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Exxon Mobil Weighs Sale of Malaysian Offshore Assets

Manuel Baigorri, Elffie Chew and Kevin Crowley

(Bloomberg) -- Exxon Mobil Corp. is considering a sale of its oil-producing offshore assets in Malaysia as part of the U.S. energy giant’s global divestiture program.

The company is working with an adviser on the potential sale, which could raise about $2 billion to $3 billion, according to people familiar with the matter. The focus is on selling upstream assets operated under production-sharing contracts with state-owned Petroliam Nasional Bhd, known as Petronas, one of the people said, asking not to be identified because the matter is private.

“Exxon Mobil is testing market interest for a number of assets worldwide, including its participating interest in producing assets in Peninsular Malaysia,” the oil major said in an emailed statement. “No agreements have been reached and no buyer has been identified. Our operations will continue as normal throughout the marketing process.”

The move follows Exxon’s $4.5 billion deal last month to exit Norway production and the decision to put Australian assets back on the market. Both are part of efforts to fund one of the biggest corporate turnarounds in Exxxon’s history after years of stagnating production and a stock-price that’s lagged rivals.

In Asia, Exxon is likely to leave projects worth a combined $5 billion in Vietnam, Indonesia, Thailand, Australia and Malaysia, Wood Mackenzie Ltd. analysts including Andrew Harwood said in a research note Monday.

Exxon produces oil and gas in Malaysia under four production-sharing contracts with Petronas, according to its website. Its assets include a 30% stake in the offshore Tapis Blend operations, which produces a low-sulfur crude that was once a benchmark for Asian oil refiners. The PSCs cover 2.4 million acres offshore and have exploration and production terms ranging as long as 38 years, Exxon said in a 10-K filing.

The company’s two global support centers in Kuala Lumpur and its polyethylene business are unaffected by the process.

As part of Exxon’s Asia-Pacific divestment push, the company said last month it’s trying again to offload its oil and gas assets in southeast Australia, including the long-producing Gippsland Basin project offshore Victoria state. The Australian newspaper reported in June that Exxon’s 50% stake in the assets, which include the Longford Gas Plant, could be worth about $3 billion.

Malaysia has been a busy market for energy deals. In April, Petronas agreed to buy stakes in two offshore Brazilian oil fields from Petroleo Brasileiro SA for $1.29 billion, expanding the southeast Asian state giant’s overseas portfolio. It also agreed to buy Amplus Energy Solutions Pte from I Squared Capital, amassing 500 megawatts of solar power in operation or under development.

A month earlier, PTT Exploration & Production agreed to buy Murphy Oil Corp.’s Malaysian oil and gas assets for $2.1 billion, deploying some of the Thai company’s massive cash reserves.

(Updates with Exxon statement in third paragraph.)

To contact the reporters on this story: Manuel Baigorri in Hong Kong at mbaigorri@bloomberg.net;Elffie Chew in Kuala Lumpur at echew16@bloomberg.net;Kevin Crowley in Houston at kcrowley1@bloomberg.net

To contact the editors responsible for this story: Fion Li at fli59@bloomberg.net, ;Simon Casey at scasey4@bloomberg.net, Reg Gale, Joe Ryan

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