COVID-19 Fuels Fire Sale Of Oil & Gas Assets

Oil and gas companies currently have assets for sale with recoverable reserves of more than 5 billion barrels of liquids and 7.5 billion barrels of oil equivalent (boe) of natural gas, Rystad Energy estimates.  While some of these planned divestments were announced before the Covid-19-related oil price crash, more were added in reaction to the pandemic and its aftermath.

Our estimates look at divestment opportunities that exclude unconventional and US onshore assets, announced since the fourth quarter of 2019.

The majority of resources on offer are in the producing phase, followed by volumes of undeveloped resources in the pre-front-end engineering and design (pre-FEED) stage. In other words, companies are either getting rid of their mature portfolio to focus on key projects, or want to avoid additional greenfield costs in light of the current low crude price.

“Many players are trying to divest their low-priority assets, while others are considering this the right time to break into the industry or expand their portfolios by acquiring these assets at a lower price,“ says Rystad Energy’s senior upstream analyst Siva Prasad.

The majors contribute nearly 70% of the liquid volumes and 50% of the gas reserves lined up for divestment globally. ExxonMobil and Chevron are the most active when it comes to divestments among the majors, as both companies seek to meet their respective divestment targets.

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