Integrated oil and gas company TOTAL S.A. (TOT) announced that its subsidiary Total Gabon received approval from the Gabonese government to carry on exploration in the sedimentary basin of Gabon.
Total Gabon received approval for exploring in three onshore regions, namely, a 50% interest in the Mutamba-Iroru license alongside Vaalco, stretching over 422.4 square miles in southern Gabon; a 30% interest in the DE7 license alongside Perenco, located in central Gabon, covering an area of 839.8 square miles and a 20% interest in the Nziembou license alongside Perenco and Tullow, which extends over an area of 396.1 square miles.
These new exploration licenses have a strategic importance for TOTAL. It will likely supplement the company’s deep offshore exploration begun this year when the company acquired 6,000 square kilometers of 3D seismic on the Diaba license.
Total Gabon is one of TOTAL’s oldest subsidiaries in sub-Saharan Africa. TOTAL has been operating in Gabon for 80 long years and remains committed to further extend its activities through these onshore drilling programs, primarily in the under-explored zones.
Apart from expanding its operation in Africa, TOTAL has been active in Asia as well. The company recently acquired an 85% interest in Block SK317B, offshore Malaysia. We believe TOTAL is able to leverage its robust balance sheet to expand operations via acquisitions.
During the third quarter 2010, the company disposed of assets worth €987 million and made acquisitions worth €1.02 billion in diverse, lucrative fields. One of its major peers, ExxonMobil Corporation (XOM), is treading a similar path. Exxon recently disposed its North Sea assets worth $2 billion and shifted focus to other fast growing areas such as Brazil.
TOTAL S.A. currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-tern Neutral rating on the stock.
France-based TOTAL is one of the largest publicly traded global integrated oil and gas companies based on production volumes, proved reserves, and market capitalization. The company has exploration and production operations across five continents.
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