Offshore staff
IRVING, Texas / ABERDEEN, UK – ExxonMobil has agreed to sell the majority of its non-operated upstream interests in the UK central and northern North Sea to NEO Energy.
The transaction, valued at more than $1 billion is subject to closing adjustments, could rise by a further $300 million in the form of contingent payments based on potential increases in commodity prices.
The package includes stakes in 14 producing fields operated primarily by Shell, including Penguins, Starling, Fram, the Gannet Cluster and Shearwater; the Total-operated Elgin Franklin gas-condensate fields; and interests in the associated infrastructure.
ExxonMobil’s share of production from these fields was around 38,000 boe/d in 2019.
The company, which expects the deal to close by mid-2021, pending regulatory and third-party approvals, will retain its non-operated share in upstream assets in the UK southern North Sea, and its participation in the Shell Esso gas and liquids (SEGAL) infrastructure that supplies ethane to the Fife ethylene plant.
Neil Chapman, senior vice president of ExxonMobil, 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.”
NEO said the transaction amounted to more than 140 MMboe of reserves and output of around 40,000 boe/d, lifting its own pro forma 2021 production (post-completion) to 70,000 boe/d, with potential to rise to more than 80,000 boe/d in 2024 via ongoing field developments.
Its total reserves and resources, including the ExxonMobil interests, will be around 300 MMboe, with 35 UK offshore fields producing or under development in its portfolio. It will also become Shell’s largest partner in the central and northern North Sea, with around 160 employees.
NEO’s near-term target is to produce 120,000 boe/d. Its goal is to become a leading full-cycle E&P company on the UK continental shelf.
Hubs covered in the transaction are:
| Area | ExxonMobil interest sold | |
| Gannet cluster | 50% | |
| Elgin-Franklin fields | 4.38% | |
| Shearwater area (inc. Fram, Starling, Merganser and Scoter) | 44%-72% | |
| Penguins redevelopment | 50% | |
| Nelson | 21.23% | |
| ETAP (Mirren and Madoes) | 21-25% |
The assets include several organic growth opportunities, including ongoing development projects such as the Penguins field, infill wells and life extension opportunities. The total number of employees in NEO at closure of the transaction will be circa 160.
NEO will fund the acquisition partly from funds supplied by institutional capital provider HitecVision, and partly from an increase of commitments under its $2-billion Reserve Based Lending facility underwritten by BNP Paribas, DNB, ING, and Lloyds Bank.
John Knight, senior partner at HitecVision, NEO’s financial backer, said: “We have built one of Norway’s largest oil and gas companies, through our joint venture with Eni, in Vår Energi. We believe that NEO has the potential to achieve a similar position in the UK sector to that held by Vår Energi in Norway.
“We will continue to fund NEO’s growth in the UK through more acquisitions and, where appropriate, mergers. This will be the first UK investment for our most recent fund, The North Opportunity Fund, which we closed in March 2020.”
02/24/2021
