Kerry Stokes’ Seven Group considered merits of ExxonMobil’s $US2.5bn Bass Strait field
The Stokes-controlled conglomerate ‘carefully looked at the assets’ as it considers potential growth opportunities.
The Kerry Stokes-controlled Seven Group said it has considered the merits of ExxonMobil’s $US2.5bn sales process for its ageing Bass Strait field after the oil giant put the assets up for sale last year.
Exxon confirmed it was pursuing a sale of its 50 per cent stake in the offshore fields despite uncertainty in the industry after the COVID-19 pandemic and oil price crash earlier in the year.
Beach Energy, 30 per cent owned by Seven Group, had been seen as a potential bidder but the Stokes-controlled conglomerate said it had carefully looked at the assets itself as it considers potential growth opportunities.
“There’s still considerable potential in the Bass Strait,” Seven Group’s head of energy Margaret Hall told the Annual Credit Suisse Australian Energy Conference on Tuesday. “The resources obviously aren’t as easy as they used to be, but within the context of the demand requirements on the east coast with gas replacement and infrastructure in place and the transport network, the opportunity for incremental investment is very good.”
Foreign companies attracted to Australia‘s tight east coast gas market, producers specialising in squeezing the most out of assets late in their life and private equity players could also consider an offer, Credit Suisse has previously said.
Exxon ‘still focused’ on sale
Exxon said it was still focused on the sale despite ructions in the market.
“We‘re really just working to fine tune exactly what the process and the exact timelines are as we move forward. But our underlying plans have not changed there and we’re keen to start some of those discussions,” Exxon’s Australian chairman Nathan Fay told the conference.
Seven Group said it was conscious of the rehabilitation and maintenance costs that would come with any acquisition.
“Obviously the existing Exxon facilities are 40-50 years old so that has to be carefully considered in terms of maintenance and the abandonment obligations that come with that,” Ms Hall said.
The Exxon deal is part of a broader shake-up in Australia‘s oil and gas sector including Chevron’s sale of its long-held stake in Western Australia’s North West Shelf LNG plant and ConocoPhillips’ divestment of its Northern Australian assets to Santos.
Since the 1960s, Exxon has produced more than 4 billion barrels of oil from Bass Strait, which at its peak was producing 500,000 barrels of oil a day, making it one of the world’s biggest producing regions.
Exxon now produces just one-tenth of the volume of oil it was pumping in the 1980s while its big legacy gas fields - Marlin, Barracouta and Snapper - are also on their last legs.
Although it remains eastern Australia‘s biggest gas player, its share of the market has fallen by about a third in the past few years sparking a costly hunt for new resources and even a potential LNG import plant to meet market demand.
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