Exxon Mobil Corp joins Shell PLC to divest Aera joint venture. The duo was in advanced talks to sell all their interests in the California oil operation.
Aera is one of the largest oil producers in California. It pumps approximately 125,000 barrels and 32 million cubic feet of LNG per day. In addition, it generates approximately $1 billion in cash per year, which implies a multi-billion dollar purchase value.
Exxon and Shell’s willingness to sell is part of a broader context
The Exxon and Shell duo has enlisted the help of financial advisor JPMorgan Chase to assist in the talks. These were held with several potential buyers.
The current context is pushing publicly traded companies to divest their former activities to reduce their emissions. At the same time, there is a strong demand for oil assets due to the surge in energy prices.
For example, Exxon and Shell have indicated their willingness to focus on larger oil fields and LNG projects. Both companies are embarking on the sale of their older properties to pay off their debt. This also aims at investing the proceeds of the sale in new projects.
Shell had initiated a sale process for its 30% stake in the Cambo oil prospect. The investment bank Jefferies managed the process. The latter had become a focal point for climate activists seeking to stop the development of new oil and gas resources.
Exxon, for its part, appears to have reduced its holdings on a global scale. The company announced several disposals worth $3 billion in the second quarter of this year. It has agreed to divest its shale gas properties in Arkansas. In addition, it has brought assets to market in the UK North Sea and Africa.
In this sense, Exxon says it wants to focus on Guyana, offshore Brazil and LNG projects.
In addition, Exxon announced the signing of an agreement to sell its shares in the Aera oil operation. The transaction includes the sale of shares of Mobil California Exploration & Producing Company, which owns 48.2% of Aera Energy. It also involves the sale of a 50% share in Aera Energy Services Company, a joint venture with Shell. The sale is expected to close in the fourth quarter of 2022.
