Exxon to Divest North Sea Stakes - Analyst Blog

ExxonMobil Corporation (XOM) intends to divest its interest in four blocks in the North Sea as a part of its plan to shed non core assets. As per reports in IndigoPool, the website operated by Schlumberger Ltd. (SLB), ExxonMobil's recently acquired XTO Energy owns the properties and the company did not specify any value for the assets.

The world's largest publicly traded company, ExxonMobil's XTO unit is offering 15% interest in three blocks, which include the Platypus natural-gas discovery. The fourth block constitutes a 33% stake for sale in the Witch Ground Graben area.

Dana Petroleum PLC is the majority stakeholder of the Platypus well and acts as the operator. Dana earlier reported that Platypus has a reserve potential of 130 billion cubic feet of natural gas and holds a 45% interest in the discovery.

In connection to valuation of the assets, Exxon pointed out that it was willing to consider a transaction that includes an asset exchange, or cash, or a combination of both.

With the XTO deal complete, ExxonMobil is enjoying access to significant unconventional resources and is now getting a major handle on North America's newest energy discoveries, as it looks forward to the growth of natural gas in expanding its share of the world's largest energy market. Since the acquisition, the company is constantly evaluating a probable asset sale and acquisitions in order to capitalize on the value of its asset portfolio. The latest disinvestment plan is a part of this endeavor.

ExxonMobil is the best-run integrated oil company in the world given its track record of superior return on capital employed (ROCE). After the XTO merger, it remains to be seen how the company maintains this trend, as we think it will likely generate only a mid single-digit ROCE.

Exxon holds a Zacks #3 Rank, which is equivalent to a short-term Hold rating. We maintain our long-term Neutral recommendation on the stock.

 
SCHLUMBERGER LT (SLB): Free Stock Analysis Report
 
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
 
Zacks Investment Research