Exxon Mobil Corporation (XOM)

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ExxonMobil (XOM) Plans to Divest Stakes in Nigerian Assets
By: Zacks Equity Research | April 5, 2019

Per Reuters, Exxon Mobil Corporation (XOM) is contemplating the sale of its stake in some of the oil and gas fields in Nigeria, both onshore and offshore. The divestment is anticipated to generate around $3 billion. The sale will mark the company’s exit from the former Soviet state after 25 years.

ExxonMobil has reportedly held discussions with several Nigerian companies to determine their interest in the fields. The U.S. oil major is currently focused on increasing yield in the Permian and developing the huge oil discoveries offshore Guyana.

The discussions are related to a number of onshore fields that the company has in joint ventures with Nigerian state oil firm NNPC. These include oil mining leases 66, 68, 70 and 104. In 2017, ExxonMobil’s share of oil production in those fields reached 120,000 barrels per day.

Per sources, the company is set to open a data room to provide seismic and production details. Being one of the leading oil and gas producers in Nigeria, ExxonMobil has 106 operated platforms and its oil production reached 225,000 barrel per day in 2017.

In 2019, ExxonMobil announced its plan to increase capital spending to $30 billion in 2019 and about $35 billion in 2020 compared with $26 billion in 2018. In February 2019, the company stated that it will ramp up divestitures to around $15 billion by 2021. The company intends to boost earnings and cash flows through 2025 on the back of asset sales. It now estimates cumulative cash flow from operations and asset sales over the period from 2019 to 2025 to be $24 billion higher than estimates provided during the analyst meeting a year ago.

International companies including Royal Dutch Shell plc (RDS.A) are seeking to lower holdings in the region due to militant violence and oil spills resulting from pipeline damages. Subsequently, the Nigerian government has encouraged efforts by domestic firms such as Oando, Seplat and privately held Aiteo to develop operations in the country over the last decade.

ExxonMobil is also trying to divest assets in Equatorial Guinea and Chad, according to two sources.

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