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ExxonMobil sells bulk of UK North Sea assets to fast-growing NEO Energy

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London — ExxonMobil is to sell most of its UK North Sea assets to Norwegian private equity-backed NEO Energy for at least $1 billion, it said Feb. 24, lowering the curtain on what has been a near-60-year presence for the US major.

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NEO Energy, owned by Norway-based HitecVision, said the deal would double its exclusively UK-based production to 70,000 b/d of oil equivalent, with ExxonMobil selling all its UK upstream assets except for gas field stakes in the southern North Sea and the SEGAL pipeline infrastructure that feeds gas to the Fife ethylene plant.

HitecVision was previously instrumental in ExxonMobil's 2019 sale of its Norwegian assets to Var Energi, a joint venture between the private equity company and Italy's Eni.

The latest asset sale comprises stakes in 14 fields, mostly operated by Shell. In 2019, ExxonMobil's share of their production was 38,000 boe/d, of which 23,000 b/d was oil and the remainder gas.

However, it also includes stakes in two projects under redevelopment by Shell, the Shearwater gas and condensate hub and Penguins oil field, due on stream this year and next year, respectively.

The $1 billion price-tag could be augmented by as much as $300 million depending on future commodity price increases, the companies 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," ExxonMobil's senior vice president Neil Chapman said in a statement.

The deal builds on a 2019 purchase by NEO of Total assets that produced 23,000 boe/d in 2019 and were considered non-core by the French major.

NEO said the ExxonMobil purchase would bring an additional 140 million boe of reserves and it expected to produce 70,000 boe/d in total this year, rising to 80,000 boe/d in 2024 on the back of development projects the purchases would bring.

ExxonMobil was one of the pioneers of UK North Sea oil production, present since 1964, mostly in partnership with Shell at fields such as Brent, which is in the process of decommissioning.

NEO CEO Russ Alton said: "This acquisition builds on NEO's existing North Sea portfolio and towards delivering on our ambition to be a leading producer on the UK continental shelf. NEO is well placed, together with its operating partners, to extract value from this and other opportunities, while at the same time focusing on improved environmental performance."

HitecVision senior partner John Knight added: "We believe that NEO has the potential to achieve a similar position in the UK sector to that held by Var Energi in Norway. We will continue to fund NEO's growth in the UK through more acquisitions and, where appropriate, mergers." HitecVision added it would fund the purchase partly from existing funds and partly by increasing borrowing under a reserves based lending facility.