November 13, 2024 [Reuters]- Top U.S. oil producer Exxon Mobil Corp has agreed to sell conventional oil drilling assets in the Permian Basin of Texas and New Mexico to privately-owned Hilcorp Energy for around $1 billion, four sources familiar with the matter told Reuters.
The deal follows a trend of U.S. oil and gas companies culling older properties following a record-breaking wave of acquisitions. Private operators like Hilcorp have been among the most active buyers of such assets.
Exxon confirmed the sale of the assets but declined to name the buyer or valuation, using terms that signify the properties were conventional vertical wells, not the horizontal wells used to pump shale.
“The sale is consistent with our strategy to focus investments on advantaged assets in our industry-leading portfolio,” the Exxon spokesperson said, adding the deal is expected to close in the first quarter of 2025.
Reuters reported in June that Exxon was auctioning the assets to focus on higher growth shale drilling properties, following the completion of its $60 billion takeover of Pioneer Natural Resources in May.
Hilcorp, which specializes in buying mature oilfields, emerged as the winner of this auction, the sources said, requesting anonymity as the auction was confidential.
Hilcorp did not respond to requests for comment.
Like other companies which took advantage of sharply elevated commodity prices to pursue recent megamergers, Exxon has been reviewing its portfolio to focus on its most profitable assets while raising cash from selling so-called non-core assets to shore up its balance sheet.
The Exxon assets which Hilcorp is buying are estimated to have net production of about 26,000 barrels of oil equivalent per day, one of the sources said. The sale does not include assets acquired from Pioneer, they added.
Hilcorp, founded by billionaire Jeffery Hildebrand, has been among the most active buyers of assets being divested by public rivals. The company this month finalized a $1 billion takeover of Italian group Eni’s offshore Alaska assets.
It was also the undisclosed buyer in APA Corp’s $950 million sale of conventional Permian properties agreed in September, sources told Reuters.
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