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Petroleum industry

Multi-Billion Dollar Asset Sales to Stimulate Organic Evolution in the Oil and Gas Industry

Strategic Insights

— 2 min read

Regulators and major oil companies are planning the largest auction of oil and gas properties in history, with properties ranging from thousands of acres of leases on Alaska's North Slope to neighborhood service stations on the block. The sales are expected to total a massive $30 billion or more, with Exxon Mobil, BP Amoco, and Royal Dutch/Shell planning to dispose of assets with little strategic value. Smaller companies are salivating at the prospect of picking up these discarded assets, which could prove to be diamonds in the rough.

Key Takeaways:

  • The multi-billion dollar asset sales planned by oil super majors could make any auction look like a suburban yard sale, with properties ranging from thousands of acres to neighborhood service stations on the block.
  • Regulators in Europe and the US are ordering some of the sales, particularly in the refining and marketing sectors, while the state of Alaska is having a major role in determining what upstream and midstream properties BP keeps.
  • The companies plan to dispose of smaller holdings, such as the Alpine development in Alaska, where BP has already opened its data rooms to potential buyers.
  • Canadian Natural Resources, Apache, and Penn West are among the smaller companies that will benefit from the sales, with Canadian Natural paying $716 million for a large part of the former Amoco's oil assets in Western Canada.
  • Other Canadian independents, such as PanCanadian and Talisman Energy, are also keeping a keen eye on developments, with Talisman's CEO saying "We are waiting for assets to fall off the mergers of mega-majors. We think it will be a buyer's market."
  • Larger companies, such as ENI and Texaco, are also taking advantage of the sell-off, with ENI unveiling plans to add 300,000 boe/d of production through acquisitions and Texaco buying a 45% stake in Shell's Malampaya deepwater gas development in the Philippines.
  • The sales will also stimulate growth in the midstream, with Kinder Morgan Energy Partners and Williams looking to acquire assets such as the TransAlaska Pipeline System and the Colonial pipeline.

Statistics:

  • $30 billion or more: the expected total value of the asset sales planned by oil super majors.
  • $4 billion: the value of properties expected to be sold by BP, with some sources suggesting that this figure could rise to $6 billion or more.
  • 230,000 boe/d: the total oil and gas production of Canadian Natural Resources, which bought a large part of the former Amoco's oil assets in Western Canada.
  • $716 million: the price paid by Canadian Natural for the former Amoco's oil assets in Western Canada.
  • $365 million: the price paid by Penn West for production of around 22,000 boe/d in Western Canada.
  • 1,150: the number of prospects identified by Canadian Natural at the Primrose and Wolf Lake fields.
  • 300,000 boe/d: the production that ENI plans to add through acquisitions.

Sources:

  • BP Amoco: "BP Amoco to Sell $10 Billion of Assets" (Source: Bloomberg)
  • Shell: "Royal Dutch/Shell to Reduce Capital Base by $10 Billion by 2001" (Source: Bloomberg)
  • Exxon Mobil: "Exxon Mobil to Streamline Operations through Asset Sales" (Source: Exxon Mobil press release)
  • Canadian Natural Resources: "Canadian Natural Resources Acquires Former Amoco Assets in Western Canada" (Source: Canadian Natural Resources press release)

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