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Another Oil Major Is Fleeing The North Sea

Chevron has just become the latest American oil major to have quit the UK North Sea after Delek Group’s fully owned North Sea E&P subsidiary, Ithaca Energy, said on Monday it had completed the acquisition of Chevron’s North Sea assets in the UK for US$2 billion.  

Ithaca Energy announced the deal in May. The completion of the transaction adds interests in ten producing fields to Ithaca Energy’s portfolio offshore the UK, including interests in four oil fields and six gas-condensate fields.

“The significantly enlarged operations provide an excellent platform from which to maximise the value of our high-quality asset portfolio and establishes the Company as a leading UK North Sea oil and gas producer,” Ithaca Energy’s chief executive Les Thomas said on Monday, commenting on the completion of the transaction.

A trend has emerged on the UK Continental Shelf (UKCS) in recent months—smaller companies acquire assets of international oil majors, especially U.S. majors.  

Major U.S. oil and gas companies have divested their UK portfolios in the past year as they focus on the shorter-cycle faster-payback U.S. shale.  

Marathon Oil said in February that it would be exiting the UK North Sea as it continues to focus on high-return U.S. shale oil operations.

Related: The Drilling Frenzy Is Over For U.S. Shale

In April, ConocoPhillips announced the sale of its UK oil and gas business to Chrysaor Holdings for US$2.675 billion. The deal was completed at the end of September, and added two new operated hubs to Chrysaor’s portfolio in the UK Central North Sea - Britannia and J-Block – in addition to an interest in the Clair Field area.

A similar trend is shaping up in waters neighboring the UK, offshore Norway. Chevron became last year the first supermajor to leave the Norwegian Continental Shelf.

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In September this year, the other U.S. oil supermajor, ExxonMobil, signed a deal to sell its non-operated upstream assets in Norway to Vår Energi AS for US$4.5 billion, as part of a plan to divest US$15 billion worth of non-strategic assets by 2021.

By Tsvetana Paraskova for Oilprice.com

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