Exxon's Norway Assets 'Worth $3.1bn': Rystad

Analysts at Rystad Energy have put a price tag of $3.1bn on the Norwegian assets that US ExxonMobil is looking to sell. That would make it the biggest ever private transaction in the country, it said June 27. 

ExxonMobil sold its operated assets off Norway two years ago but retained stakes in 20 other oil and gas fields. That included the large Ormen Lange gas field, but the portfolio is oil-weighted.

“Following interest expressed by several parties, Exxon Mobil has decided to open a data room to test the market interest for the upstream portfolio in Norway,” the company said June 22, adding that no decision to sell had yet been made.

ExxonMobil controlled 530mn barrels of oil equivalent on the Norwegian continental shelf as of January 1. The most valuable asset in the portfolio is its stake in the Snorre field, which is worth almost $700mn, said Rystad. Output last year was 155,000 boe/day.

“The profile is mature and declining, but nevertheless sizeable in terms of current production. A portfolio generating high cash flow and with limited tax balances, given the Norwegian fiscal regime with 90% nominal tax relief on investment, will be highly attractive for any E&P company without sufficient revenue," the consultancy said.

"ExxonMobil’s decision to put its assets up for sale follows a gradual decline in Norwegian activity, highlighted by the divestment of its stake in the Gassled pipeline infrastructure in 2010, the completion of its last operated exploration well in 2010, and the divestment of its operated portfolio to Point Resources in 2017.

“The portfolio now up for review consists strictly of non-operated assets," Rystad noted. "The potential exit will follow the trend of American companies refocusing their efforts away from northwest Europe."

A second consultancy - GlobalData - said this week that ExxonMobil's Norwegian production only accounts for about 3% of the company's total portfolio and the sale could help focus on activities in more core growth regions such as onshore US and deep-water South America.

GlobalData said the assets would provide steady positive cash flow and an oil weighted production portfolio. The company's Norwegian production has declined year-on-year over the last 11 years owing to production declines in major fields such as Statfjord, coupled with the sale of major assets like Balder.

"With estimated remaining recoverable reserves of approximately 400mn boe from producing fields there is significant value to be captured. Growth opportunities include the Trestakk oil field due to commence production in 2019 with expected gross recoverable reserves of 80mn boe, the Snorre expansion project expected to extend field life beyond 2040 and gas discovery opportunities at Lavrans and Mikkel Sor," said GlobalData. 

"A number of potential buyers include Sweden's Lundin Petroleum, Aker BP and Polish PGNiG, who have all been active in asset acquisitions in the region of late," the report suggests. "Local player DNO intends to add to its Norwegian portfolio since its hostile takeover of Faroe Petroleum earlier in the year. Rapidly growing Chrysaor Holdings, which has a track record of acquiring producing assets from the majors in the region, could look to expand its footprint in Norway to further boost its North Sea production."

Wood Mackenzie, meanwhile, said the move does not come as a surprise as it had highlighted Norway amongst a $48bn pool of assets from which ExxonMobil could meet its recently announced $15bn divestment target.

“While Norway is no longer core to the overall business, ExxonMobil’s position is substantial enough to receive an attractive exit price, particularly as Norway remains one of the premium merger and acquisition markets in the world.

"The portfolio is predominantly operated by Equinor, which has laid out its own plans for increased oil recovery in the coming years – so it will come with future investment opportunities, the analysts added.  

In terms of buyers, the new wave of North Sea independents are likely to be the front runners. Although the oil-heavy portfolio could deter some buyers looking to appease the investor community before an initial public offering in the coming years, it said.