ExxonMobil to divest upstream assets in UK for $1bn to NEO Energy

25 February 2021 (Last Updated February 25th, 2021 12:16)

ExxonMobil has agreed to divest its non-operated upstream assets in the UK central and northern North Sea for more than $1bn to NEO Energy, part of Norway’s HitecVision.

ExxonMobil to divest upstream assets in UK for $1bn to NEO Energy
NEO Energy will acquire ownership stakes in 14 producing fields. Credit: Zachary Theodore / Unsplash.

ExxonMobil has agreed to divest its non-operated upstream assets in the UK central and northern North Sea for more than $1bn to NEO Energy, part of Norway’s HitecVision.

NEO Energy will acquire ownership stakes in 14 producing fields, including Penguins, Starling, Fram, the Gannet Cluster, Shearwater and Elgin Franklin fields, in addition to interests in the associated infrastructure.

Based on the potential for an increase in commodity prices, the sale price has additional contingent considerations of approximately $300m.

The sale is a part of ExxonMobil’s strategy to further focus on a portfolio of advantaged assets.

ExxonMobil senior vice-president Neil Chapman said: “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.

“Our development plans that prioritise Guyana, the US Permian Basin, Brazil and LNG are focused on increasing earnings potential and generating strong cash flow to fund future capital investments, reduce debt and maintain a reliable dividend.”

HitecVision expects the deal to provide a cash-generative portfolio and significantly increase and diversify NEO’s producing asset base.

The deal also marks a major step towards NEO’s near-term target of producing 120,000 barrels of oil equivalent per day (boepd).

However, ExxonMobil will retain its non-operated interest in upstream assets in the southern North Sea, as well as its share in the Shell Esso gas and liquids (SEGAL) infrastructure, which supplies ethane to the Fife ethylene plant in the UK.

The firm will also retain refining and fuels marketing, lubricants, petrochemicals production and natural gas marketing business in the country.

Subject to regulatory and third-party approvals, the transaction is slated to be closed in the first half of this year.

Last year, Abu Dhabi National Oil Company (Adnoc) and Exxon Al-Khalij, the Gulf subsidiary of ExxonMobil, signed an agreement to jointly explore technology research and development partnership opportunities across the oil and gas upstream value chain.