Exxon to divest some UK, North Sea assets for over $1 billion

Exxon Mobil Corp will sell non-operating interest in its UK and North Sea exploration and production assets to private-equity fund HitecVision for more than $1 billion, as the oil major seeks to free up cash and focus on some mega projects.

The deal includes holdings in 14 producing fields, operated primarily by Shell, as well as interests in the associated infrastructure. Exxon could also receive about $300 million in contingent payments based on an increase in commodity prices.

Exxon said on Wednesday HitecVision, which bought Exxon’s Norwegian North Sea assets for $4.5 billion in 2019, was making the purchase through its British unit Neo.

Exxon’s share of production from the fields, which was about 38,000 barrels of oil equivalent per day (boepd) in 2019, will more than double NEO’s output to around 70,000 boepd, making it among the top five oil and gas producers in the UK.

Exxon said it would retain its non-operated share in upstream assets in the southern part of the North Sea as well as its interest in Shell’s Esso gas and liquids infrastructure.

Tom Ellacott, a senior vice president at energy consultancy Wood Mackenzie, said it remains to be seen if Exxon can fully exit its presence in the UK, adding there was potential for other country exits in Europe, including Germany and the Netherlands.

Exxon’s rate of upstream disposals since 2014 has been much lower than other oil majors, Ellacott said, adding the deal value looked broadly in line with Wood Mackenzie’s valuation

Initially, Exxon hoped to raise more than $2 billion from the North Sea sale, which was planned for late 2019. In June 2020, sources told Reuters that the portfolio was more likely to fetch $1 billion to $1.5 billion given the oil price weakness last year.