Ithaca Energy Ltd.'s $2 billion pending purchase of oil and gas producing assets in the North Sea from Chevron North Sea Ltd., a unit of Chevron Corp., comes as no surprise to analysts, as many of the majors continue to shuffle the deck, pulling out of regions no longer deemed viable for their business models.

Smaller producers are instead moving in, scooping up what the large companies have deemed aging assets and infrastructure in the region that lies between the U.K. and Scandinavia, hoping to extract existing reserves.

The acquisition, which is expected to add 10 producing field interests to Ithaca's existing portfolio, is expected to position the company as the second largest independent producer in the region. The holdings include interests in the Alba, Alder, Britannia, Captain, Elgin/Franklin, Erskine and Jade fields, as well as the Britannia platform and its satellites. Ithaca formally submitted a bid for the assets in April.

Once completed, Ithaca's asset base will have proved and probable reserves of approximately 225 million barrels of oil equivalent, plus 45 million boe of proved and probable contingent resources. Ithaca would also own a total of 18 producing field interests, which are expected to yield pro-forma 2019 production of about 80,000 boe/d, consisting of 60% liquids, at an operating cost of approximately $17 per boe.

"The deal is not a surprise. It fits the trend of global oil companies pulling out of the region," Raymond James analyst Muhammed Ghulam said in a May 30 email.

Like many of its peers, Chevron had been looking to divest its aging North Sea assets, launching the sale in July 2018 in order to focus on other, more prolific production areas around the world, including the U.S. Permian Basin. In early April, Chevron announced a $52 billion bid, which included debt, for producer Anadarko Petroleum Corp., but it was successfully countered by a $57 billion buyout offer from rival Occidental Petroleum Corp.

When it announced its intention to buy Anadarko, Chevron also said it planned to sell $15 billion to $20 billion in assets from 2020 to 2022. With a $1 billion breakup fee in hand from the failed deal, Chevron is reportedly not actively pursuing another merger at this time, but analysts think many of the majors, including the California-based company, could turn their attention to possibly acquiring any one of the undervalued independents with shale assets in the U.S. In March, Chevron indicated it would maintain strict capital spending of between $19 billion to $22 billion from 2021-2023.

Ithaca is majority-owned by Israel's Delek Group Ltd., which has been looking to build out its global operations, announcing in early April it entered a deal to buy a 22.45% stake in the Caesar-Tonga project in the U.S. Gulf of Mexico for $965 million from Royal Dutch Shell PLC. However, the deal was conditional upon other stakeholders not looking to purchase the interest and Equinor ASA ultimately stepped in to offer the same sum for the Gulf of Mexico assets.

"The acquisition is a key part of the Delek Group's strategic focus on building a world class [exploration and production] business. Acquiring Chevron North Sea Limited accelerates the implementation of that strategy and further strengthens the group's oil and gas business," Delek Group CEO Asi Bartfeld said in a May 30 news release.

In mid-April, London-based Chrysaor Holdings Ltd. said it would purchase North Sea assets from ConocoPhillips, another company looking to sell off holdings in the region, for almost $2.7 billion. That transaction includes two operated hubs in the central North Sea, as well as ConocoPhillips' stake in Britannia and J-Block, and a 7.5% stake in the Clair field. In December 2018, Conoco sold a 16.5% interest in Clair to operator BP PLC in exchange for stakes in the Greater Kuparuk Area in Alaska and Kuparuk Transportation Co.

As part of the April deal, ConocoPhillips will retain its London-based commercial trading business and its 40.25% interest in and operatorship of the Teesside oil terminal.