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TotalEnergies (TTE) Wins New Block in Suriname, Boosts Footprint
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TotalEnergies SE (TTE - Free Report) announced that it signed a Production Sharing Contract (PSC) with partners QatarEnergy and Petronas, for Block 64 with Staatsolie Maatschappij Suriname (Staatsolie), the State-owned oil company of Suriname.
Block 64 is a large 2,418 square miles block that lies around 250 km offshore. TotalEnergies and its partners won Block 64 in the Suriname authorities' 2022-2023 Bid Round. TotalEnergies, along with QatarEnergy (30%) and Petronas (30%), will operate the block with a 40% stake.
With the goal of authorizing a 200,000 b/d oil project by the end of 2024, TTE is the operator of Block 58 and holds a 50% interest, while APA Corporation (APA - Free Report) has the remaining 50%, where five discoveries have been found and development studies are underway. The company, together with QatarEnergy (20%) and Paradise Oil Company, a subsidiary of Staatsolie (40%), joined exploring blocks 6 and 8 as the operator (40%) in May 2023.
Rationale Behind PSCs
PSCs outline the details regarding the exploration and production of resources from a specified region and for a specific duration.
Oil production can be challenging because it requires substantial upfront investments that become difficult to recover if the well doesn't produce enough oil. However, a sharing contract can reduce the participating companies’ risk exposure by combining their resources and expertise. It also makes an oil production project more commercially viable. TotalEnergies, along with its partners, makes a formidable team, without risking too much capital on one project.
Other oil and gas companies like Equinor ASA (EQNR - Free Report) and Chevron Corporation (CVX - Free Report) are also expanding their operations through PSCs.
Equinor, along with ExxonMobil and Shell, entered into an agreement with the government of Tanzania to build a liquefied natural gas export facility. The deal includes the essential components of a host government and a production-sharing agreement. The project, valued at around $42 billion by a top Tanzania government official, is anticipated to be constructed at the Lindi coast. It is expected to supply 15 million metric tons per year using gas from three deepwater blocks offshore Tanzania.
The Zacks Consensus Estimate for Equinor’s 2023 earnings is pinned at $3.99 per share. The company delivered an average earnings surprise of 0.8% in the last four quarters.
Chevron finalized a production sharing agreement with Angola and the Democratic Republic of Congo to operate their shared offshore oil block. The deal might significantly impact the oil and gas industry in central Africa. It is also expected to unlock the offshore block’s potential.
Chevron’s long-term (three- to five-year) earnings growth rate is 14.27%. The Zacks Consensus Estimate for CVX’s 2023 earnings is pinned at $13.27 per share.
Price Performance
In the past six months, shares of TotalEnergies have risen 15.3% compared with the industry’s 14.4% growth.
Image: Bigstock
TotalEnergies (TTE) Wins New Block in Suriname, Boosts Footprint
TotalEnergies SE (TTE - Free Report) announced that it signed a Production Sharing Contract (PSC) with partners QatarEnergy and Petronas, for Block 64 with Staatsolie Maatschappij Suriname (Staatsolie), the State-owned oil company of Suriname.
Block 64 is a large 2,418 square miles block that lies around 250 km offshore. TotalEnergies and its partners won Block 64 in the Suriname authorities' 2022-2023 Bid Round. TotalEnergies, along with QatarEnergy (30%) and Petronas (30%), will operate the block with a 40% stake.
With the goal of authorizing a 200,000 b/d oil project by the end of 2024, TTE is the operator of Block 58 and holds a 50% interest, while APA Corporation (APA - Free Report) has the remaining 50%, where five discoveries have been found and development studies are underway. The company, together with QatarEnergy (20%) and Paradise Oil Company, a subsidiary of Staatsolie (40%), joined exploring blocks 6 and 8 as the operator (40%) in May 2023.
Rationale Behind PSCs
PSCs outline the details regarding the exploration and production of resources from a specified region and for a specific duration.
Oil production can be challenging because it requires substantial upfront investments that become difficult to recover if the well doesn't produce enough oil. However, a sharing contract can reduce the participating companies’ risk exposure by combining their resources and expertise. It also makes an oil production project more commercially viable. TotalEnergies, along with its partners, makes a formidable team, without risking too much capital on one project.
Other oil and gas companies like Equinor ASA (EQNR - Free Report) and Chevron Corporation (CVX - Free Report) are also expanding their operations through PSCs.
Equinor, along with ExxonMobil and Shell, entered into an agreement with the government of Tanzania to build a liquefied natural gas export facility. The deal includes the essential components of a host government and a production-sharing agreement. The project, valued at around $42 billion by a top Tanzania government official, is anticipated to be constructed at the Lindi coast. It is expected to supply 15 million metric tons per year using gas from three deepwater blocks offshore Tanzania.
The Zacks Consensus Estimate for Equinor’s 2023 earnings is pinned at $3.99 per share. The company delivered an average earnings surprise of 0.8% in the last four quarters.
Chevron finalized a production sharing agreement with Angola and the Democratic Republic of Congo to operate their shared offshore oil block. The deal might significantly impact the oil and gas industry in central Africa. It is also expected to unlock the offshore block’s potential.
Chevron’s long-term (three- to five-year) earnings growth rate is 14.27%. The Zacks Consensus Estimate for CVX’s 2023 earnings is pinned at $13.27 per share.
Price Performance
In the past six months, shares of TotalEnergies have risen 15.3% compared with the industry’s 14.4% growth.
Image Source: Zacks Investment Research
Zacks Rank
The company currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.