Exxon Mobil Corp. is looking for buyers for its 50 percent stake in an Australian oil and gas operations as part of the oil giant's review of its global portfolio of investments.
Exxon Mobil announced on Wednesday it was selling half of its stock in Gippsland Basin to test "market interest and meet company's financial objectives." No interested parties for the sale have been revealed and agreements are yet to be forged.
The sale could be worth more than $3 billion, however operating costs for the deactivation of the aging oil rigs could reduce its structural price, market observers and analysts said.
The Gippsland Basin exploration partnership, situated off the Victorian region, has for many years functioned as the main source of southern Australia's gas and oil supply, but production numbers in recent months have not been very satisfactory.
Exxon and 50-50 joint venture partner BHP Group scrapped a 20-month sale process in February 2018 to review the output of the latest sale offering this year.
The largest oil producer in the world in terms of market value is working on a $15 billion plan to sell off subsidiary investments, unloading non-performing assets to fund more lucrative options from Brazil to Texas and Papua New Guinea.
Exxon Mobil confirmed earlier it is conducting discussions to offload its Norwegian oil and gas explorations, deal analysts said will be worth as much as $4.5 billion. The US supermajor is also in talks with Repsol SA of Spain to sell deep-water oil wells in the Gulf of Mexico.
Potential entities up for bidding are likely to have other oil firms with stakes in the Bass Strait, including the Mitsui & Co of Japan, Cooper Energy, and Beach Energy, sources said.
According to Wood Mackenzie research head Angus Roger, interested clients will have to be amiable with the condition of the aging assets, falling output and significant liabilities in line with the operations' decommissioning.
"The fact that previous moves to sell the Gippsland oil assets failed because of uncertainty over abandonment costs underscores how big an issue this will be," Angus stressed.
A June report by an Australian newspaper said that Exxon's 50 percent asset share, which includes the Longford Gas facility, could be valued at around $3 billion.
Exxon's decision to sell its stake at Gippsland Basin comes on the heels of a discouraging exploration program in the Bass Strait in 2018 in what had been expected as "a promising gas prospect", in the midst of plans to extract more value from its non-performing assets.
