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Is Total Increasing Its Focus on US Shale Gas?

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Sep. 13 2016, Updated 10:05 a.m. ET

Total’s stock price reaction

After the news of its latest announcement on September 9, 2016, Total’s (TOT) stock closed the day ~3% lower at $48.74. However, the stock rose by 1.1% in after-market trading.

Total’s stock has increased 8% YoY (year-over-year). Meanwhile, its peers Royal Dutch Shell (RDS.A) and Chevron (CVX) have increased ~1.4% and 33% YoY, respectively.

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Is Total increasing its stronghold in the US?

Along with its 25% interest in the Barnett upstream joint venture with Chesapeake Energy (CHK), Total also holds 25% interest in the Utica shale joint venture with Chesapeake—the operator.

Coming to the Gulf of Mexico, Total owns 17% interest in the Tahiti field. It holds 33.3 % in the Chinook field.

In addition to this, Total and Cobalt International Energy (CIE) have partnered to form a “strategic alliance” for oil exploration in the deep offshore Gulf of Mexico.

Until now, Total focused more on the Gulf of Mexico. By becoming the operator of the Barnett assets, Total is increasing its US shale presence.

According to Total, the associated 2016 net production from the Barnett assets operated by Chesapeake is ~65,000 barrels of oil equivalent per day.

Speaking about its recent announcement, Total’s CEO said in a press release, “We believe that we can extract significant value from the substantial, well located resource base of the play by combining focused upstream operating efficiency, streamlined midstream contract management and marketing savvy through Total’s trading affiliate Total Gas & Power North America”. He further said, “Increasing our stake in the Barnett shale supports Total’s global strategy to be a leader in natural gas.”

Total makes up ~10% of the First Trust Indxx Global Natural Resources Income ETF (FTRI).

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