Page 4 - Euroil Week 33 2019

EurOil COMMENTARY EurOil
ExxonMobil seeks North Sea retreat
The company is following on the heels of other US majors that have scaled back in the region to concentrate on domestic oil production
NORTH SEA
WHAT:
ExxonMobil plans asset sales in the UK and Norway.
WHY:
The company wants to focus on domestic oil production and other high-margin projects elsewhere.
WHAT NEXT:
Equity-backed players
or cash-rich national oil companies could snap up the assets.t
US oil major ExxonMobil is planning to exit the North Sea, putting $6bn of oil and gas assets up for grabs.
e world’s largest publicly traded oil and gas company has entered talks with several opera- tors in recent weeks to test the market for all or some of its UK North Sea business, worth up to $2bn, sources told Reuters on August 13. In parallel, it is also seeking a buyer for its assets o Norway, potentially generating a further $4bn, according to earlier reports.
ExxonMobil is following on the heels of its domestic rivals Chevron and ConocoPhillips, which have already scaled down their North Sea presence considerably. Like its counter- parts, ExxonMobil is divesting in order to focus more on big tight oil plays back home and other low-margin, high-reward projects.
e North Sea has seen production rise in recent years, on the back of record investment levels prior to the 2014 oil price collapse. But subsequent spending cuts put this revival on borrowed time, with North Sea output set to decline over the next decade, according to the UK Oil and Gas Authority.
ExxonMobil is also mulling a retreat from Romania, where it is partnered with Austria’s OMV Petrom at the 84bn cubic metre Neptun Deep gas discovery, local news outlet G4media. ro claimed on July 15. And reports emerged earlier this year that the company and Chevron were considering a divestment from the giant Azeri-Chirag-Deepwater Gunashli (ACG) pro- ject o Azerbaijan, where they have been work- ing for 25 years.
ExxonMobil revealed plans to March to
divest around $15bn of non-core assets by 2021, in order to strengthen its bottom line and inject more cash into its US business. e company’s profits slumped 21% year on year in the sec- ond quarter to $3.13bn, owing to weaker mar- gins in its downstream and chemicals segment – another area it is likely to put up for review. While downstream earnings tumbled 38% in the three-month period, upstream earnings soared 7.3%, on the back of production gains in the US Permian basin.
In the UK North Sea, ExxonMobil manages most of its assets through a joint venture with Royal Dutch Shell known as Esso, which controls shares in almost 40 oil and gas elds. Esso ows around 80,000 barrels per day (bpd) of oil and 4.57 bcm per year of gas.
According to Reuters sources, ExxonMobil will hire a bank to arrange a sale if it is unable to nd a buyer on its own.
In Norway, ExxonMobil has already reduced its footprint after offloading its shares in the Balder, Ringhorne, Ringhorne East, Jotun and Forseti elds in 2017. It net- ted around 170,000 barrels of oil equivalent per day (boepd) in 2017 from its remaining Norwegian business, which comprises shares in more than 20 elds.
Interest in the Texas-based producer’s assets is likely to come from private equi- ty-backed players such as Chrysaor or Nep- tune Energy, or companies with the stated intention of expanding in the region such as Aker BP. Cash-rich national oil companies from Asia and the Middle East could also step forward.™
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w w w . N E W S B A S E . c o m Week 33 22•August•2019