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Feb 24, 2021

Exxon to sell some North Sea assets for more than US$1B

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Exxon Mobil Corp. agreed to sell some assets in the North Sea for more than US$1 billion as the company focuses on newer and larger sources of oil and gas such as Guyana, Brazil and the U.S. Permian Basin.

The company will sell most of its non-operated upstream assets in the U.K. central and northern North Sea to NEO Energy, according to a statement Wednesday. NEO is an oil producer backed by Norwegian private equity firm HitecVision AS. Bloomberg first reported the talks in December.

Exxon has earmarked US$15 billion of asset sales as it focuses on U.S. shale, Guyana and funding the third-largest in the S&P 500 Index. The last major divestment by Exxon was the US$4.5 billion sale of its Norwegian operations in 2019.

The pandemic-driven slump in energy demand forced Exxon to make a series of aggressive cost cuts as its debtload surged and the company incurred its first annual lost in at least four decades.

“We continue to high-grade our portfolio by divesting assets that are less strategic and focusing our investments on our advantaged projects that are among the best in the industry,” Exxon Senior Vice President Neil Chapman said in the statement.

The North Sea divestment is subject to closing adjustments that may include about US$300 million in contingent payments if commodity prices rise. The transaction is expected to close by the middle of the year.

The transaction includes Exxon’s interest in 14 producing fields such as Shearwater. The company’s share of daily output from the assets was equivalent to 38,000 barrels of crude in 2019. It will keep a non-operated interest in upstream assets located in the southern North Sea, plus its stake in the Shell Esso gas and liquids infrastructure.

NEO completed a purchase of some British North Sea assets from Total SE in August for US$635 million.