The chief executive of French oil major Total, Patrick Pouyanne, has dismissed the idea it might buy Irish-founded Tullow Oil, which is its partner in East Africa and Guyana.
Total is a partner in all growth markets for Tullow Oil whose market capitalisation has shrunk to around £633m (€747m) from £3.28bn in September.
It is slashing its workforce and restructuring its portfolio.
Amid industry speculation about a potential Tullow takeover target, Mr Pouyanne said, when asked whether Total might buy Tullow: “Stop dreaming... No.”
As of late 2019, Tullow was saddled with $2.8bn (€2.56bn) in debt, a hangover from the last oil price crash which saw Brent crude prices plummet to below $30 a barrel in 2016.
High debts can make buying assets a more attractive option than a corporate sale.
Offshore Guyana, Tullow owns 60% and Total 25% of the Orinduik block, estimated to hold around 5.1bn barrels of oil equivalent. Total also holds 25% in the Kanuku block, adjacent to Orinduik, in which Tullow holds 37.5%.
While two of Tullow’s previous wells in Orinduik produced heavy oil, calling into question the quality of the reservoir, other wells targeting deeper layers have produced lighter oil, reviving hopes for the commercial viability
of wells targeting the so-called Upper Cretaceous.
Mr Pouyanne said he expected two or three wells to be drilled offshore Guyana this year.
Total, Tullow, and their Orinduik partner Eco are due to meet this month and discuss next steps for their drilling off Guyana.
In Uganda and Kenya, Total and Tullow have partnered to bring the countries’ first oil projects onstream, but both projects have hit snags
. Onshore Uganda, a deal for Tullow to sell a chunk of its stake to Total, fell through in August
due to tax disputes with the government