Presidio Petroleum, a top US shale producer, is in advanced talks with ExxonMobil to acquire Exxon’s holdings in the Fayetteville Shale in Arkansas. According to sources exclusively cited by Reuters, Presidio would buy up to 5000 shale gas wells from Exxon.
Firstly, Reuters reports that Exxon’s XTO Energy unit has sought buyers for its shale properties in Arkansas. The sale would be part of the company’s drive to raise cash and divest from non-core assets. On the other hand, Presidio would want to buy the properties to boost output.
Moreover, according to the Reuters report, terms of the talks or any financial details about the transaction were not immediately available. Exxon had acquired the Fayetteville assets in 2010 for $650 million during a shale boom that would reshape the US energy landscape.
In addition, the sources said that, even though the talks are advanced, they could still go south ways. Therefore, Exxon could still seek another buyer or decide to retain the properties. The sources spoke in condition of anonymity.
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Sale could have great potential for Presidio Petroleum
However, last year Exxon said it wanted to sell the properties. In November, it also established a data room for potential buyers and put about 5,000 natural gas wells in the Fayetteville Shale on the block in August.
Furthermore, according to another person familiar with the matter, the properties have a value between $400 million and $500 million. The sale could have great potential for Presidio Petroleum, as US gas prices are up 67% year to date. They also traded at $3.83 per million British thermal units on Monday.
Finally, Exxon indicated it would want to close the transaction in January. According to a marketing document seen by Reuters, the properties’ shale gas production has declined by half since 2016, to around 227 million cubic feet per day (mcfd) in the first half of this year.