Shell and Exxon are facing delays in abandoning an oil field in California due to pending approvals.
The Shell and Exxon field buyout
Shell and Exxon face delays in abandoning an oil field. Both companies are awaiting regulatory approvals to complete the sale. A buyer, IKAV is ready to take over.
While the sale of Shell’s stake seemed to be concluded in September, it has been postponed. Shell owns 51.8% and Exxon the rest of Aera Energy, a joint venture operating an oil field in California. The buyer, IKAV, is an international asset management group based in Germany.
In September, the agreement reached was for $4 billion for the purchase of Aera Energy. This company produces nearly 25% of the state of California’s oil production. The 25-year-old Shell and Exxon facility in California was producing about 95,000 barrels of oil and gas per day last year.
The reasons for the delay
The sale of the joint venture operated by Shell and Exxon in California was originally scheduled for November 2022. However, the proposal is pending review by the Committee on Foreign Investment in the United States. This institution is responsible for assessing the national security risks of sales to foreign companies.
However, the actors involved are optimistic that the sale will be concluded in the near future. Its postponement will allow the contract to be concluded in the first quarter of next year. These delays will be sufficient to obtain regulatory approvals according to the companies.
However, this delay will not be without consequences for businesses. While the two companies will split the $4 billion purchase price, Shell says it faces an impairment charge for the transaction. It would amount to between $300 and $400 million.
