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TotalEnergies (TTE) Buys 40% Stake in Norway CO2 Storage License

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TotalEnergies SE (TTE - Free Report) announced that it has entered into an agreement with CapeOmega Carbon Storage AS, a wholly-owned subsidiary of CapeOmega AS, to acquire the 40% participating interest held by CapeOmega in the carbon dioxide (CO2) storage exploration license in ExL004 (the Luna project) off Norway.

The Luna license area covers 175 square miles, about 75 miles offshore Bergen in 200 m water depth. It lies next to the license area where the Northern Lights CO2 storage project is under development, and its first phase is scheduled to start in 2024.

With a 60% participation stake, the Luna project is run by Wintershall DEA Norge AS. The deal is dependent on meeting usual requirements, including receiving final clearance from the necessary government authorities.

Rationale Behind the Move

If the exploration is successful, this area might allow the storage of several hundred million tons of CO2 from Europe's difficult-to-abate sectors, marking the deal’s significance in the expansion of TotalEnergies’ CO2 storage service.

The company is developing a high-quality portfolio of carbon storage over the North Sea. With extensive geological reserves and favorable political rules, Norway will play a major role in the portfolio.

TotalEnergies focuses on avoiding or at least reducing its emissions by developing and deploying a systematic, asset-by-asset approach to implement the best available technologies.

For residual emissions, the company is developing industrial projects for carbon storage. TTE is on track to achieve its target of developing storage capacity of 10 million metric tons of CO2 per year by 2030.

Per a report by the International Energy Agency, 2022 was a strong year for carbon capture, utilization and storage. More than 140 new projects were announced, increasing planned storage capacity by 80% and capture capacity by 30%.

In June 2023, TotalEnergies entered into an agreement with Petronas and Mitsui & Co. (MITSY - Free Report) to develop a carbon storage project in Southeast Asia. This deal aims to provide CO2 merchant storage service in order to decarbonize industrial customers in Asia.

Per the terms of the deal, the companies will research a number of prospective storage locations, decide on the best technological method for delivering CO2 from regional industrial clusters to Malaysia, and create the most appropriate business framework for Malaysia’s commercialization of a carbon storage service.

Apart from TTE, other oil and gas companies are also adopting and expanding their carbon storage projects.

In March 2023, Chevron Corporation (CVX - Free Report) and its partner, Talos Energy Inc (TALO - Free Report) disclosed that they have tripled the size of a projected carbon capture and storage hub for the Gulf Coast. CVX reported that it has acquired approximately 100,000 acres of onshore land in the Texas counties of Chambers and Jefferson, thereby expanding its CO2 storage footprint.

Chevron’s long-term (three- to five-year) earnings growth rate is 14.27%. It delivered an average earnings surprise of 7.8% in the last four quarters.

The Zacks Consensus Estimate for TALO’s third-quarter 2023 earnings per share (EPS) is pegged at 6 cents. The same for 2023 EPS is pinned at 45 cents.

Price Performance

In the past month, shares of TotalEnergies have risen 3.3% compared with the industry’s 3.5% growth.

 

Zacks Investment Research
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Zacks Rank

TotalEnergies currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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