Exxon Mobil Corp (NYSE: XOM) is exploring the sale of many of its U.S. Gulf of Mexico (GoM) assets, as higher prices prompt the world’s largest publicly traded oil company to review its portfolio, people familiar with the matter said Oct. 2.
Major oil companies have been looking to concentrate development operations in a few key areas. Irving, Texas-based Exxon Mobil is focusing on promising acreage in offshore areas such as Guyana and Brazil and onshore in the Permian Basin.
Exxon Mobil has asked a small number of parties to gauge their potential interest in the company’s GoM assets, ahead of deciding how to proceed, according to two of the sources, adding that any sale would likely happen next year.
The company is considering selling deepwater assets in the GoM that currently produce about 50,000 barrels per day (bbl/d) of oil, one of the sources added. The company has stakes in GoM assets that produce the equivalent of more than 200,000 bbl/d of oil and 730 million cubic feet of gas daily, according to company data.
Exxon Mobil produces the equivalent of about 2.2 million bbl/d of oil. While Exxon Mobil is the most valuable publicly traded oil company, it is only the ninth-largest operator in the GoM, trailing heavyweights like Royal Dutch Shell Plc (NYSE: RDS.A) and BP Plc (NYSE: BP), along with smaller Gulf-focused independent oil companies like Fieldwood Energy LLC and Talos Energy Inc. (NYSE: TALO).
The GoM, once considered a reliable basin for oil exploration and production, has become overshadowed by shale formations onshore and by new offshore plays like Guyana, where Exxon Mobil’s giant Liza field is expected to produce 120,000 bbl/d of crude in its first phase.
“Exxon Mobil continually reviews its assets for their contribution toward meeting the company’s operating needs, financial objectives and their potential value to others,” a spokeswoman for the company said in a statement.
“We remain committed to conducting business in the U.S. Gulf region, as we have for more than 100 years.”
The sources asked not to be identified because the matter is confidential.
Exxon Mobil’s positions in the GoM include a 50% stake in development of the large Julia oil field, and a 47% stake in the Hadrian South natural gas field, which it operates. The company also has a 9% piece of Heidelberg Field and 23% of the Lucius oil and gas field, both of which are operated by Anadarko Petroleum Corp. (NYSE: APC), according to Exxon Mobil’s latest annual report.
Exxon Mobil’s partners in developing many of these sites could have a contractual right of first refusal on any opportunity to acquire Exxon’s interest, one of the sources said.
Exxon Mobil has sold 29 leases or stakes in leases to other companies since 2014, according to data from the U.S. Bureau of Ocean Energy Management.
The company has not acquired any leases from other companies in that period. In the last 10 federal lease sales of oil acreage, Exxon Mobil has bid on 28 leases, compared with rivals like BP, which has bid on 52 leases.
Exxon Mobil shares were up 0.7% to $86.42 each on Oct. 2. Shares have risen 6.5% this year, trailing broader equity averages.
Qatar, which has a number of partnerships with Exxon Mobil, including in Brazil, would be well positioned to make an offer for the GoM assets, the sources said. Exxon Mobil has an extensive partnership with Qatar, including partnering with Qatar Petroleum to develop the world’s largest non-associated natural gas field off that country’s coast.
Qatar Petroleum also bought a 30% stake in two of Exxon Mobil’s affiliates in Argentina in June, giving Qatar access to oil and gas shale assets in the Latin American country.
Qatar Petroleum’s CEO told Reuters in May that the company was expanding its upstream business and assets abroad, particularly in the U.S.
Qatar Petroleum is the majority owner of the Golden Pass LNG terminal in Texas, with Exxon Mobil and ConocoPhillips Co. (NYSE: COP) holding smaller stakes.
It could not be established whether Qatar will indeed make an offer. Qatar government officials did not immediately respond to requests for comment.
This week, Chevron Corp. (NYSE: CVX) agreed to sell its North Sea holdings off the shore of Britain.
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