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 After a disappointing deal-showing recently, French oil giant Total SA is back and interested in investing in North America.
At a Houston Planning and Strategic Forum luncheon on Thursday, Jean-Michel Lavergne, president and CEO of Total E&P USA Inc. in Houston, said the company has to increase its presence in the U.S. "We've been trying for years and haven't been very successful," he said. "We've decided to try again." Why now? He says the U.S. is the third-largest oil producer in the world, has a relatively low "government take," as he put it, and has vast untapped resources in the oil and natural gas shales. "A lot of European players are buying into shales in the U.S.," he said. "On the face of it, you have to believe the U.S. has a lot of opportunity." Last fall, Total was rumored to be preparing a $19.7 billion bid for Canadian oil and gas company Nexen Inc. But instead it made a C$617 million ($577 million) offer in January for Calgary-based UTS Energy Corp., whose shareholders nixed the deal two months later. Total obviously wants to build on what assets it has managed to snare in North America. Last year, it agreed to pay C$480 million for Synenco Energy Inc., an operator in the Canadian oil sands. And this past January it agreed to buy half of American Shale Oil LLC, a division of Newark, N.J., telecom and energy company IDT Corp. (NYSE:IDT), for an undisclosed sum. The two plan to develop a research program to produce shale oil on Amso's lease hold in western Colorado. Lavergne said Total hopes to build its position in the deepwater Gulf of Mexico, where it's already a big player; be active in researching and developing oil shales; and keep a close eye on the natural gas shales. "We are trying to access the resources of tomorrow," he said. "We expect to become a significant player." And when will oil prices head upward again? Lavergne thinks next year, driven mostly by growth in developing countries and the need for transportation. Said he: "We believe oil supply will be under constraint, demand will exceed supply and prices will grow again." Better hurry up and buy. - Claire Poole
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