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There’s been a lot of gloom about the oil and gas sector lately. With many firms slowing or completely stopping project development. But this week news from an unexpected part of the world shows signs of life. With the world’s largest public E&P company moving in a surprisingly aggressive manner on a key M&A deal.
The firm is ExxonMobil. Which Reuters reported over the weekend is close toclosing a major strategic project acquisition, in a new spot for the major. That’s Mozambique. Where sources said Exxon is preparing to buy a 15 percent stake in the massive Area 4 offshore natural gas discovery – from the project’s 50 percent owner, Eni.
According to several insiders, Eni will sell a portion of its interest to Exxon, as part of a strategy to farm-down assets and raise money. And sources said the deal will be a big one – likely representing Exxon’s largest acquisition since the collapse of the oil price.
Of course, this makes a lot of sense given that Area 4 is a natural gas play. A commodity where pricing still remains buoyant in many parts of the world outside North America.
The deal is also a testament to how “big” never goes out of style when it comes to projects. With Mozambique’s offshore Rovuma Basin, where Area 4 is located, having already yielded an astounding 85 trillion cubic feet of gas discoveries.
That’s apparently too big of a prize for Exxon to pass up – depressed markets or not.
And this may not be the end for the major either. With sources also saying that Exxon is eyeing stakes in other Eni assets including Egypt and elsewhere in Africa.
All of which is an encouraging reminder that life goes on in project development, no matter what commodity prices are doing. As developers we just need to stay the course, and keep focused on assets that are big and profitable enough to have an impact.
Here’s to getting back on the horse
By Dave Forest, from Oilprice.com