US Energy giant ExxonMobil is set to sell its UK upstream central and northern North Sea assets to private-equity fund HitecVision for over $1 billion, the company announced on Wednesday.
The company signed an agreement with HitecVision, through its wholly-owned portfolio company NEO Energy. The more than $1 billion sales price is subject to closing adjustments and has an additional upside of approximately $300 million in contingent payments based on the potential for increases in commodity prices.
The company wants to focus on increasing earnings potential and generating strong cash flow to fund future capital investments, reduce debt and maintain a reliable dividend by prioritizing Guyana, the US Permian Basin, Brazil and LNG.
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 oil-equivalent barrels per day in 2019.
The company said it 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.
“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,” Neil Chapman, senior vice president of ExxonMobil, was quoted as saying in the statement.
The transaction is expected to close by the middle of 2021, subject to regulatory and third party approvals.
ExxonMobil has operated in the UK for more than 135 years and continues natural gas sales, refining and chemical operations, the marketing of lubricants and petrochemicals, and the marketing of fuels through a network of more than 1,300 independently owned Esso-branded retail sites.
By Sibel Morrow