Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News  >  Companies

News : Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors

Big Oil's $110 billion asset sale target could prove big ask

10/01/2020 | 11:02am EST
FILE PHOTO: FILE PHOTO: A combination of file photos shows the logos of five of the largest publicly traded oil companies BP, Chevron, Exxon, Mobil Royal Dutch Shell,and Total

Leading energy companies are hoping to sell dozens of oil and gas fields and refineries worth more than $110 billion to curb both their ballooning debt and their carbon footprints.

But with the outlook for oil and gas prices uncertain because of the coronavirus pandemic and a shift to cleaner energy, finding buyers and striking deals might prove tricky.

"This is not a very good time to sell assets," Total CEO Patrick Pouyanne said while presenting the French giant's strategy to switch to renewables on Wednesday.

Eight of the world's top oil companies, Exxon Mobil, Chevron, Royal Dutch Shell, BP, Total, Equinor, Eni and ConocoPhillips, are expected to sell assets with resources of around 68 billion barrels of oil and natural gas equivalent.

Those assets today carry an estimated value of $111 billion, and are equivalent to around two years of existing global oil demand, Norwegian consultancy Rystad Energy said in a note.

(Graphic: https://graphics.reuters.com/OILMAJORS-DISPOSALS/oakveergzvr/chart.png)

Oil prices hit their lowest since 1999 in April after a collapse in demand caused by coronavirus-related travel restrictions. They have since recovered to around $40 a barrel, but are not expected to rise dramatically in coming years.

This means an opportunity to snap up cheap assets for smaller companies like Serica Energy, Cairn Energy and Jadestone Energy, Peel Hunt analysts said.

Yet with a narrowing pool of buyers and a growing reluctance to lend to the oil and gas sector, disposals could be tough.

"Oil and gas asset sales will of course put pressure on market pricing if there are few buyers for these assets," Garrett Soden, CEO of Canadian-listed Africa Energy, which is part of Lundin Group, said.

Reduced investments by the majors could however lead to tighter supply and higher oil prices, which would increase the value of their resources, Soden added.

The majors need to sell assets to boost revenues and reduce debt amassed in the wake of the oil price collapse.

European companies including BP, Shell and Total are also looking to focus their oil and gas operations on the most profitable and least polluting projects after pledging to slash carbon emissions in coming decades.

Exxon and BP each hope to sell $25 billion of assets in the coming years, while Shell aims to dispose of $5 billion a year.

Spiro Youakim, global head of natural resources at investment bank Lazard, told Reuters that oil company boards should consider spinning off unwanted oil and gas production and refining businesses to attract new investors as buyers such as private equity lose appetite.

"The majors' portfolios are exceedingly large and they include more peripheral assets which could be run more effectively by different types of investors," Youakim said.

By Ron Bousso


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AFRICA ENERGY CORP. -1.41% 0.35 Delayed Quote.-12.50%
BP PLC -0.17% 300.3 Delayed Quote.17.88%
CAIRN ENERGY PLC 0.00% 190.0847 Delayed Quote.-9.40%
CHEVRON CORPORATION -3.56% 92.09 Delayed Quote.9.05%
CONOCOPHILLIPS -5.74% 45.12 Delayed Quote.12.83%
DOW JONES AFRICA TITANS 50 INDEX 0.11% 536.26 Delayed Quote.0.36%
ENI S.P.A. -0.07% 8.862 Delayed Quote.3.60%
EQUINOR ASA 1.26% 169.15 Real-time Quote.15.21%
EXXON MOBIL CORPORATION -4.81% 47.89 Delayed Quote.16.18%
JADESTONE ENERGY INC. 4.17% 75 Delayed Quote.17.07%
LAZARD LTD -2.56% 45.61 Delayed Quote.7.83%
LONDON BRENT OIL 0.68% 55.16 Delayed Quote.9.17%
ROYAL DUTCH SHELL PLC 0.61% 16.75 Real-time Quote.13.92%
S&P AFRICA 40 INDEX 0.40% 174.5 Delayed Quote.-0.21%
SERICA ENERGY PLC 0.32% 123.6 Delayed Quote.7.13%
TOTAL SE 0.73% 37.245 Real-time Quote.4.76%
WTI 0.06% 52.363 Delayed Quote.11.60%
Latest news "Companies"
04:44aENDESA S A : connects 390 MW of renewable energy in 2020, distributed in 12 wind and solar plants, despite the impact of Covid-19
PU
04:44aSIOEN INDUSTRIES : Geosynthetics according to Francesco Fontana
PU
04:42aLINK MOBILITY : + Conversation24
PU
04:42aSILICOM : Has introduced the new P4CG2I81 Server Adapter
PU
04:40aEVOTEC SE : Preliminary announcement of the publication of quarterly reports and quarterly/interim statements
EQ
04:40aDOMETIC : Invitation to conference call and webcast presentation of Dometic's year-end report 2020
PU
04:39aASTRAZENECA : Thailand defends royal company's role in vaccine strategy
RE
04:39aOil prices rise as investors look to higher demand seen in second half
RE
04:38aRIVERSTONE : Acquisition Of Industrial Land
PU
04:38aGeely, Tencent Form Partnership on Smart-Vehicle Technologies
DJ
Latest news "Companies"