Exxon Mobil plans to divest $15 billion worth of assets, but it could face major obstacles, energy consultancy Wood Mackenzie said in a recent report.
One of the challenges the energy giant faces is stiff competition from rivals who have flooded the market with their assets, while the second is potential buyers who may not have the finances to pull off mega-deals.
Exxon’s efforts come amid similar efforts by oil majors to shed their non-core assets in order to boost cash flow and divert investment to more productive assets.
The majors have more than $70 billion of assets up for sale, so there is clearly no shortage of supply for potential buyers, says Wood Mackenzie.
Exxon has confirmed that it would sell stakes in Peninsular Malaysia and the Bass Strait joint venture in Australia, but the M&A market in the Asia-Pacific region has already seen a string of deals lately.
Earlier this year, Thailand’s PPT Exploration and Production agreed to buy Partex, the energy holding of Lisbon-based philanthropic body the Calouste Gulbenkian Foundation for $622 million.
In May, Indonesia's Medco Energi Internasional bought out UK-based Ophir Energy in an all cash offer of about $517 million, while last year Australian oil and gas firm Santos acquired privately-held Quadrant Energy for more than $2 billion.
It remains to be seen if these players still have the financial capability to support further acquisition ambitions, said Wood Mackenzie’s research director Andrew Harwood in the report.
Exxon Mobil’s shares are down over 1 percent year-to-date on the New York Stock Exchange. The S&P 500 Energy Index, a gauge of the US energy sector, was down 2 percent in the same period.
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