Oil and Gas Assets Flood Market
Source: Financial Times, Sylvia Pfeifer (12/27/10)
"World's majors under intense pressure to boost returns for investors."
Driven the big oil groups' attempts to offload non-core assets, the selloff has gathered pace sharply over the past two years, according to an industry research and consulting firm.
The value of industry assets on the market in mid-2009 was just $20B; at the start of 2010, it was $46B.
This comes after a flurry of deal announcements in the past three months, including significant asset sales by BP.
The figure is "the highest I have seen for at least 10 years," said one industry executive. The $90B figure compares with an industry average of $30B–$40B of assets for sale over the past three years, he said.
The jump in activity comes as international oil companies including BP, Royal Dutch Shell, ExxonMobil and ConocoPhillips have put substantial assets on the block. The majority of sales reflect the groups' plans to shed non-core assets to raise funds for significant exploration and production ¬programs.
The world's majors are under intense pressure to boost returns for investors.
BP has led the way with plans to sell up to $30B of assets to help pay for the GOM disaster and has already sold ~$22B. Shell is selling some Nigerian assets, while both BP and Exxon have are selling North Sea assets. Some substantial gas assets are also up for sale in Canada.
Industry executives said in spite of the levels of assets on the block, the market has been clearing as there is still "more money than assets," according to one executive.
A relatively stable oil price of $70–$85/barrel, throughout the year has underpinned strong balance sheets.
The Chinese national oil companies have been the most aggressive buyers.