Exxon To Sell UK North Sea Assets As Part Of European Exit

Exxon Mobil
An Exxon sign is seen at a gas station in the Chicago suburb of Norridge (Photo: Reuters / Jim Young)

After more than 50 years of continued operations in the British North Sea, Exxon Mobil is apparently now calling it quits. The world's largest publicly traded energy company is reportedly planning to sell its assets in the oil and gas basin to pursue other locations and projects.

According to reports citing industry sources close to the matter, Exxon is apparently now initiating talks with a number of oil operators in the region to see if any of them are interested in acquiring its North Sea assets.

The company's assets in the area are estimated to be worth around $2 billion. However, it has to be noted that assessing the actual value of such assets is difficult as most of the facilities and infrastructures in the area are heavily used and may require dismantling or refurbishing.

The Texas-based firm is currently able to produce around 80,000 barrels of oil and 441 million cubic feet of gas per day through its various assets in the British North Sea.

Majority of its operations in the region are placed under a joint venture firm with Royal Dutch Shell. Under the joint venture company called the Esso Exploration and Production UK, Exxon operates different facilities in close to 40 oil and gas fields within the basin.

The company is likely approaching North Sea operators first as they would have the most to gain from the acquisition of Exxon's assets in the region. Among the most likely buyers of Exxon's North Sea assets are private equity-backed producers Chrysaor and Neptune.

Both companies have previously acquired assets from other producers who had left the area over the past few years. Exxon's operations would be a great acquisition for the companies as its business in the area is still generating a lot of cash under relatively low operating costs.

While the overall production output in the basin is expected to decrease over the next decade, the current output is still proving to be very profitable. Production in the area is still quite plentiful, especially with the discovery of new fields that had recently come online.

The move to exit the North Sea is a major retreat for the US firm from Europe, given how it has already put up its Norwegian offshore assets for sale. If Exxon does manage to completely sell its assets in the North Sea and Norway, the company could become $5 billion closer to its $15 billion divestment target.

Exxon's move also follows similar strategic exits from its competitors in the region. Earlier in the year, both Chevron and ConocoPhillips announced that they would be selling the majority of their assets in the North Sea to other operators.

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