Oil and gas companies have done a lot of selling this year.
There isn’t a one-size-fits-all explanation for the constantly changing playing field. Companies are shedding assets for a variety of reasons.
Some want to give cash back to shareholders. Others seek more focused portfolios, or they need money to pay off debt or legal liabilities.
Analysts say oil and gas companies can make money by taking cheap assets and building them into valuable production vehicles, then selling them off and using some of the money for new exploration.
Here’s a look at some of the big deals through the midpoint of 2013:
In February, Chesapeake Energy Corp. agreed to sell 50 percent of its Mississippi Lime assets to China Petrochemical Corp., or Sinopec Group, for $1.02 billion. Heavy debt has led to job cuts and asset sales at Chesapeake.
The following month, Hess Corp. said it planned to exit the energy trading and marketing businesses and sell its gasoline stations so it can focus on exploration and production. It’s part of an effort to drive value for investors. Some of the money will be used to pay debt and fund other projects.
Transactions picked up steam in May and June.
In May, Houston-based Apache Corp. announced it will sell $4 billion in assets by the end of the year to pay down debt and buy back as many as 30 million company shares. The planned sales follow a big acquisition spree by Apache that started in 2010.
Tulsa, Okla.-based Laredo Petroleum Holdings agreed to sell its interests in the Anadarko Basin to Houston’s EnerVest for $438 million. The Anadarko Basin spans the Texas Panhandle and western Oklahoma. Laredo said it will pump money from the sale into its projects in the Permian Basin in West Texas.
As part a plan to sell $15 billion to $20 billion of assets by 2014, French oil producer Total said in May it would sell a stake in an exploration block off Angola to that African nation’s state oil company, Sonangol. The parties didn’t disclose the price.
BP completed the sale of its Carson, Calif., refinery and other assets to San Antonio-based Tesoro Corp. for $2.4 billion this month. The British oil giant has been refocusing its portfolio, shifting strategy in certain markets and raising cash to pay for its liabilities from the 2010 Gulf of Mexico oil spill.
Also in June, Houston-based Marathon Oil Corp. said it’s selling its 10 percent stake in an offshore block in southern Africa for $1.5 billion to Sonangol Sinopec International, a joint venture between Sinopec of China and Sonangol.
Marathon Oil started a divestment program in 2011 following the spinoff of its refining arm.
EP Energy, based in Houston, signed a deal in June to sell $1.3 billion of assets, including gas fields in Texas and Louisiana.
This year’s maneuvering follows a big year of selling in 2012. A report from Wood Mackenzie said major oil companies sold off more assets than they bought last year, cutting their inventories by a net $56 billion.
>On the upside, Tudor, Pickering, Holt & Co. said in a recent research note that Marathon’s latest asset sale in Angola is positive for the company because it gets Marathon to the upper end of its plan to sell up to $3 billion in assets by the end of the year and will allow the company to buy back shares, accelerate its Eagle Ford operations or raise its dividend.
On the downside, the firm said in the same note that another asset sale planned in the eastern Niger Delta involving Shell, Total and Italian oil and gas firm Eni could draw such high interest that it would increase “the risk of overpayment for would-be acquirers.”
Investing in divesting
Some of the asset sales Houston energy companies have completed or announced this year:
* Apache Corp. plans to sell $4 billion in assets by the end of the year to pay down debt and buy back stock shares.
* Marathon Oil is selling its 10 percent stake in an offshore block in Angola for $1.5 billion, part of a divestment program it began after spinning of its refining arm.
* EP Energy, an exploration and production unit formed when Apollo Global Management bought El Paso Corp.’s oil and gas operations last year, is selling $1.3 billion of assets, including gas fields in Texas and Louisiana.