Released March 08, 2021 | GALWAY, IRELAND
en
Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--ExxonMobil (NYSE:XOM) (Irving, Texas) has announced the sale of most of its U.K. upstream and northern North Sea assets to Norwegian private equity-backed NEO Energy for more than $1 billion.
The move comes as part of the company's commitment to selling off $15 billion in assets in order to concentrate more on its assets in the U.S. Permian Basin and Brazil and on the liquefied natural gas (LNG) sector.
The agreement includes ownership interests in 14 producing fields operated primarily by Shell, including Penguins, Starling, Fram, the Gannet Cluster and Shearwater; Elgin Franklin fields operated by Total; and interests in the associated infrastructure. ExxonMobil's share of production from these fields was approximately 38,000 barrels of oil equivalent per day (BOE/d) in 2019. The company will retain 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. It will retain its extensive refining and fuels marketing, lubricants, petrochemicals production and natural gas business in the U.K. In 2019, Industrial Info reported that ExxonMobil had agreed to sell its Norwegian assets for up to $4 billion to Var Energi, Norway's second-largest independent oil and gas company after Equinor (NYSE:EQNR). For additional information, see September 24, 2019, article--ExxonMobil Agrees to Sale of North Sea Assets. Like Var Energi, NEO is funded by Norway's HitecVision.
ExxonMobil was hammered financially last year by low oil prices and demand caused by the COVID-19 pandemic. Last month it reported its first loss in decades with a net loss of $22.4 billion for 2020, compared with a $14.3 billion profit in 2019. For additional information, see February 3, 2021, article--ExxonMobil Suffers $22.4 Billion Annual Loss, Sticks to Low Capex Plan.
"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," said Neil Chapman, senior vice president of ExxonMobil. "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."
On completion, NEO estimates that its 2021 production will be around 70,000 BOE/d, which it expects to "grow organically" to more than 80,000 BOE/d in 2024 through ongoing field developments. It will have 35 fields both producing and under development and will increase the company's presence in the key hubs in the Central and Northern North Sea with total reserves and resources of around 300 million BOE. NEO's near-term target is to produce 120,000 BOE/d.
John Knight, senior partner at HitecVision, commented: "HitecVision is a leading investor in the European offshore energy industry with US$6.7 billion in assets under management. We have built one of Norway's largest oil and gas companies, through our joint venture with ENI, in Vår Energi. We believe that NEO has the potential to achieve a similar position in the U.K. sector to that held by Vår Energi in Norway. We will continue to fund NEO's growth in the U.K. through more acquisitions and, where appropriate, mergers."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
The move comes as part of the company's commitment to selling off $15 billion in assets in order to concentrate more on its assets in the U.S. Permian Basin and Brazil and on the liquefied natural gas (LNG) sector.
The agreement includes ownership interests in 14 producing fields operated primarily by Shell, including Penguins, Starling, Fram, the Gannet Cluster and Shearwater; Elgin Franklin fields operated by Total; and interests in the associated infrastructure. ExxonMobil's share of production from these fields was approximately 38,000 barrels of oil equivalent per day (BOE/d) in 2019. The company will retain 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. It will retain its extensive refining and fuels marketing, lubricants, petrochemicals production and natural gas business in the U.K. In 2019, Industrial Info reported that ExxonMobil had agreed to sell its Norwegian assets for up to $4 billion to Var Energi, Norway's second-largest independent oil and gas company after Equinor (NYSE:EQNR). For additional information, see September 24, 2019, article--ExxonMobil Agrees to Sale of North Sea Assets. Like Var Energi, NEO is funded by Norway's HitecVision.
ExxonMobil was hammered financially last year by low oil prices and demand caused by the COVID-19 pandemic. Last month it reported its first loss in decades with a net loss of $22.4 billion for 2020, compared with a $14.3 billion profit in 2019. For additional information, see February 3, 2021, article--ExxonMobil Suffers $22.4 Billion Annual Loss, Sticks to Low Capex Plan.
"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," said Neil Chapman, senior vice president of ExxonMobil. "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."
On completion, NEO estimates that its 2021 production will be around 70,000 BOE/d, which it expects to "grow organically" to more than 80,000 BOE/d in 2024 through ongoing field developments. It will have 35 fields both producing and under development and will increase the company's presence in the key hubs in the Central and Northern North Sea with total reserves and resources of around 300 million BOE. NEO's near-term target is to produce 120,000 BOE/d.
John Knight, senior partner at HitecVision, commented: "HitecVision is a leading investor in the European offshore energy industry with US$6.7 billion in assets under management. We have built one of Norway's largest oil and gas companies, through our joint venture with ENI, in Vår Energi. We believe that NEO has the potential to achieve a similar position in the U.K. sector to that held by Vår Energi in Norway. We will continue to fund NEO's growth in the U.K. through more acquisitions and, where appropriate, mergers."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
