ExxonMobil Looks To Exit UK North Sea Oil & Gas
ExxonMobil has recently discussed with operators selling part or all of its assets in the UK North Sea in a move that could raise up to US$2 billion for Exxon and mark another major U.S. exit from the area, Reuters reported this week, quoting three industry sources familiar with the matter.
Exxon has been a major investor in the UK North Sea since 1964, when the first exploration drilling in the area began. The U.S. major holds interests in 40 producing oil and gas fields and produces around five percent of UK oil and gas production, with an average 80,000 barrels of oil and 441 million cubic feet of gas a day. Exxon’s investment in the North Sea is managed through a 50/50 joint operation with Shell.
If Exxon sells some or part of its assets in the UK North Sea, it will be yet another major U.S. oil and gas firm to divest interests in this mature area to focus on their current key growth areas, which for Exxon right now are the Permian in Texas and conventional oil production offshore Guyana.
While European supermajors Shell, BP, and Total continue to view the North Sea as one of their core assets, U.S. majors have been selling North Sea stakes as many of them are now focused on 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.
In April, ConocoPhillips sold its UK oil and gas business to Chrysaor Holdings for US$2.675 billion in a deal which Wood Mackenzie described as “another story of the changing corporate landscape in the North Sea – for the first time, a non major is the number one producer in the UK.”
Chevron also sold in May its North Sea assets—except for a non-operated stake in the Clair field—for US$2 billion to Ithaca Energy.
A sale of assets in the UK would add to Exxon’s plan to sell its assets offshore Norway in what could be a major withdrawal from European offshore production.
In Norway, ExxonMobil sold in 2017 its ownership interests in its operated fields Balder, Jotun Ringhorne, and Ringhorne East to Point Resources, but continued to hold ownership interests in fields that it doesn’t operate.
In June, an Exxon spokesman told a Norwegian newspaper that the company is weighing the sale of its assets in Norway. Rystad Energy has estimated that Exxon’s portfolio of Norwegian upstream assets has a value of US$3.1 billion. As of 1 January 2019, Exxon controlled 530 million barrels of oil equivalent on the Norwegian Continental Shelf, the most valuable asset being a stake in the Snorre field, worth nearly US$700 million, according to Rystad.
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