American oil giant, ExxonMobil is in exclusive talks with private equity fund HitecVision and its British unit Neo for the sale of its upstream assets in the central and northern North Sea.
This was disclosed by HitechVision in a statement to the industry which read, “HitecVision/Neo Energy have entered exclusive negotiations to purchase ExxonMobil’s upstream assets in the central and northern North Sea, which, if successful, are expected to result in a signed sales agreement in the first quarter, with close later in the year.”
According to sources close to Reuters, the assets produce around 35,000 barrels of oil equivalent per day, which is expected to increase to just under 60,000 barrels of oil equivalent resources per day by around 2023. It was further noted by that news outlet that initially, Exxon had hoped to raise more than US$2 billion from the sale but the portfolio is more likely to fetch US$1 to US$1.5 billion given the oil price weakness last year.
Since 2019, ExxonMobil had announced that its intention to put more than US$15billion in global assets up for sale. But the effects of the COVID-19 pandemic on oil prices have since accelerated the need for ExxonMobil to shed less profitable ventures and focus on projects with low breakevens like its Liza Phase One, Liza Phase Two, and Payara projects in the Stabroek Block offshore Guyana. After receiving government approval last year for its third Project called Payara, the oil giant has moved full steam ahead with plans to have the project up and running to produce 220,000 barrels of oil per day by 2026. Liza Phase Two is already set to be producing the same quota by next year.
After taking stock of the damage done to its financial health at the end of the 2020 fourth quarter, ExxonMobil was keen to inform the market that it would be removing more less strategic assets from its development plan for 2021 to focus more on Guyana and Brazil.
The assets removed from its list of priorities include certain dry gas resources in the Appalachian and Rocky Mountains, Oklahoma, Texas, Louisiana and Arkansas in the United States, and in western Canada and Argentina.
The decision will result in non-cash, after-tax fourth-quarter impairment charge of approximately US$17 billion to US$20 billion.