France's Total to develop shale play in Denmark

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

De Margerie told Le Monde that Total is also investing in Poland and China. Previously, Total indicated plans to slow its investments in US shale gas plays.

In January 2010, Oklahoma City-based 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’s upstream Barnett shale assets.

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.

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 write-down 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 non-cash write-downs in the value of their US shale assets during presentations on 2012 second-quarter financial results.

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