Exxon Sells UK North Sea Oil, Gas Assets For Over $1 Billion

ExxonMobil will sell most of its non-operated assets in the UK’s central and northern North Sea to private equity fund HitecVision for more than $1 billion, the U.S. supermajor said on Wednesday as it divests non-core assets to focus on its priority areas—the Permian, Guyana, Brazil, and LNG.

Exxon will be selling to HitecVision’s NEO Energy ownership interests in 14 producing fields in the UK North Sea operated primarily by Shell, including Penguins, Starling, Fram, the Gannet Cluster, and Shearwater. The sale also includes Exxon’s interest in the Elgin Franklin fields operated by Total, and interests in the associated infrastructure.

The share of the U.S. supermajor of production from these fields was around 38,000 oil-equivalent barrels per day in 2019.

The sale price of more than $1 billion has an additional upside of some $300 million in contingent payments based on the potential for increase in commodity prices, Exxon said in a statement.  

“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,” Neil Chapman, senior vice president of ExxonMobil, said. “Our development plans that prioritize Guyana, the U.S. Permian Basin, Brazil and LNG are focused on increasing earnings potential and generating strong cash flow to fund future capital investments, reduce debt and maintain a reliable dividend,” Chapman added.

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However, Exxon will keep its non-operated share in upstream assets in the southern North Sea, and its share in the Shell Esso gas and liquids (SEGAL) infrastructure that supplies ethane to the company’s Fife ethylene plant.

While European supermajors Shell, BP, and Total continue to view the UK North Sea as one of their core assets, U.S. majors have been selling North Sea stakes as many of them have focused on U.S. shale.

Marathon Oil exited the UK North Sea in 2019 as it continued to focus on high-return U.S. shale oil operations. ConocoPhillips sold its UK oil and gas business to Chrysaor Holdings for US$2.675 billion, and Chevron also sold in 2019 its North Sea assets—except for a non-operated stake in the Clair field—for US$2 billion to Ithaca Energy.

By Charles Kennedy for Oilprice.com

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