Exxon prepares to sell non-core assets

ExxonMobil is considering the sale of over $1 billion of non-core conventional oil assets in the Permian. This move aligns with the company's strategy to focus on higher-growth shale production, particularly following its recent $60 billion acquisition of Pioneer Natural Resources. The sale would involve mature wells in the Permian's central basin, known for steady but modest oil output, with the final price contingent on prevailing oil prices. APA is also reportedly Central Basin asset sales.

The potential divestiture comes in the aftermath of roughly $210 billion of mergers this year. Following its acquisition of Pioneer, Exxon's global production is projected to rise to a record 4.3 million barrels per day in 2024, its highest output in over a decade. Despite disputes about demand forecasts, Exxon's outlook remains bullish, forecasting oil demand to stay above 100 million barrels per day by 2050, with a 15% increase in total energy use expected by that time.

While large-scale divestitures can streamline portfolios, they also carry risks for participating companies. Acquirers often rely on sellers' land data until integration is complete, which can lead to unexpected issues with un-integrated, poorly visible, or "phantom" assets. These surprises can emerge post-acquisition, potentially impacting the value and operational efficiency of the purchased assets.