ExxonMobil looking to sell UK North Sea portfolio

ExxonMobil is preparing to sell its UK North Sea portfolio, including its three main hubs – Penguins, Shearwater and Gannet – for some $2bn (£1.6bn), according to media reports.

The oil major currently produces some 5% of the UK’s oil and gas through its joint venture with Shell.

If a sale goes through, it would make ExxonMobil the third major US oil company to exit the UK North Sea after Chevron and ConocoPhillips sold their North Sea assets earlier this summer. Chrysaor acquired ConocoPhillips’ North Sea portfolio for $2.7bn in April 2019, its biggest deal since buying Shell’s North Sea assets for $3.8bn in 2017. Shortly thereafter, Chevron sold its North Sea assets to Israeli-owned Ithaca Energy for $1.6bn (for more details on recent North Sea mergers and acquisitions, see Petroleum Review’s August 2019 issue).

‘Combined with its Norwegian assets, which ExxonMobil recently announced its intention to market, this could see the supermajor reach one-third of the way to meeting its $15bn divestment target,’ comments Neivan Boroujerdi, Principal Analyst, North Sea Upstream at Wood Mackenzie.

He adds: ‘In a recent report, we highlighted the UK and Norway amongst nearly $50bn worth of assets we think the company could divest. An active phase of portfolio high-grading will complement and strengthen its aggressive investment-led strategy, centred around its flagship projects in Guyana, US tight oil and LNG.’  

‘Nevertheless, the UK business is attractive. It is highly cash generative, with operating costs around half of the UK average. Most of the value lies in three main hubs – Penguins, Shearwater and Gannet. Focus for any new buyer will be on increasing recovery and pushing out abandonment costs.’

However, Boroujerdi adds: ‘Given the portfolio is operated through a 50:50 joint venture with Shell, investment plans will need to be aligned with the Anglo-Dutch major, which is juggling opportunities in its own global portfolio.’