Exxon Sells Off Permian Assets to Hilcorp in $1 Billion Deal
Oil Giant ExxonMobil Sheds Underperforming Assets
ExxonMobil (NYSE: XOM) is reportedly in advanced talks to sell a package of its older Permian Basin assets to Hilcorp Energy Co. for approximately $1 billion. The deal, which could be announced as early as this week, would mark one of the largest asset sales by Exxon in recent years. It comes as the oil giant grapples with the fallout from the COVID-19 pandemic and increasing pressure from investors to improve returns.
Aging Assets, Declining Production
The assets being sold are located in the southern portion of the Permian Basin in Texas. They include a mix of operated and non-operated oil and gas properties. Exxon has been looking to sell these assets for some time, as they have become increasingly uneconomical to operate. Production from the fields has been declining in recent years, and the cost of maintaining the infrastructure has been rising.
Hilcorp's Expansion in the Permian
Hilcorp, a privately held oil and gas company based in Houston, has been aggressively expanding its operations in the Permian Basin in recent years. The company has acquired several large asset packages from other producers, including BP and ConocoPhillips. Hilcorp is known for its expertise in operating mature fields and its ability to extract value from assets that other companies have deemed uneconomical.
Deal Benefits Both Parties
The sale of the Permian assets would allow Exxon to shed underperforming assets and focus on its more profitable operations. It would also help the company to reduce its debt, which has been a major concern for investors. For Hilcorp, the acquisition would add to its already sizable Permian footprint and provide the company with additional opportunities for growth.
Conclusion
The sale of Exxon's Permian assets to Hilcorp is a significant development in the oil and gas industry. It reflects the changing landscape of the Permian Basin, as oil companies look to optimize their portfolios and improve returns. The deal is also a testament to Hilcorp's growing presence in the region, as the company continues to acquire assets and consolidate its position as a major player.
