Total plans shale drilling in Denmark

Total SA plans exploratory drilling in Denmark later this year in efforts to develop shale plays outside the US, Chief Executive Christophe de Margerie said in an interview published in Le Monde newspaper.

De Margerie also told Le Monde that Total also is investing in Poland and China.

Previously, Total indicated plans to slow its investments in US shale gas plays.

In January 2010, Chesapeake Energy Corp. announced a $2.25 billion joint venture agreement with Total E&P USA Inc. in which Total acquired a 25% interest in Chesapeake Corp.'s upstream Barnett shale assets (OGJ Online, Jan. 4, 2010).

In January 2012, Total E&P USA signed a joint venture agreement with Chesapeake and affiliates of EnterVest Ltd. in which Total acquired a stake in the Utica shale in Ohio. Terms called for Total to obtain 25% interest in Utica assets for $700 million (OGJ Online, Jan. 3, 2012).

De Margerie and Total had planned on $6/Mcf Henry Hub prices compared with current prices of $3.20/Mcf, RBC Capital Markets analyst Peter Hutton wrote in a Jan. 10 research note.

“BG has already taken a writedown on some US gas assets…and this confirmation may signal a similar action by Total,” Hutton said. RBC’s long-term Henry Hub forecast is $5/Mcf.

Encana Corp. and BG Group each separately reported noncash writedowns in the value of their US shale assets during presentations on 2012 second-quarter financial results (OGJ Online, July 30, 2012).

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