GHANA– Total, a French multinational integrated oil and gas company, has called off a plan to acquire Occidental Petroleum’s (OXY) assets in Ghana, which was conditional on the completion of the acquisition of Occidental’s other assets in Algeria.
The deal was part of an US$8.8 billion agreement reached between Total and Occidental to over Anadarko’s assets in Mozambique, Ghana, Algeria, and South Africa. Occidental in 2019 decided to unload those assets as part of a US$38 billion deal to buy Anadarko Petroleum that has soured due to the global downturn in fuel demand.
While a deal over the assets in Mozambique has been reached, Total said that an agreement over the assets in Ghana fell through after authorities in Algiers blocked Total’s acquisition of Occidental’s assets in Algeria.
The acquisition of assets in Ghana was conditional upon the completion of the Algeria asset sale, Total said. Algeria blocked Occidental’s deal to sell those assets earlier in the month.
Total added that Occidental had informed the company that, as part of an understanding with the Algerian authorities, that Occidental would not be in a position to sell its interests in Algeria.
“Given the extraordinary market environment and the lack of visibility that the group faces… Total has decided not to pursue the completion of the purchase of the Ghana assets,” Total said in a statement.
Occidental shares have been under pressure all year, and has cut staff and reduced expenses to deal with its high levels of debt taken on during the Anadarko acquisition.
The outbreak of COVID-19 has lowered demand for hydrocarbon and substantially reduced its prices globally. Occidental has decided to shut non-economic production. To preserve liquidity, it reduced 2020 capital expenditure budget by more 50% to US$2.4-$2.6 billion.
In addition to achieving US$1.1-billion overhead and operating expense synergy target one year ahead of schedule, the company also identified US$1.2 billion in operating and overhead cost reductions to be realized in 2020.