KEY POINTS
- Exxon agrees to sell Permian assets to Hilcorp for $1 billion.
- Hilcorp adds mature assets, strengthening its conventional portfolio.
- Exxon focuses on high-growth assets post-Pioneer acquisition.
Exxon Mobil Corp has reached an agreement to sell its conventional oil assets in the Permian Basin to Hilcorp Energy for approximately $1 billion, sources with knowledge of the deal have revealed.
The sale is in line with Exxon’s shift to reduce the company’s portfolio while targeting properties that can generate good returns in the market as evidenced by the $60 billion acquisition of Pioneer Natural Resources earlier this year.
Hilcorp acquires Exxon’s older oil assets
Hilcorp, a private company known for acquiring mature oil fields, emerged as the top bidder in an auction of Exxon’s conventional Permian properties.
Exxon’s decision to divest these assets aligns with a broader industry trend where major oil companies are selling non-core assets to prioritize high-return ventures, especially as private operators like Hilcorp actively buy older properties.
Exxon declined to comment on the buyer’s identity or transaction value but confirmed that the assets consist of traditional vertical wells, distinguishing them from the newer horizontal wells typical in shale production.
According to Reuters, the deal, expected to close in early 2025, does not include any assets from the recent Pioneer acquisition. These Permian assets, according to sources, produce approximately 26,000 barrels of oil equivalent per day.
The sale to Hilcorp represents Exxon’s ongoing review of its holdings to maximize value and free up capital.
Strategic moves amidst market evolution
The asset sale follows Exxon’s broader shift to concentrate on its “advantaged assets,” positioning the company to sustain growth in higher-value shale production.
Hilcorp’s portfolio has been expanding with acquisitions, including a recent $1 billion deal for Italian company Eni’s Alaskan offshore assets.
These moves have allowed Hilcorp, founded by billionaire Jeffery Hildebrand, to secure properties other operators are divesting. The company was also reported as the buyer of APA Corp’s $950 million conventional assets in the Permian Basin in a separate deal earlier this year.
Exxon’s latest move reflects an industry-wide response to recent high commodity prices, with many operators using favorable market conditions to shore up balance sheets and strengthen core business segments.
The path forward for Exxon and Hilcorp
The company in its restructuring has also applied balance sheet enhancement through asset sales for its continuing megaprojects.
Hilcorp is no exception, as its acquisition demonstrates the continued desire of management to operate proven oil fields while avoiding the high-risk production models of shale and other more recent discoveries.
The constant changes within Exxon’s portfolio might suggest continuing changes to fine-tune it on production and profitability, while providing unique firms like Hilcorp an opportunity to enhance mature resources.
