- One of the 14 fields was subsequently removed from the package.
- The investigation focused on collaboration between vendor, purchaser and operator.
- Where there is evidence of repeated examples of poor behaviour, or a failure to collaborate, the NSTA will not hesitate to use its sanction powers, the regulator emphasised.
The North Sea Transition Authority (NSTA) of the United Kingdom has completed its inquiry into ExxonMobil’s North Sea assets sale to NEO Energy, reminding the sector of the importance of avoiding protracted delays in transactions that can affect the company and deter new investors as reported by Offshore Energy.
Energy transition
The NSTA, which has recently rebranded to reflect its evolving role in the energy transition, informed on Thursday it has completed its investigation of the ExxonMobil-NEO Energy deal, reminding licensees of the obligation to collaborate effectively and ensure transactions are completed promptly, to support investment in the UK Continental Shelf (UKCS).
As a reminder, ExxonMobil entered into a deal with NEO Energy in February 2021 for the sale of its non-operated oil and gas assets in the Central and Northern North Sea, including 14 fields, for a price tag of over $1 billion.
Before the two companies managed to complete the transaction, the Oil and Gas Authority, now NSTA, started an investigation into the proposed deal due to concerns that the sale was not progressing as quickly as expected.
However, before the investigation was closed, ExxonMobil and NEO completed their deal, in December 2021.
One of the 14 fields was subsequently removed from the package.
Improvements
Following the NSTA investigation into ExxonMobil’s sale to NEO of interests in 13 producing fields – including the Elgin Franklin fields, operated by TotalEnergies – the regulator has set out where improvements can be made when licensees collaborate.
In a statement on Thursday, the regulator emphasised that collaboration is an obligation in the OGA Strategy and failure to comply with The Strategy is sanctionable under the Energy Act 2016.
The transaction has now successfully completed and no further action will be taken by the NSTA, following the investigation.
The investigation focused on collaboration between vendor, purchaser and operator.
These shortcomings may have delayed the transaction, the NSTA said.
Realistic timetable
Industry-developed guidance emphasises the significance of defining a realistic timetable to completion at the outset, transparency of communication with joint venture partners, authorising lead negotiators to negotiate “in the room”, and avoiding demands for open-ended spending commitments and unlimited guarantees.
According to the regulator, this industry-developed guidance provides a strong framework, which the industry is expected to follow.
Where there is evidence of repeated examples of poor behaviour, or a failure to collaborate, the NSTA will not hesitate to use its sanction powers, the regulator emphasised.
NSTA Director of Regulation, Tom Wheeler, said: “Billions of pounds in new investment will be needed if the North Sea is to play its vital role in the energy transition.”
“We recognise that there is a balance to be struck between this and the need for licensees to manage counterparty risks.
The NSTA is carefully examining this issue and intends to consult on this and other related matters in the coming months.”
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Source: Offshore Energy
