ExxonMobil has signed an agreement to sell its upstream operations in Norway to independent exploration and production (E&P) company Vår Energi for $4.5bn.

The two companies had been in talks since the start of September, although the deal was originally valued at $4bn. The deal will be backdated to January 2019 and will be funded through cash and a reserve-based debt lending facility underwritten by BNP Paribas.

ExxonMobil’s divestment from the region is part of its plan to raise $15bn by 2021 and transfer more of its operations to US shale oil fields and other regions in the Americas like Guyana. As part of this divestment, ExxonMobil is also rumoured to be selling its stakes in 40 North Sea oil and gas fields, which produce 80,000 barrels a day.

ExxonMobil senior vice-president Neil Chapman said: “Our objective is to have the strongest, most competitive upstream portfolio in the industry.

“We’re achieving that by adding the best set of projects we’ve had in many years and divesting assets that have lower long-term strategic value.”

The asset divestment includes ExxonMobil’s ownership interests in over 20 producing fields, with the majority of them operated by Equinor. The Grane, Snorre, Ormen Lange, Statfjord and Fram production fields have a combined capacity to produce approximately 150,000 oil-equivalent barrels (boe) per day in 2019.

This will double Vår’s current output and make it one of the biggest oil producers in the North Sea. The agreement does not cover the company’s refinery in Slagen and network of around 250 independently owned Esso-branded retail sites.

Vår Energi chief executive Kristin Kragseth said: “In delivering on our ambitious growth plans, Vår Energi will not only be a major force on the shelf, we are also creating major opportunities for Norwegian suppliers in the years to come, securing employment in many parts of the country.”

Despite the announcement of the deal, ExxonMobil’s share price fell slightly from $71.35 to $70.97 a share, giving the company a current market capitalisation value of $300.3bn.

ExxonMobil share price in 2019

This is different from when ExxonMobil and Vår Energi were rumoured to be in exclusive talks. After this Exxon’s share price rose by 1.5%, but from a lower price of $69.29 to $70.27 a share.

Meanwhile, Vår’s parent company Eni’s stock price climbed by 0.33% from €13.86 to €13.94 a share on the Borse Italiana, giving the company a market capitalisation value of €50.8bn.

Eni share price in 2019

The acquisition of ExxonMobil assets will offer Vår Energi additional interests in producing fields in the North Sea and Norwegian Sea. Furthermore, Vår Energi will continue to expand its portfolio of oil and gas producing assets, development projects and exploration licenses.

According to the company, the funding for the transaction will be provided from its existing cash resources and a reserve-based lending debt facility. The transaction is subject to approvals from regulatory authorities and other customary approvals and is expected to be completed in the fourth quarter of 2019.

Vår Energi

Vår Energi is a joint venture between Italian energy company Eni and Hitec Vision subsidiary Point Resources. With this deal, Vår will be able to produce 300,000 barrels per day (bpd) by the end of 2019 and 350,000 bpd by 2023 through $7bn in investments in the region.

Senseye Oil and Gas director Barry Stott said: “We’ve seen a number of companies sell stakes in the North Sea to smaller operators in recent years, so there is nothing particularly unusual in this. What did strike me, however, was the scale of Vår’s ambition to expand production from 300,000 barrels a day to 350,000 by 2023.

“Producing an additional 50,000 bpd is no mean feat, and those that are ramping up production to this extent in the current climate are doing so by getting smarter and more efficient. I’d expect to see Vår investing heavily in areas such as data harnessing and Industry 4.0 to drive this increase.”