Pandemic to delay ExxonMobil’s Gippsland Basin sale

Exxon was believed to be on track to launch a sale around August or September through investment bank JPMorgan.

The COVID-19 lockdown in Victoria is expected to delay ExxonMobil’s plans to sell its $US2bn stake in the Gippsland Basin gas project.

Exxon was believed to be on track to launch a sale around August or September through investment bank JPMorgan.

But many believe that given the assets are located off the coast of Victoria this timetable could now prove challenging.

Macquarie and Beach Energy are expected to line up for the ExxonMobil-owned Bass Strait fields that have provided up to 40 per cent of east coast gas production but are now in decline. While plenty of oil and gas assets are currently for sale around Australia at a time of low oil prices, it is thought that parties lining up for assets are yet to form consortiums.

Investment bank Citi is selling a portfolio of oil and gas assets for the Italian group ENI, with the main factor weighing on the minds of bidders being $US100m of abandonment liabilities at two projects within the portfolio.

Flyers have been sent out for Project Ocean, as it is known, but suitors are yet to receive an information memorandum.

About 37 parties have signed non-disclosure agreements.

Adviser Citi is believed to be hoping for first-round bids to be received in mid-August.

North American infrastructure buyers like Morgan Stanley Infrastructure Partners are also around the hoop, as well as Beach Energy and Macquarie.

It is understood that the vendor is not prepared to sell assets separately and suitors will need to work with an oil and gas operator.

Two of the most valuable assets in the portfolio, which is expected to sell for between $500m and $1bn, are the Blacktip gas project off the north coast of Australia and the 10.99 per cent stake in Darwin LNG.

Meanwhile, some see Woodside Petroleum as the only logical acquirer for Chevron’s 16.67 per cent stake in the North West Shelf, but others believe other acquisition targets could be on the agenda for the Australian-listed oil producer.

Some say the need for Woodside to diversify away from Australia remains pressing and one target could be BHP’s global petroleum portfolio if the resources giant wants to sell.

Woodside has valued its 16.67 per cent interest in the North West Shelf at $US1.9bn.

Some see this as a line in the sand as to what it could be prepared to pay for the Chevron stake. Earlier it was estimated to be worth between $8bn and $9bn when the oil price was more buoyant.

One thought is that Woodside buys out other interests within the North West Shelf, which is also owned by likely sellers such as BHP, Shell and BP.

The logic for this would be for Woodside, the operator of the asset, to achieve a tolling agreement on the project at a time when the holders do not necessarily see eye to eye.