TotalEnergies to Acquire 45% Stake in Eagle Ford Basin Assets
TotalEnergies SE TTE announced that it has signed an agreement with Lewis Energy Group to acquire a 45% interest in dry gas-producing assets owned and operated by Lewis Energy Group in the Eagle Ford basin in Texas.
TTE Strengthens Natural Gas Production in the U.S.
TTE’s acquired assets in Southwest Texas have the potential to reach a sustainable gross production of around 400 thousand cubic feet per day (Mcf/d) by 2028. This is the second acquisition of non-operating shale gas assets in 2024, following that of a non-operating interest in the Dorado asset (located in the Eagle Ford Basin), which was acquired from Lewis Energy Group in April 2024.
Following the announcement of the acquisition of Texas Dorado, TotalEnergies' integration throughout the U.S. gas value chain has been further strengthened with the purchase of the recent long-term, low-cost assets. In addition, TotalEnergies manages the technical production of nearly 500 Mcf/d at Barnett.
TTE’s Primary Objective in the LNG Chain
TotalEnergies, which exported more than 10 million tons in 2023, is a leading U.S. LNG exporter with 16.6% stake in the Cameron liquefied natural gas (LNG) plant in Louisiana and several long-term purchasing agreements.
The company’s U.S. LNG export capacity is expected to reach 15 million tons per year (Mtpa) by 2030, after the start-up of the Rio Grande LNG plant in South Texas. TTE is integrated throughout the LNG value chain, with upstream gas production assets in Texas and offshore in the Gulf of Mexico.
Moreover, the company’s global LNG portfolio was 44 Mtpa in 2023, owing to its interests in liquefaction plants in all geographies. TTE continues to expand its LNG operation through acquisitions, partnerships and agreements. Its large fleet of LNG tankers and reserved capacity in several regasification terminals make it a perfect partner for the development of LNG projects globally.
TotalEnergies’ expanding LNG operation is in sync with its long-term ambition to increase the share of natural gas in its sales mix to nearly 50% by 2030, reduce carbon emissions and eliminate methane emissions associated with the gas value chain.
Oil and Gas Companies’ Focus on Acquisition & Divestiture
TotalEnergies continues with its strategic acquisitions in high-potential areas and sells non-core assets to achieve its long-term objective of improving production by focusing on the promising hydrocarbon-producing regions of the world.
In the second quarter of 2024, TotalEnergies acquired assets worth $544 million and sold those worth $324 million. These strategic initiatives should help further expand its operations across the globe.
Here are some other oil and gas companies’ strategic moves to expand their operations.
In May 2024, Equinor ASA EQNR sold its 100% interest and operatorship of its onshore asset in the Appalachian Basin, located in southeastern Ohio, in exchange for 40% of EQT Corporation’s EQT non-operated working interest in the Northern Marcellus shale formation in Pennsylvania.
The transaction should significantly enhance Equinor’s presence in the region. Following the completion of the deal, EQNR’s average working interest in certain Northern Marcellus gas units is expected to increase from 15.7% to 25.7%. This marks a strategic increase in EQNR’s stake and its commitment to expanding its operational footprint in the United States.
A few months back, Phillips 66 PSX also entered into an agreement to acquire Pinnacle Midland in an all-cash deal worth $550 million. The Dos Picos natural gas complex, owned by Pinnacle Midland, has a processing capacity of 220 million cubic feet per day (mmcfd). The complex has the potential to be scaled to a second 220 mmcfd gas plant.
EQNR’s long-term (three to five year) earnings growth rate is 2.2%. The Zacks Consensus Estimate for 2024 EPS indicates a year-over-year decrease of 3.8%.
The Zacks Consensus Estimate for EQT’s 2024 sales indicates a year-over-year increase of 7.1%. The company delivered an average earnings surprise of 108.5% in the trailing four quarters.
PSX’s long-term earnings growth rate is 3%. It delivered an average earnings surprise of 7.2% in the past four quarters.
TTE’s Stock Price Performance
In the past three months, shares of TotalEnergies have lost 3.6% compared with the industry’s 7.6% decline.
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TTE’s Zacks Rank
The company currently has a Zacks Rank #5 (Strong Sell).
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