equity stake in NOVATEK provides Total with another production growth stream
      • Deal adds to Total's range of LNG growth options but lack of control is a concern
      • Total's appetite for above-ground risk appears undiminished
    • NOVATEK
  • Oil & gas pricing and assumptions

Tables and charts

This report includes 8 images and tables including:

  • Deal analysis: Table 1
  • Deal analysis: Table 2
  • Oil & gas pricing and assumptions: Table 1
  • Oil & gas pricing and assumptions: Table 2
  • NOVATEK and Total Russian assets
  • Upstream assets: Table 1
  • Wood Mackenzie forecast of NOVATEK production, plus best-case Yamal LNG upside* (gross)
  • Impact of NOVATEK equity on Total production outlook and resource base *

What's included

This report contains:

  • Document

    Total acquires a 12.09% interest in NOVATEK

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