Total buys Maersk Oil for $7.45 Billion

French oil and gas company, Total SA (NYSE: TOT) is buying Danish AP Moeller Maersk’s oil and gas sector for $7.45 billion in order to what the company says will boost operations in the North Sea and generate more earnings and cash flow.

The breakdown of the deal is that Maersk will get $4.95 billion in Total shares and Total will assume $2.5 billion of Maersk Oil's debt.

"This transaction is immediately accretive to both cash flow and earnings per share and delivers further growth over coming years," said Total chairman and CEO Patrick Pouyanne. "It is in line with our announced strategy to take advantage of the current market conditions and of our stronger balance sheet to add new resources at attractive conditions."

Maersk says the sale of its oil branch, with reserves equivalent to around 1 billion barrels of oil, fits with a strategy of focusing on its shipping business and other activities announced last year, according to Reuters.

With the acquisition of Maersk, this will put Total as one of the biggest competitors in the North Sea region. The North Sea region is among the largest oil and gas producing zones in the world. This acquisition will boost the oil giant’s position among its competitors.

Maersk has been in the Danish section of the North Sea for decades.  "It was time for us to do what a real oil and gas company would do in a period such as this when prices are lower and costs are down. Either launch new projects or acquire new reserves at attractive prices," Pouyanne told reporters.  Pouyanne also added that Maersk Oil will "create a leading international operator in the North West European offshore region, making Denmark a regional anchor point for Total's North Sea business."

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