Apache Corporation, the US independent, has sounded a vote of confidence in the future of the North Sea in the UK, by agreeing to buy several assets from ExxonMobil for $1.75bn in a deal that will substantially increase its presence in the region.

The deal, which includes the Beryl field, will significantly boost Apache’s production in the North Sea, increasing it 54 per cent and its reserves by about 44 per cent. It comes just six months after the UK government announced a surprise tax increase on North Sea production, sparking warnings from the industry that it would deter investment into the region.

“These major legacy assets will expand Apache’s presence in the North Sea. They bring us significant remaining life, high production efficiency and quality reservoirs – the best North Sea assets we’ve evaluated since acquiring the Forties field in 2003,” said G Steven Farris, Apache chief executive.

“There is a portfolio of low-risk exploitation projects, and we believe the complex structural setting holds reserve upside,” he added.

Apache’s newly acquired fields produce 19,000 barrels of oil and 58m cubic feet of gas a day. As well as its Beryl asset, ExxonMobil has sold its operated interests in the Nevis, Ness, Nevis South, Skene and Buckland fields, and also its share of the Beryl/Brae gas pipeline and the SAGE gas plant. The deal includes ExxonMobil’s non-operated interests in the Maclure, Scott and Telford fields and the Benbecula exploration acreage west of the Shetland Islands.

Brad Corson, ExxonMobil’s UK chairman, said: “ExxonMobil routinely assesses its assets to assure consistency with the strategic objectives of the company and its shareholders, and concluded in this instance that their best interests would be served by this sale.”

Rex Tillerson, the chairman and chief executive of the US group, told the Financial Times earlier this year that the UK government’s tax increase had prompted concerns.

“The fear I have, as we look at our own operation, is, is this just going to accelerate the end of life of marginal properties? As you accelerate that end of life, then the facilities and infrastructure that go with those marginal fields, that gets dismantled,” he said.

Exxon said on Wednesday the sale did not affect its commitment to the North Sea and the UK, noting that it would continue to hold an interest in 40 producing fields, principally through the Shell/Esso joint venture, as well as its “substantial” refining and marketing assets in the country.

The sale represents about 10 per cent of its daily UK production.

A number of the world’s major oil companies, including BP, have in recent months put some of their North Sea oilfields up for sale to concentrate on larger developments elsewhere in the world.

Get alerts on Exxon Mobil Corp when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Comments have not been enabled for this article.

Follow the topics in this article