Delay likely for Exxon’s Bass Strait asset sale

Some merger and acquisitions may be on hold due to the coronavirus pandemic, but there has been no word yet suggesting that ExxonMobil’s Bass Strait asset sale program has been shelved.

The process was always scheduled to proceed in July, and ExxonMobil is yet to offer an indication to suitors as to whether it will proceed as planned or the deal will be pushed out until later in the year.

The oil price has made a recovery since it collapsed around March at the onset of the COVID-19 pandemic, but is still a far cry from the levels at the start of 2020.

Most expect that the sale process will be delayed until conditions improve, given that travel restrictions will make an acquisition tricky.

When it does launch into action, the prediction in the early stages is that Beach Energy will likely be the party to beat.

Beach has no debt, is cash rich and is looking to put its funds to work.

It paid almost $1.6bn to buy Origin Energy’s Lattice Energy business in 2017, which included assets in the Bass Strait.

The sales process is being run by JPMorgan and some expect it will be complex. The biggest factor is the cost of the abandonment liabilities.

There is also a question over how regulators will view bids by players such as Beach, and whether BHP will also sell its interests, with speculation that it could stage an exit.

Up for sale is Exxon’s interest in the Gippsland Basin Joint Venture off the Victorian coast.

It is owned in partnership with BHP and produces oil and gas with valuation estimates last year of about $US2bn. It supplies between 40 and 50 per cent of east coast domestic gas demand.

As part of the joint venture, Exxon also owns the Kipper gas field in the same area, with its 30 per cent interest estimated to be worth about $US800m.

Meanwhile, Beach Energy is not thought to be interested in the ENI Australian gas assets up for sale through Citi. Estimates suggest the assets, which include a stake in the Darwin LNG project and the Blacktip Gas Project off the northern coast, could be worth up to $1bn.