"This announcement is not so surprising, given that these properties are amongst several production assets owned by Shell and ExxonMobil that have been non-core to both companies for some time. In fact, there could be more to come. It is perhaps more of a surprise that they have not been sold off sooner, although it is perhaps the sustained high oil price that has slowed the process.
"Their decision to sell is right for Shell and ExxonMobil and also is good for the UK offshore scene. It means that companies that see more materiality in these properties will now be allowed to get on with new investment on these fields; and, if anything, more jobs will be created rather than lost in the longer term. We now have over 140 companies active in the North Sea; double the number from five years ago, and more than half don't yet have oil or gas production.
"In addition, and most importantly, the transfer of ownership of mature production will act as a new catalyst for more exploration wells in these so-called mature field areas, and it would be surprising if new oil reserves were not found in the next five years as a direct result of this important maneuver.
"It is significant that both ExxonMobil and Shell are jointly offering their working interests in this acreage, as it offers a real chance for a new investor to gain a material position and take control of the pace of their new investment. Hopefully, other oil majors will heed the move by Shell and ExxonMobil and will follow suit. In fact, the key to the North Sea's next phase--and a long production phase it might be--is the transfer of ownership of most or many of its maturing assets to smaller companies and new entrants, and the sooner the process steps up a pace, the better"
An advisor to the upstream UKCS environment since 1993, Hannon Westwood offers a variety of market, technical and well intelligence products and bespoke consultancy services.
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